Good News for Drugmakers and Bio-tech Investors

Back in mid-August, after the highly publicized trial that found drugmaker Merck & Co. responsible for the wrongful death of a patient taking its popular painkiller, I pondered in my commentary called “A Precedent is Set” on “what effect one little pill could have on the health industry as a whole.”

 As of last week, it looks as though that little pill may have less of an effect than many people thought. You see, the second lawsuit ended last Thursday with a jury verdict that concluded Merck was not liable for the heart attack of an Idaho man taking the same painkiller that sparked the wrongful death lawsuit.

 Considering the result of the previous trial, which saw a settlement bill of $253.4 million, last week’s win is a huge victory for Merck, as it could translate into more courtroom success in the company’s uphill battle of over 6,000 similar pending lawsuits. Facing potential liability settlement estimates in the range of $50 billion, Merck needs all the good news it can get these days.

 Comments from the jurors in last weeks suit included the following:

 “On the whole we felt that Merck was not trying to be deceitful…”

 Damaging testimony was “taken out of context…”

 And, my favorite for its blunt honesty, “Medicine is business… This is about making money.”

 The jury has been praised for its calm reasoning, as well as its understanding of the pharmaceutical business. Manufacturing prescription drugs is done not out of the kindness of people’s hearts, but as a venture to make money — the jurors understood this reality. By the same token, the jurors were realistic about the limitations of modern medicine. Prescription drugs are fantastic, but the risk of side effects, including dangerous side effects, is always there, especially for higher risk patients.

 Last week, I would bet that the boardrooms of a slew of drug companies were filled with the sounds of sighs of relief when the verdict was handed down in this case. Likewise, Merck & Co.’s litigation team is probably feeling a lot more confident about their chances, going forward, after Thursday’s verdict.

 Merck’s battle will be long and hard in the coming months, but last week’s events are definitely a vote of confidence in both the company and the pharmaceutical industry as a whole, and that’s good news for bio-tech investors in today’s market.