The Merck verdict

Merck's quarter billion dollar loss displays a lot that is bad about both corporate governance and tort litigation. 

The verdict was hardly surprising.  As reported here, the plaintiff’s case featured resentment-mongering against executive pay and corporate profits, and exploitation of the average lay jury's innumeracy.  For example, responding to witness Gilmartin’s argument that the results of a study showing Vioxx users had six episodes of heart attacks or strokes to one for placebo users were not statistically significant, the lawyer asked:

have you got $6 on you? I'm going to give you a dollar and you give me the six. It is not statistically significant in the difference. What do you think, are you in or out?

Mixed in with this brew was the misguided “social responsibility” of Merck in completely withdrawing Vioxx rather than redirecting it to users for whom the benefits outweighed the risks.  As I pointed out here,

in withdrawing Vioxx, Merck threw raw meat to the plaintiffs' lawyers who were already gearing up to prove that Vioxx was a dangerous drug.

If Merck hid evidence of the dangers of Vioxx it should have disclosed, maybe it mistakenly hoped the tardy bid for “public admiration” (Holman Jenkins’ words) would serve it well in court. In either event, the problem with Merck is not that it was “socially irresponsible” but that it failed properly to maximize profits, which includes managing in light of future litigation risks. 

All of which is not to divert blame from a dysfunctional tort litigation system that would stake the future of a large company – one whose business is vital to our health – on the ability of a lay jury to draw a conclusion about causation that even experts hesitate to make, after poisoning their minds with resentment and deliberately misdirecting them through courtroom tricks.

Is this really the best we can do?

Update: More interesting and depressing information and thoughts from Stitch in Haste, Point of Law, Bainbridge, Conglomerate, Kirkendall, and a cry of anguish about the "carnage" done in the Merck trial from Richard Epstein in the W$J.

Update 2: More from the jury box here.

Comments

[Michael Hammond]

The pharmaceutical industry makes billions of dollars drugging school children and this is a form of genocide: condemning millions of young lives to a drug addicted future. They employ “experts” and lobbyist and hire ex FDA personnel and retired congressman to get pro-drug legislation passed. Newspapers and magazines receive billions of dollars a year in advertising, and investment firms make big bucks touting the latest snake oil; so it would be a rare article indeed that went against Big Pharma. The industry is motivated by the bottom line and shareholders not Science. A Google search of Ritalin and Cocaine, Prozac, chemical imbalance, school shootings, will show even the most skeptical that something is horribly wrong when 6 million school children ( plans are in place to increase this by 40% each year) are on anti-depressant drugs prescribed to handle “disorders” created to sell the drugs. Now after the Texas Vioxx decision Big Pharma's stooges are flooding their editorial outlets ( USA Today, the New York Times, Wall Street Journal) with demands that the government protect the drug companies.

PS The decision by the Texas jury was rendered because the defendant couldn’t explain their faulty “science” to the common man. Something that contains lies is very hard to explain as it gets very complicated whereas that which is true is simple and easy to explain.