Mark Lanier Defends The Vioxx Settlement
7 CommentsBy Ed Silverman // January 7th, 2008 // 7:05 pm
The flamboyant Texas lawyer apparently couldn’t help himself. After all, Ted Frank (pictured at left), the American Enterprise Institute Fellow and vociferous critic of lawyers who sue pharma, wrote on his Overlawyered blog that the $4.85 billion Vioxx deal is an “extortionate settlement,” and chided Lanier for having his trial victories thrown out on appeal because he failed to follows the rules of evidence.
Frank also contended that Lanier agreed to the deal because many of his cases may actually be worthless and there really is no smoking gun among the evidence. So Lanier replied by posting this comment:
“Some clients will get over a million dollars for their heart attacks…Do you call that meaningless money? That is a fair settlement for not having to go to trial where the expenses alone exceed a million dollars meaning the victim must win over 3 million dollars every time to equal the settlement. And I can try maybe two to three of these cases a year…How long will it take the 1,000 clients I have to get justice in the court system? That is one reason this is a good settlement!
Final point, the US Supreme Court is currently considering taking away plaintiffs lawsuits against drug companies for failing to warn about risks (“Preemption” is the legal term). Most pundits believe they will do so, although for everyone’s sake, I pray they don’t! If they do, the cases disappear… GONE… Don’t you figure the clients would rather have the money? In short, there are more reasons than the two you gave for why we recommend this to our clients. We’re not foolish, and we know smoking guns when we see them!”
For his part, Frank believes that “tens of thousands of plaintiffs who are legally entitled to zero will get about a $3 billion windfall,” which he wrote to someone else who commented on his blog. And his reply to Lanier? The deal is “bad for the rest of us, who have to pay higher prices for our drugs so that you can hold a larger Christmas party. And it’s bad for America when attorneys can bring tens of thousands of meritless cases and make a billion-dollar profit off of it: it means that some other innocent investors are going to be victimized by the trial bar in the near future.”
Hat tip to the WSJ Law blog
Vioxx Plaintiff
This Settlement between the lawyers and Merck is leaving the plaintiffs out in the cold. Vioxx made many healthy people sick and living in poor conditions. They have lost their jobs, homes, and some their lives. I hope Lanier and the rest of you lawyers can sleep at night. I have never heard of a Settlement offer that you had to take or lose your lawyer. I do believe this is causing mistrust between the clients and lawyers and justly so.
Matthew Holford
It was probably in the first lecture of Legal Methods and Legal Systems, in my first year reading Law, that the following kernel of wisdom was fired in my direction (I paraphrase):
“The legal process is a race of uncertain duration. One isn’t quite sure when it starts, nor when it will finish. There will be hurdles placed in one’s way at varying intervals, and one will never be told the rules.”
And I would echo Lanier’s contention that it costs a great deal to engage in this level of uncertainty, in terms of time and emotional investment, as well as cash. I can’t speak for any of the patients involved in this case, but I can understand why Lanier would believe that it’s a good deal. What I don’t like about out-of-court settlements is that any documentary evidence of suppressed side effects data gets sealed and mothballed. Go to trial, and the docs become public property.
Anyway, what really attracted me to this post was the contention that legal settlements are responsible for driving up drug prices. Really? Well, as Mr Pharmalot pointed out, in a recent post, we’re told that twice as much is spent on marketing, as is spent on R&D. If one wants to reduce the cost of drugs, one should look at that, first, I should have thought.
As an additional sideswipe at the Worshipful Company [of Apothecaries] (my nickname for Big Pharma), my training in financial compliance tells me that one should be very wary of any organization that has sales and marketing at the head of its corporate hierarchy, because the first things that are sacrificed are transparency and scrutiny.
Matt
Vioxx Plaintiff
In reply to the comment ” This Settlement between the lawyers and Merck is leaving the plaintiffs out in the cold. Vioxx made many healthy people sick and living in poor conditions. They have lost their jobs, homes, and some their lives. I hope Lanier and the rest of you lawyers can sleep at night. I have never heard of a Settlement offer that you had to take or lose your lawyer. I do believe this is causing mistrust between the clients and lawyers and justly so.”
Ted Frank, needs to come live with one of the “So called, Windfall clients!”, that has lost thier lives in every way, thier families have lost a huge part of life!,the clients children that have lost so very much due to the life of thier family they love so much, losing the ability to be any kind of healthy parent, then to the funerals of “lives cut so short”, due to as stated “worthless” cases?.
I am one of those “Formaly Healthy people” that has been hospitalised 7,6,5,4 weeks at a time,Been hospitalised more than most americans just “Pass by”, a hospital!Had my 1st Stroke within 4 weeks of taking VIOXX,(Thinking for 48 hours that I just was very sick from some kind of Flu,and my right side was just so week?!),Then rushed by Ambulance to find out I had a Stroke at a very young age. The very first prescription taken away was “VIOXX”, Without explanation? Had my family told I would not make it 3 different times!,Can not have any surgery that I need to relieve pain due to ( No Surgeon) will put me on the table with the statement, ” You will more than likely not come off that table!”,My blood ,Liver, blood vessels, vains, are almost completely detereated now,Have the same as P.A.D Patients, Had 2 strokes, several T.I.A.’S, blood clots so bad, they have been in so many places, Organs, Even my lungs, that Doctors and nurses call me the “Blood Clot Guy”,”Walking dead man”,lost my health to an extreem!,lost my ability to even get out of my home!, bedridden 99% of the time!,lost Everything!,now losing time left for very “Life”!, Doctors can only do the best they can to keep me as comfortable as possible, ,Had to take my ” Life Saving”,central line out due to Doctors scared of “Any Infection” , caused by things meant to help me!,My family has gone through so very much Fear,Developing Health & mental issues of thier own,Due to a Drug Company that Makes Much more than this settlement offer in just 1 month!
Spends billions on advertising!,
ALL due to taking “VIOXX”, Then Celibrex,,Now, I will not go to a hospital anymore unless I’m
unable to voive my hatred for hospital stays, Tests,Needles,nursing staff that is scared to do anything wrong, Doctors not wanting to treat me due to FEAR!
If this is not enough for this huge company to WANt to take full responsibility for not only my life, My Family will live with this for thier whole lives, my upcoming Grandchildren will not have a Grand father, My children do not have a Daddy!
I have never made a lawsuit before in my life! Now I see why we have a “So Called” justice system, to be able to hold companys like Merck, RESPONSABLE!My Doctors do not desearve to Quote,”become public property”.
May God Bless all those out there that are in “My Boat!”
Very Sincerely,
M.Pickens
Justice in Michigan
Vioxx Plaintiff - I am with you 100%. I am also not a great fan of Lanier, but Merck created the conditions that led to the choices he describes. Likewise, as Lanier notes, there is the genuine possibility that Supreme Court will uphold FDA preemption. If it does, a great many more people will be in your boat - and, in many instances, in no boat whatsoever. (Because even this sort of settlement would not be available.)
As for Ted Frank’s comment, it is contemptible.
Dennis Harrison
Version 1.0 – later estimates much higher!
If offer rejected – what is next MRK step?
The answer seems to be in what would be Mercks’ future cost to litigate!
It seems increasingly apparent that Merck has chosen the question of what their next step would be should the agreement be declined, as leverage to stimulate the inherent fear that this question brings up.
As can be seen in VPEG, I feel, quite strongly also - that it is very likley Merck will re-negotiate. Why in the world not? They have been negotiating for over a year - sure they were encouraged by Judge Fallon, but if they did not want to, I think that would have been known by now.
I have details in POSTING about 7-10 days ago about WHY I feel there would have been negotiation. I can provide more detail in this POST if anyone is interested. Basically it comes down to 2008, in my view, would have been a REALLY tough year for MERCK. There would have been about 300 more cases at least in trial in 2008 and the TRIAL PACKAGE would have provide plenty of evidence for the trial attorneys as the cases were sent back (remanded) to the states in which they came. Merck was about to face a major crisis.
The timing of the agreement seems very suspicious. JUST when the cases were to begin remanding back to the states, JUST when the TRIAL PACKAGE was available (after 3 years of a major effort by the PSC), and JUST when there may have been more PUBLIC AWARENESS of other issues (this last thought is more of a thought than a fact).
There would seem to be NO WAY that MERCK would want the above cases to proceed. Merck was about to be hit really hard. They almost had to attempt a settlement now - BEFORE the you know what hit the fan!
It is a bit surprising, however, that the PSC did not do better in negotiations. I kind of feel that they were, as people, really tired and wary and wanted to get on to the next thing in their own personal lives. I don’t like where those thoughts would lead, so I’ll stop here on that thought. However, also remember that the MERCK lawyers were not as likely motivated to move on. With Merck as their employer, they did not have to worry about moving on to the nesxt thing - one case is as good as another.
My gosh, I can’t see the argument that Merck would drag this on as being valid, at all. Maybe their lawyers (above paragraph) didn’t care too much personally speaking (which works to Merck’s benefit), but Merck as a company (the business aspect of these settlements) would not want the really bad publicity that was about to come slamming down on them to really have happened. In general the 2008 cases (in my view, which is what I would call an “educated” view) in 2008 likely would have led to an ever increasing amount of public opinion shifting towards the Plaintiff side. I believe 2008 would have been a year in CRISIS for MERCK - do you seriously think MERCK would want that?! This very likelywould have been acknowledged (if not by now).
What an absolute shame and pity - about 3 years of hard work resulting in the TRIAL PACKAGE, which was JUST NOW becoming available - then POOF!, gone - never to be used if the “agreement” is reached.
The FORM letter approach that is becoming increasingly obvious, and annoying, to Plaintiffs states several reasons WHY a Plaintiff should “agree”. WHAT IS NOT SAID often means even more. It was not said how good or bad the TRIAL PACKAGE was. Surely, that would have been well known by the PSC (the authors), but as the FORM LETTER authors they DID NOT indicate something like this —-> early evidence analysis indicates that Merck may have some problems in its legal stance….
If I had a weak case (for whatever reason - including the CAUSATION issue - I WOULD (this is MY feelings, it is not advice) probably take the agreement. If I felt my case was strong, I WOULD NOT. Why should a strong case accept this, when it is likely to do much better in a court trial (remember, it is a strong case)? If a strong case does not accept the agreement, either it will go to trial or it won’t. It probably won’t, Merck would likely want to settle it as it (Merck) continues to clear out its books and whittle down the number of outstanding cases.
Merck seems to be every bit as motivated as the Plaintiffs as whole, and maybe even more so. The damage has mostly been done to the Plaintiffs, they are looking for a fair settlement. Merck has not really felt the impact yet (although they did for a while when VIOXX was withdrawn. It is very logical that Merck would work on a new agreement. It just seems unreasonable that they would stop negotiations now. It is NOT a question of pride, it is dollars and cents (I almost typed “sense”). The dollars and cents would seem to say AGREE TO A SETTLEMENT WHERE THE COSTS OF A SETTLEMENT DO NOT EXCEED THE COSTS OF PROSECUTING ONE BY ONE.
REMEMBER - if Merck doesn’t clear there books, the litigation becomes a MAJOR uncertainity to its business. That results in a lower stock valuation for what would be a LONG time if Merck really went to trial for each case.
So, just speaking subjectively - what are the potential costs Merck faces should the agreement not to proceed? That is where the answer to the question (of new agreement versus individual case by case trial.
1: the costs of prosecuting. Using $200,000 to $300,000 to prosecute (on average) each case that part would be between $6B to $9B. OK, that may be high (the $200k to $300k; let’s use $150,000 as the litigation costs (only), that would be (using this logic) about 4.5B - maybe a bit high yet, but let’s use it as the difference as will be shown becomes relatively not meaningful.
2: the costs to its Business Operations. This is not considered by the average person. There are definitive costs. The bond rating of the company is based upon how the rating agencies feel the company will be able to meets its debt. If major costs are projected well into the future (i.e. the cases go to trial one by one) their interest rates on bonds, etc. would be higher. There are many other business costs also. Rather than even estimating them (at this point), a simple surrogate to use would be the impact of future litigation hovering over Merck on its STOCK PRICE. Using a 10-15% penalty to the price (NOT unreasonable at all based upon past market reactions), this can be used ot estimate a BUSINESS COST of about $15 billion (this is a quick, back of the envelope estimate and is subject to more refinement of course.
So, what would the total costs be under this scenario (cases in trial one by one)?
Cost of prosecuting: ok, let’s lower them again to be more conservative so it now = about $2.5B; now add the approximation of the impact on business operations of $15 billion.
Using this logic, and it seems to be in the right direction to me! - a cost, of litigation AND the impact to Business Operations would be about $17.5B. Divide that by approximately 30,000 and a per case average cost would be estimated to be close to $600,000 per litigant on average.
So, to remain conservative, which strengthen the assumptions - let’s cut the estimated cost in 1/2. Merck will not wish to settle if the amount is as high as $17.5B, as at that point, either option is about the same (in COSTS - the real measure on how to evaluate the issue of renegotiation vs one-by-one litigation).
So, being conservative at several points here (even the 10 - 15% impact on stock price may be underestimated, and now we are cutting the estimated costs again, by 50% this time!) we can now derive a total cost estimate to conservatively be $10B. That is 2x the current cost to Merck estimate. This approach would suggest that Merck would rather readily accept approximately a doubling in costs.
The bottom line to individuals - this would suggest that up to a doubling of the current (average) Plaintiff cost could be readily obtained. If one were to buy in to this methodology of “predicting” if there would be re-negotiations (versus one by one litigation dragging this out - for MERCK as well as Plaintiffs.
I have not seen anybody taking this kind of approach to understanding the issue of re-negotiating or going one by one in litigation used yet. That is surprising, it is (to me ) so intuitive.
It would suggest what also seems to be intuitive, that Merck has much more headroom to go using its current estimate as a baseline, and up to a 2x increase seems to be obtainable somewhat easily. There is also a reasonable argument that it could be much higher than 2x. It would say to me, if my case was even reasonableh, to vote no!
Why not ask your attorney’s to help you understand the chances of a re-negotiation. Bring this to stimulate your thoughts (and the attorney’s if applicable). It is meant to stimulate thoughts and a way of thinking (though there is nothing in this approach that is new, it is just a common cost/benefit kind of analysis - something that we feel Merck has a good handle on by the way!
Please note that this is another, more quantitative way of looking at the issue. It is what I feel to be the case. IT IS NOT advice - your individual situation needs to be taken into account.
NOTE: this type of analysis is not new, it is not magic. It is a relatively straight forward way of looking at the issue. I used to do this kind of thing very, very often. Consistently it led to good decisions. But as they say…. past performance is not a guarantee…
-badbonehealing
Dennis Harrison
1 - opting in will very likely get many nothing (see #4)
2 - the average TORT case is (estimate from a few) likely about 5-
10x higher
3 - Merck just doesn’t have the corporate resources to sue each
person, there will likely be another negotiation; I have written on
this before, and I have done financial analysis also.
4 - basically - you “takes your chances either way” (but see #6)
5 - causation is very important; it always has been, and will be in
the “agreement” also; quite frankly, most know that Merck was damn
guilty (alleged) and by walking away without admitting such,- really
it is a travesty of justice, and encourages the whole industry to be
sloppy in development/testing/marketing/decision making/post sale
studies,….
6 - and while causation is very important; if the TRIAL PACKAGE is
“FREED” and the 2008 cases go to court as had been planned;
Merck (allegedly) is likely to show a lot of other dirt on its face that is
not so obvious now; my guess is that this might help the jury
be more fair to the causation issue than you are likely to face with
Merck waiting to slaughter the sheep! I am saying that your causation
issue may have a better chance with a jury than with Merck’s “gate processâ€
7 - even a courtroom victory, which Merck just is not dumb enough to
really do en masse (per fin. analysis + prior reasoning) which is
small will in many cases be bigger than the lousy settlement $ +
subrogation could (I assume) be managed there + punitive damages can
be quite high.
8 - opt in now, and you likely won’t have the choice when/if(? - I
don’t really think it is if…(but not legal advice - but I was a
top 2% MBA in finance/mkt/business strategy and had a very successful
mid-exec career (before VIOXX prevented me from returning/continuing.
9 - why rush it; the VPEG group is very aggressively ramping up and
has plans for rallies in NOLA and NJ/Merck, and the MLC (Masssive
Letter Campaign) which is likely to yield near 1,000 letters
(including spouses and relatives - how it has impacted their
lives….how they have seen the Plaintiff befuddled, confused,
angry, sad and back/forth - and how MANY have lost faith in their
attorney’s and are now not trusting of them, don’t think that the attorney’s
have their best interests at heart, how they received the insulting form
letter, how they think their attorney’s (if “agreement” goes
through) are getting a lot of $ for little work), how the attorney’s are
often so callous and not returning of phone calls, AND HOW, QUITE FRANKLY,
THEY ARE JUST NOT REPRESENTING YOU individually in so, so many
cases - that is just plain morally and legally unacceptable! It is a sham!
10 - The recent 5th Circuit Court of Appeals on PTO 28, to me
(non-laywer) makes a LOT of sense, it is not what “TED” - I doubt if
“TED” read it (it is not easy to read, it is legalese - but it can
be - also, what are YOUR attorney’s saying about it?)
…..and more
p.s. - just wondering; make sure the subrogatinon issue comes up; as
we know, it was ignored (and that was a mistake) in the “agreement”;
quite easily; your whole amount could be wiped out, or it could be
so low that you had wished to opt out (and also remember; besides
punitive damages in court; I would think that subrogation
should/could be part of the damages….
Settlement per agreement = difficult; same causation (or maybe worse) than trial/individ. settlement; loss of potential punitive; loss of potential subrogation. You will either be a barely surviving sheep, or a slaughtered one.
Maintaining your legal rights and voting no = difficult also (either way); same causation issues (but with dirt on Merck’s face, who knows, maybe jury decision is better than “slaughter the sheep†Merck position; 5x-10x (estimate, not a recommendation!) of an award (which is not excessive, it is ONLY FAIR, potential punitive (some states up to 4x); opportunity at getting Merck to do what it should – pay for SUBROGATION!; - almost forgot; as MERCK CANNOT really afford to go to trial one by one, and CANNOT afford to let this drag out (business and cost of capital issues) there could easily be an opportunity for individual settlement. And also, voting no means you can participate in which are likely to be renegotiations – Merck simply cannot afford, in many ways, to let this drag on.
dan
what idiot thinks its ok to be descriminated against for their weight,habits,ect ect…they didn’t have a problem selling their poison to anyone at risk.
the crackpots that came up with this joke should be disbarred