On April 5, 2006, a New Jersey jury found that Merck’s arthritis drug Vioxx caused John McDarby, a seventy-seven-year-old retired insurance agent, to suffer the heart attack that left him debilitated in 2004. (The drug was not blamed for the heart attack of a second plaintiff in the same case.) The jury also found Merck guilty of consumer fraud for not warning doctors and the public of the drug’s cardiovascular risks. McDarby and his wife were awarded $4.5 million, plus another $9 million in punitive damages because the company was found to have misled the US Food and Drug Administration (FDA). Merck now faces about ten thousand similar lawsuits, and has vowed to fight every one of them. So far, there have been verdicts in four cases—two for Merck and two against (the McDarby case and an earlier one in Texas, in which the plaintiff was awarded $253.5 million, which under Texas law must be cut to $26.1 million).1 If there are more losses, and the chances are there will be, Merck, despite its defiant talk, may ultimately have to try to reach a settlement instead of fighting each case.2
The defeat was not just a loss for Merck, but for the industry as a whole, which has seen its reputation plummet in the past few years. Polls show that among American businesses, the pharmaceutical industry now ranks near the bottom in public approval—above tobacco and oil companies, but well below airlines and banks and even insurance companies. This situation contrasts sharply with the generally high regard in which the industry was held just a few years ago.3
There are three main reasons for the drop in public esteem. First, people are growing increasingly skeptical about the industry’s justifications for its high and rapidly escalating prices. To many, it looks more like simple profiteering than what the industry claims it is—a necessity to cover high research and development costs. People are beginning to realize that even after the pharmaceutical industry’s much-vaunted R&D expenditures, it still has enough left over to make it consistently one of the most profitable industries in the US. Second, as more people began to purchase drugs from Canada in recent years, it became generally well known that prices in the US are much higher than in other countries. While the industry claims that other countries are “free riders,” it seems to many Americans that it is the drug companies who are free riders. Finally, many older people have become all too aware of the fact that the new Medicare drug benefit, as a result of pressure from the powerful pharmaceutical lobby, specifically prohibits Medicare from using its huge purchasing power to bargain with drug companies for lower prices (even though it is allowed to regulate doctors’ fees and hospital payments). This prohibition adds to the disillusionment with a bill that is not only weirdly byzantine but provides far less help than it might, and it increases resentment toward the pharmaceutical industry.
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