Merck’s Big Test

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Merck’s (MRK) has won almost every liability case it has faced over side-effects of its pain killer Vioxx. It has gotten to the point where plaintiff’s attorneys don’t want to risk their time any more.

According to The Wall Street Journal "Merck withdrew Vioxx from the market in September 2004 following a study that linked the drug to an increased risk of heart attacks and strokes." But, as it became clear that things could go well for Merck in the courts, its shares made a long, strong climb. Over the last two years, they are up 75%.

Of course,  suits from individuals who claim to have been damaged by Vioxx are one thing. A suit by New York State and New York City is another.

The Associated Press writes that "the state and city sued Merck & Co. Inc. on Monday, accusing the drug maker of defrauding Medicaid and other government insurance programs by hiding the risks of heart problems associated with its pain medication Vioxx."

There is a temptation for Wall St. to dismiss the case. Merck has done so well keeping the Vioxx issues from becoming a financial liability beyond what the company has paid in legal fees. But, state attorneys general have a way of using their vast resources to bring large companies into their local court systems and beating them up to take their lunch money.

New York State is not some old man who says he had a heart attack because he took Vioxx.

Douglas A. McIntyre