At the time, there were 4,200 lawsuits pending. As each new case came to trial, the cases would double until it reached 27,000, with some estimating that there could be as many as 50,000 cases pending.
Although I’m sure Merck looked at the dollars in this nightmare, the reality of the calendar probably weighed heavily in their thinking. Since 2005, 17 cases have gone to trial so far, and Merck has won 12, and they are appealing the others. At this rate, it would take over 3,000 years to try the rest of the cases.
That’s a lot of five year plans.
The decision to litigate, as I pointed out over two years ago, was a poor choice. Win, lose or draw, each trial found its way onto the front pages, each time increasing the number of litigants. Lawyers placed ads in papers, on billboards and on the Internet asking for clients who may be harmed by Vioxx.
I know of a few folks who decided to “take a shot” since it really didn’t cost them anything to try. A really bad attitude, you might say, and you would be right. But if you are in the claims business, you know that the more an exposure finds press, the more claims it will generate, and the more claims, regardless of merit, the higher the cost.
Remember, not only did Merck take Vioxx off the market in 2004; they also were successful in keeping it on the market for over five years, adding to the pool of potential litigants. Of course, they made a whole lot of money during that time as well.
This being said, if Merck had made the conscious decision to mitigate each case and settle those with potential merit, it would have kept the pool of litigants at around 10,000. Each case could probably be settled for an average of $75,000 per claim (averaging in high dollar settlements on one end with nuisance lawsuits on the other).
If you figure in about $50 million in legal fees, you’re looking at about $800 million or about $6 billion less than this settlement structure, (the estimate of the total incurred losses from Vioxx including legal and claims expenses is around $7 billion).