August 23, 2005
By
John Dietz, Senior
Advisor, Trustmakers
August 23, 2005
Well,
the verdict in the
Robert Ernst vs.
Merck case came out
Friday with a $253
million dollar verdict
against Merck. For
those who have been
out of the loop,
the widow of Robert
Ernst, Carol Ernst,
sued Merck in Angleton,
Texas claiming that
her husband, who
used Vioxx, died
in 2001 of cardiac
arrhythmia, which
she feels was caused
by the drug. Vioxx,
a $2.5 billion dollar
blockbuster arthritis
pain killer, was
pulled off the market
by Merck in September
2004.
As
most readers know,
this is a very high
profile case. Before
the verdict, Merck
was faced with approximately
2,600 filed lawsuits
with 4,600 plaintiffs.
I’m not a betting
man, but I am going
to go out on limb
here and say those
numbers are going
to increase.
As
many as 20 million
people worldwide
have taken Vioxx.
Friday’s verdict
saw Merck’s stock
lose $5.2 billion
in market capitalization.
Merck says it will
fight all cases,
I believe using the
classic scorched
earth approach. Merck
claims that there
is no scientific
evidence that Voixx
causes fatal cardiac
arrhythmia or any
other type of death.
The
plaintiff’s attorney,
W. Mark Lanier, says
that Merck knew about
the drugs’ side effects
and suppressed the
information. When
interviewed, Lanier
said that Merck took
the “Three Monkey
Approach.” "They covered their eyes because they didn't want to see anything that would hurt
the sale of Vioxx,
they covered their
ears because they
didn't want to hear
anything that would
hurt the sale of
Vioxx, and they covered
their mouth because
they certainly didn't
want to say anything
that would hurt the
sale of Vioxx."
Of
course, Merck has
consistently denied
charges that Vioxx
caused deaths. Merck
has also denied allegations
that it concealed
information, noting
that the company
voluntarily withdrew
Vioxx from the market.
The post verdict
interview with the
plaintiff’s attorney
is a chilling reminder
that there are no
real winners. The
litigator made Merck
out to be a new age
Bin Laden, and Merck’s
defense team acted
like the decision
would be overturned
on appeal. As my
father always says:
“It all depends on
who’s telling the
story!”
Whatever
side you fall on,
this is not important
for our discussion.
I don’t think we
will know the full
ramifications for
at least ten years.
What is important
is that many people’s
lives will be affected
good and bad. Some
Wall Street gurus
are saying Merck’s
value is going to
be a zero. File your
claim before there
nothing left, so
the pundants say…
The
point to the story
is that you and I
should go a long
way to avoid being
in front of a contingent
fee litigator, judge
and jury. Part of
planning your life’s
work is to limit
the downside risk.
Any good stockbroker
worth a salt will
tell you to cut your
losses and let your
winners run. Asset
protection planning
is about limiting
your downside risk.
If you plan for the
worst, there is a
good possibility
that you won’t be
sitting where Merck
is right now.
Until
next time,
John
If
you would like more
information regarding
asset protection,
trusts, family limited
partnerships or the
subject of this article
please call or email
our office.
