Vioxx...

As background, Dr. David Graham, Associate Director for Science and Medicine in the FDA's Office of Drug Safety, in 2004:

Dr. Graham's Testimony to Senate Committee on Vioxx, FDA Failures: Prior to approval of Vioxx, a study was performed by Merck named 090. This study found nearly a 7-fold increase in heart attack risk with low dose Vioxx.... In November 2000, another Merck clinical trial named VIGOR found a 5-fold increase in heart attack risk with high-dose Vioxx.... In 2002, a large epidemiologic study reported a 2-fold increase in heart attack risk with high-dose Vioxx.... About 18 months after the VIGOR results were published, FDA made a labeling change about heart attack risk with high-dose Vioxx, but did not place this in the Warnings section. Also, it did not ban the high-dose formulation and its use..... In March of 2004, another epidemiologic study reported that both high-dose and low-dose Vioxx increased the risk of heart attacks compared to Vioxx's leading competitor, Celebrex....

If you apply the risk-levels seen in the 2 Merck trials, VIGOR and APPROVe, you obtain a more realistic and likely range of estimates for the number of excess cases in the US. This estimate ranges from 88,000 to 139,000 Americans. Of these, 30-40% probably died. For the survivors, their lives were changed forever...

If you believe Dr. Graham--which I am not sure that I do--we have 30,000 excess deaths from Vioxx. A $5 billion settlement amounts to $170,000 per extra death caused, which does not seem to me to be grossly out of line on the high side as a sanction on a company whose marketing department did not want warning labels.

The usually-reliable Joseph Nocera has a different view:

Forget Fair; It’s Litigation as Usual: They had the kits ready to go. The “trial package,” they called it... the plaintiffs’ bar always develops a trial kit when a mass tort gets to a certain point; it’s one of the weapons trial lawyers use to put pressure on the company they are attacking. The big-time lawyers who bring the early cases... wind up spending $1 million to $1.5 million developing their case... expert witnesses... discovery... depositions... jury consultants.... And then they put their collective knowledge in a neat little package of documents and videotaped depositions and suggested lines of attack, so that all the other lawyers who have sued the same company can partake of their acquired scholarship, and bring their own trials — for a lot less money. “Ours would have allowed a lawyer to try a legitimate case for under $200,000,” said Mr. Herman, with no small touch of pride. He was talking, of course, about the Vioxx litigation, which the drug’s manufacturer, Merck, settled late last week for the tidy sum of $4.85 billion.

Mr. Herman has 120 of the 27,000 cases — that’s right, 27,000 — that were brought against Merck, which took Vioxx off the market three years ago after a study made it clear that the medication increased the risk of a heart attack or stroke. He was also one of the key architects of last week’s settlement. When I spoke to him a few days ago, he defended the settlement as a fair one, which, as he put it, “balances the scales between two competing parties.” He made it sound like standard business negotiation. Which it was.

But he also said something plaintiffs’ lawyers don’t often say out loud — at least not when a reporter is within hearing distance. “A corporate defendant cannot afford to defend thousands of cases where there is an alleged mass disaster at one time,” Mr. Herman said.... [A]s mass torts have evolved over the last decade, it is that it scarcely matters anymore whether the facts are on the plaintiffs’ side — not when a thousand lawyers are armed with those kits.... Is a mass tort really the right mechanism to settle disputes about product safety, or to punish corporate wrongdoing?

Vioxx was hardly Merck’s finest hour. I’ll readily concede that point. The company did things it shouldn’t have.... Vioxx... was a painkiller that was originally aimed at a pretty small group... people who suffered serious stomach problems as a result of taking aspirin regularly. But Merck spent hundreds of millions of dollars marketing Vioxx... as some kind of miracle pain reliever.... [T]here were rumblings... that Vioxx might increase the risk of heart attacks or strokes. It’s not quite right to say that Merck completely ignored those potential problems — but the company certainly tried to avert its eyes....

There are many problems with viewing product liability lawsuits as a means to right wrongs, which is how we see them in this country. They often make lawyers rich while the people who say they were hurt wind up with very little. The legal system gives corporations zero incentive to step forward if there is evidence that a drug might have a harmful side effect — because, after all, they’ll get sued as soon as they make such an admission. Third, even the smartest lawyers aren’t the Food and Drug Administration, which is charged with making decisions about which drugs should be allowed on the market and how their risks should be disclosed. Mass torts have become a rogue form of regulation, and not necessarily in the public interest. And finally, when you get right down to it, litigation is a crapshoot, and it can be cruelly unfair.

That was certainly true of Vioxx, whose potential side effect is one of the most common serious conditions known to mankind: a heart attack. It is impossible to know what causes someone to have a heart attack, just as it is impossible to know why someone develops cancer. In the Vioxx litigation, the plaintiffs’ lawyers were arguing, in effect, that the way to punish the company’s bad behavior was to make it hand their clients large sums of money, even though they couldn’t prove that the clients’ heart attack had been induced by Vioxx. Meanwhile, the company argued that it was just as likely, if not more likely, that some other risk factor was involved, like smoking or obesity — even though it had put a product on the market that increased heart attack risk.

As a result, a handful of lucky people who may well have been victims of their own bad habits — and not of Vioxx — won large sums of money. (Although they haven’t seen a penny yet: every case the plaintiffs won is on appeal.) And some people who may well have suffered because of Vioxx lost their cases and didn’t get a penny. How does such a system even approximate “justice”?...

[W]hy, then, did Merck settle? Because it had no choice. The four judges managing most of the cases had decided that the time had come to settle the litigation, and Merck was not in a position to say no to the judges.... Besides, Merck had won enough cases that it felt it could devise a settlement that it could live with. Which it did.... [T]he stock jumped when the $4.85 billion deal was announced....

As for the plaintiffs’ lawyers, they are likely to pocket around $1.5 billion of the settlement money, which means that Merck will wind up feeding the beast, just like every other company that finds itself embroiled in a mass tort. That money will go to funding the next mass tort...

A good newspaper story on this would answer three questions about these cases:

1. Is the settlement too large or too small as a sanction on Merck--as a two-by-four to the head of the CEO to make sure that he understands that his job is to curb the enthusiasm of his marketing product when he has a new product with dangerous side effects?
2. Are the lawyers' fees too large or too small--does it give lawyers too much of an incentive to crank up this mass-tort machine as a way of providing drug companies with an incentive to do the right thing?
3. Does the settlement money get to the people who were harmed--to the victims?

My answers in this case to these three questions right now are: (1) probably about right, (2) I don't know but I fear too large, and (3) somewhat but not largely.

My first beef with Joseph Nocera is that his story does nothing to help me get better answers to any of these questions. My second beef is that his story pushes a less-informed reader towards answers--too large, too large, and no--that are largely wrong. My third beef is that Joseph Nocera doesn't set out any ideas about how one might create a better system. My fourth beef is that Joseph Nocera pushes readers wrong answers by playing intellectual three-card monte--if he's going to make a big deal about how large the 27,000 case number is, he has a moral obligation to set it alongside the 30,000 net excess heart attack death number.

And my fifth beef is that Nocera knows damned well that he has a moral obligation to raise the level of the debate, and that he is ducking that obligation.

Why oh why can't we have a better press corps?

Comments

[Jim Lund]

Let's put figures to #1. Total sales of Vioxx, $11+ billion (1999-2004) vs. the $4.8 billion settlement cost. Merck most likely made a billions on Vioxx. Pushing it was a winning bet.

The next time the situation arises, the Merck executives will make the same decision--it is their fiduciary obligation. Vioxx was a win for Merck and bonus time for Merck management.

The Vioxx rollout and litigation management will provide an example to the industry of how drugs can be sold. Brad, as a man approaching the medicated time of life this should be of personal interest to you.

[Emma Anne]

I can only see two reasonable ways to make sure consumer products are safe: regulation and litigation. Both of these can be too heavy handed, but yeah, there's a balance and if you ease up on regulation, litigation almost has to fill the gap.

[Benjamin]

Nocera says: "The legal system gives corporations zero incentive to step forward if there is evidence that a drug might have a harmful side effect — because, after all, they’ll get sued as soon as they make such an admission."

The legal system incentives work the same way for hit-and-run drivers. Nocera implies we should feel sorry for them.

[sd]

Benjamin wrote:

"The legal system incentives work the same way for hit-and-run drivers. Nocera implies we should feel sorry for them."

No, he doesn't. He implies that we should feel sorry for the people who will die between the time that Merck retroactively discovers problems with Vioxx and the time that a third party discovers problems with Vioxx. Because Merck's behavior in the interim, while morally unacceptable, is not surprising in light of the structural incentives in the environment. And we should care that our lottery tort system sets up these incentives, to the detriment of patients and the enrichment of high stakes class action lawyers.

[Winston]

"Why oh why can't we have a better press corps?"

Abolish those stupid journalism schools that "teach the fundamental skills of researching, reporting and writing for all media," and you will get one.

[RSA]

I have another beef with this article:

"It is impossible to know what causes someone to have a heart attack, just as it is impossible to know why someone develops cancer. . . Meanwhile, the company argued that it was just as likely, if not more likely, that some other risk factor was involved, like smoking or obesity — even though it had put a product on the market that increased heart attack risk. As a result, a handful of lucky people who may well have been victims of their own bad habits — and not of Vioxx — won large sums of money."

Assuming that the first sentence is true, Nocera seems to be arguing that because we can't know with certainty the cause of some disease, any possible contributing factors should be ignored. Thus if I were to market a drug that caused heart attacks without fail for whoever took it, at some unpredictable time in the future, I should get off because there's no certainty that those heart attacks weren't caused by something else. (That is, my drug would have caused a given person's death, but that person may have died sooner because of something else that caused his heart attack.)

[gcochran]

Taking the relevant Merck executives out and hanging them would have been more appropriate.

[sm]

Hanging is one alternative dispute resolution settlement that doesn't come up much when tort reform is brought up.

[gcochran]

Local prosecutors did consider manslaughter charges. Merck management went around threatening outsiders who had begun to see the problem. They tried to sue a scientific journal in Spain about it and threatened to cut off support to Stanford's medical school when a doctor there began talking about the problem. I was pleased to see that the med school told Merck to fuck off.
I made a rough cut at the numbers: it looked more like 50,000 excess deaths to me, but Graham is the expert. The big majority would have been preventable if Merck had acted properly and promptly on the evidence, since Vioxx use was increasing rapidly and most patient-days of exposure were in the last year or so. There was no effect delay - which is consistent with the conclusion that the risk was mediated by an increased clotting tendency. Merck pushed the idea that there might be an effect delay as a legal tactic, not a scientific hypothesis.

I can understand how those executives tried not to believe the bad news as it became clearer, since pulling the drug would have hurt their careers and stopped all that lovely money coming in. Perhaps we would have had a better outcome if those natural impulses were balanced by gut-wrenching fear of what would happen when we caught them.

[gcochran]

Local prosecutors did consider manslaughter charges. Merck management went around threatening outsiders who had begun to see the problem. They tried to sue a scientific journal in Spain about it and threatened to cut off support to Stanford's medical school when a doctor there began talking about the problem. I was pleased to see that the med school told Merck to fuck off.
I made a rough cut at the numbers: it looked more like 50,000 excess deaths to me, but Graham is the expert. The big majority would have been preventable if Merck had acted properly and promptly on the evidence, since Vioxx use was increasing rapidly and most patient-days of exposure were in the last year or so. There was no effect delay - which is consistent with the conclusion that the risk was mediated by an increased clotting tendency. Merck pushed the idea that there might be an effect delay as a legal tactic, not a scientific hypothesis.

I can understand how those executives tried not to believe the bad news as it became clearer, since pulling the drug would have hurt their careers and stopped all that lovely money coming in. Perhaps we would have had a better outcome if those natural impulses were balanced by gut-wrenching fear of what would happen when we caught them.

[JMOHR]

I am a recovering attorney. I have spent a lot of time as in house counsel and outside counsel in the litigation of product liability and aviation liability cases. A number of observations:

1. Nocera uses the usual ploy that a corporation uses whenever there is an increased rate of disease. It is literally impossible to find conclusive evidence linking a chemical or medicine to the specific illness in a person. Look at tobacco as the most public example. Not only did the tobacco company evade responsibilitiy for selling a dangerous product by arguing the lack of conclussive proof, but also set back public education and warnings on cigarettes by investing heavily in a PR campaign to confuse the issue. Many suffered and died as a result. The same impact obtains here, it would be virtually impossible to find any company liable for a dangerous chemical or drug.

2. I see a lot of duplicity on the kits developed for individual attorneys to share knowledge, experts and deposition questions. This is not the result of class action litigation but because of efforts that the product liability defense bar has undertaken to make it harder to bring a class action. The idea was to force individual cases through numerous attorneys/actions that gave large corporations the advantage in deploying its defense (they share the same experts, evidence, and usually have a lead firm coordinating litigation throughout various jurisdictionds) and make each plaintiff's attorney undertake the cost of starting from scratch. Individual cases also permit the defense to play upon the inability of each plaintiff to prove the conclusive link.

3. Nocera criticizes the system because Merk won some cases denying some legitimate plaintiffs recovery. Again, a reason why the defense bar wants to keep laswuits fragmented. A well run class action suit could lead to more just results.

I can well agree that litigation can be a crap shoot. I can agree that the FDA fell down on the job. I can agree that Merk feared being sued if it admitted the problem. I have the feeling that this person would just give a pass to Merk.

[low-tech cyclist]

RSA says, "Nocera seems to be arguing that because we can't know with certainty the cause of some disease, any possible contributing factors should be ignored."

It's worse than that: Nocera is effectively arguing that statistical evidence should not count.

If we can statistically prove that Drug A caused X thousand excess deaths, but we can't medically prove which deaths they were, then in Nocera's opinion, the statistical evidence should carry no weight in the scales of justice.

[low-tech cyclist]

RSA says, "Nocera seems to be arguing that because we can't know with certainty the cause of some disease, any possible contributing factors should be ignored."

It's worse than that: Nocera is effectively arguing that statistical evidence should not count.

If we can statistically prove that Drug A caused X thousand excess deaths, but we can't medically prove which deaths they were, then in Nocera's opinion, the statistical evidence should carry no weight in the scales of justice.

[Bonnie]

I took Vioxx for 3 and half years and had no heart problems; but, I did have major pain relief. While I was switched to Celebrex, I still have not had the pain relief I had from Vioxx. I took Paxil and had some serious adverse affects long before I took Vioxx. I was outraged and wanted Paxil taken off the market. Yet, since then, I have found some friends and relatives who have benefited greatly by Paxil. Now, with both experiences under my belt, I believe if the people are provided good information about the product and they choose to take it, it should be available. The thing about all these drugs is that they ALL will help some people miraculaously and hurt some people terribly. However, I resent that I am not able to choose to use Vioxx because of the dishonesty of the drug company and the fear created by the way this issue has been handled. Of course, the other reality is that if there is only a small portion of the public who can use a drug, the companies will not offer them, such as the case of orphan drugs. However, the real problem seems to be the ignorance of doctors and the public about these drugs. Most of the doctors and the public do no research to find out if what the drug salesman has provided good information beyond the "selling" propaganda. If that occurred the drug company would have more reason to be forthcoming with the studies. Maybe.

[allan_in_upstate]

There is no evidence that Nocera or his ediors have the intellectual capacity or knowledge to even ask the questions that Brad does, much less answer them.

[Chris Brown]

"Mass torts have become a rogue form of regulation, and not necessarily in the public interest."

Tort claims are precisely the "form of regulation" that large corporations obviously support.

When the actuaries determine that the probable cost of settling future claims is less than the profits that will ensue from sending a defective product to market, the corporation which decides to go to market is in essence challenging folks to sue it.

[RSA]

low-tech cyclist says, "If we can statistically prove that Drug A caused X thousand excess deaths, but we can't medically prove which deaths they were, then in Nocera's opinion, the statistical evidence should carry no weight in the scales of justice."

Yeah; though there's a surface similarity to Fisher's arguments about smoking and cancer, somehow I doubt that Nocera is reviving those arguments here.

[save_the_rustbelt]

I (and many physicians) heard very early on that Vioxx was a dangerous drug.

Unfortunately that information often came from Celebrex drug reps so it was seen as sour grapes.

Patients (including my wife) liked Vioxx because it was very effective. Effective at a high price though.

[jeff hoffman]

The relative avarice of pharma execs vs class action lawyers? That's a toss-up. If they could do it, the drug companies would have their own salaried plaintiff lawyers so as to recover 30% of their losses. The irony of the vioxx story is that the drug's only real marketable benefit (less ulcer forming) is lost if taken with an aspirin a day. Undoubtedly many of those at risk were taking vioxx and aspirin, the latter for their existing heart conditions.

[urbanlegend]

The brainwashing gullible people like Nocera are unaware of is mindboggling. Those poor Fortune 50 corporations just can't find decent lawyers to defend them anywhere in the largest and most prestigious law firms in the world. Why -- sputter, sputter -- those unstoppable plaintiffs' lawyers actually made up a KIT. Oh, the humanity. It's not even a fair fight. Who could possibly defeat a kit, whether it's totally full of shit or not.

[snuh]

the thing that RSA and low-tech-cyclist picked up also irritated me, but for a different reason.

"It is impossible to know what causes someone to have a heart attack, just as it is impossible to know why someone develops cancer.

in a sense, if you significantly increase the risk or likelihood of outcome A, you "cause" outcome A, even if "the cause" can't be established pathologically.

there are several risk factors for heart attacks. largely, claimants who have lost vioxx cases were not successful because they had other substantial heart attack risk factors. whereas in successful vioxx cases, other risk factors have been less pronounced or absent. i.e., precisely because it is impossible to know what causes a particular person's heart attack, the jury has to decide what was most likely given that person's risk factors. so some people will win vioxx cases, and some will lose.

rather than note this obvious (and fair) outcome, nocera frets about how unfair it is that some people win and some lose, implying arbitrary justice. this presentation speaks volumes about where his sympathies lie.

[Karmakin]

Well, if the question truly is tort reform, what currently happens is nothing short of mercenary justice, to be blunt. And that's the system we have right now.

Most of the tort reform advocates want to replace mercenary justice with NO justice...obviously a really bad idea. A much better idea would be to give government agencies real teeth to do this sort of work, and bring real CRIMINAL charges on those involved.

How much would you get for 20k+ cases of murder? Probably life several hundred times over. Seems about right.

But further, I'd like to see the criminal code updated to deal with the public corporation. Where corporations would be found guilty of criminal activity, and because of that, punished with real teeth. Say fining them their profits of the last 10 years or something like that.

But then we cry..what about the shareholders? Waaaah! Investing is a risk. Grow up you WATB, you made a bet and it didn't pan out. Want to be safe? Keep it in a high-interest savings account.

[Karmakin]

Well, if the question truly is tort reform, what currently happens is nothing short of mercenary justice, to be blunt. And that's the system we have right now.

Most of the tort reform advocates want to replace mercenary justice with NO justice...obviously a really bad idea. A much better idea would be to give government agencies real teeth to do this sort of work, and bring real CRIMINAL charges on those involved.

How much would you get for 20k+ cases of murder? Probably life several hundred times over. Seems about right.

But further, I'd like to see the criminal code updated to deal with the public corporation. Where corporations would be found guilty of criminal activity, and because of that, punished with real teeth. Say fining them their profits of the last 10 years or something like that.

But then we cry..what about the shareholders? Waaaah! Investing is a risk. Grow up you WATB, you made a bet and it didn't pan out. Want to be safe? Keep it in a high-interest savings account.

[Robert Waldmann]

OK some tort reform. A mandatory ceiling on contingent fees as a fraction of the award.

You're answers have a simple implication. You think that things are roughly OK except lawyers have excessive incentives to sue. You seem to think that Their current share (one third no?) is too high so how about "plaintiff can not pay more than 20% of the total settlement to lawyers."

I am reluctant to propose tort reform at all as the reactionary and the bought will try to eliminate contingent fees entirely leaving you at the mercy of large organizations (as I am here in Italy). Still it is what follows from your analysis.

There is a problem with the alleged lack of incentives to report side effects promptly. That is what punitive damages are for, no ? If they had no connection with despicable behavior by managers, there would be a problem. Does Nocera really believe this ? I would guess the opposite, that is, that acting in a way that outrages ordinary jurors is too costly compared to actions which are equally damaging but motivated by, for example, ideology not greed.

[robertdfeinman]

There is a belief that one can punish corporations or the "market" by imposing financial penalties.

Corporations and markets are not people, they don't learn from their mistakes or misdeeds. When the next dangerous products comes along or the next Ponzi scheme, it will be managed by different people, even if the same firms happen to be involved.

You can punish individuals, but this is quite rare in business; for every Dennis Kozlowski that ends up in prison there are 100 settlements where the firm "admits no wrongdoing".

If you want to change corporate behavior you have to put in regulations which persist beyond one cycle of CEO's. In addition you need to add enforcement laws which make it clear that the heads of corporations which are fined for their actions will be held criminally liable. Sarbanes-Oxley tries to do this, that's why the business community is so anxious to get rid of it.

Corporations get their ethics from the top down. If the management doesn't have any skin in the game then why should they care about ethical (or even legal) behavior?

Finally, when a fine is imposed or a legal settlement made against the firm it is the stockholders who pay, and they never have any say in how a firm is managed under current business practices.

Isn't the punishment supposed to fit the crime?

[Nice Idea But]

Karmakin:

Proposals to impose criminal (the equivalent of) criminal penalties on corporations have always failed due to definitional problems. For instance, in New York taxicab owners incorporate each cab to escape liablilty. What is the appropriate entity? All that will happen is a legal arms race, with lawyers the only winners.

[cthulhu]

Low-tech cyclist: "If we can statistically prove that Drug A caused X thousand excess deaths, but we can't medically prove which deaths they were, then in Nocera's opinion, the statistical evidence should carry no weight in the scales of justice."

Well that would be quite ironic in that, for many drugs, the same statistics are used to show mortality and morbidity reduction in order to receive FDA approval.

[move along, nothing to see here]

[Because Merck's behavior in the interim, while morally unacceptable, is not surprising in light of the structural incentives in the environment]

Am I the only one here who thinks that this alleged "incentive" to not report safety problems makes no sense from an economic point of view? If you have just found out that your drug is dangerous, and you know that class action lawsuits are really expensive, how can it possibly be the rational response to try and hush up the bad news, thus increasing the size of the class and piling up much greater legal liability?

Maybe executives do behave in this way out of fear, panic, cupidity etc, but it shouldn't be called an "incentive"; are we economists here or what? The incentives don't work in this way.

[Ted]

The "30,000" number is completely fictional. Graham's own study for Lancet didn't find a statistically significant difference for low-dose Vioxx, and he cherry-picked another study's result (and cherry-picked the comparison drug, another COX2) to maximize the number of heart attacks in the text.

[lloyd667]

1. Way too small. Merck still made a handy profit on the drug. The $5 billion, multiplied by the (small) chance of getting caught, just tells drug companies to continue to do everything they can to boost sales. I predict, therefore, that that is exactly what they will do. We will see if Brad's (implicit) prediction to the contrary prevails instead.

2. Too little. The problem with the tort system is not that there are too many suits, but that there are too few. (I am in no way associated with the bar, by the way.) Litigation is a crapshoot on both sides, which means from the plaintif lawyer's viewpoint, a large investment might go down the drain. It is said that thousands (4000, I remember) people die every year from eating tainted meat, yet I hear of no big class-action lawsuits to get the giant meatpackers to shape up and stop shipping tainted meat.

3. Too little. But then, big time class action tort law is no longer really about compensating the plaintif. It is more about punishing the offender and thereby saving lives down the line.

The root problem here is not tort law or the lawyers. It is organizations like the FDA, all of which have largely abandoned their role of consumer protection in favor of promoting the firms they regulate (or, in some cases, like with "herbal" remedies or meat inspection, Congress or the administration has gutted them). The FDA did nothing about Vioxx, even when their own studies pointed to the huge death toll. Since the Vioxx debacle, it has steadfastly resisted internal changes that might reduce the chances of something similar happening again, because it views its role as hastening drugs to market.

Bottom line: tort law is, for the reasons cited in the column, a poor way of regulating safety. But, for better or worse, it is all we have. We should make the most of it.

[wood turtle]

Sounds like a case of compensatory death.

[Vickie Pynchon]

Thanks for the clear thinking on the journalistic failures; this is the first time I've seen your blog. Great contribution. Here's my piece -- from a mediator's persepctive -- on the Nocera article --

http://www.negotiationlawblog.com/2007/11/articles/conflict-resolution/vioxx-justice-and-hypothetical-john-doe/