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Tabarrok, Surowiecki on Vioxx

Over at Marginal Revolution, Alex Tabarrok (fresh off his Point of Law featured discussion) has some interesting thoughts on Vioxx and tort:

We have two systems of drug regulation in the United States, the FDA and tort law. Unfortunately, neither system works well. FDA incentives push for excess delay and excess cost and the tort system appears random if not perverse in its operation with good claims receiving nothing and bad claims receiving billions.

(see original for internal links)

Tabarrok points to James Surowiecki's New Yorker article, which notes:

Ever since Merck announced, this past fall, that the pain reliever Vioxx could be linked to an increased risk of strokes or heart attacks, ads from lawyers trolling for potential plaintiffs ("Hire a Texas Vioxx lawyer," "Vioxx injury claims") have become ubiquitous on the Internet and cable television. Merck is already defending itself against almost five hundred lawsuits, and the number is expected to soar in the next few months. One Wall Street analyst has estimated that the company could face a total bill of more than fifty billion dollars. . . .

[W]hile Merck executives may have hoped to persuade people that they were acting responsibly, plaintiffs� attorneys have taken the withdrawal [of the drug] as an admission of guilt. Questions about Vioxx�s potential risks have been common since its introduction, six years ago, especially after a 2000 trial suggested that the drug increased the risk of heart disease. Merck did not hide these data, and beginning in 2002 the drug�s label included a warning about the possible cardiovascular risks. Some critics, however, have suggested that the company soft-pedalled the dangers. Internal company documents show that Merck employees were debating the safety of the drug for years before the recall.

From a scientific perspective, this is hardly damning. The internal debates about the drug�s safety were just that�debates, with different scientists arguing for and against the drug. The simple fact that Vioxx might have risks wasn�t reason to recall it, since the drug also had an important benefit: it was less likely to cause the internal bleeding that aspirin and ibuprofen cause, and that kills thousands of people a year. And there�s no clear evidence that Merck kept selling Vioxx after it decided that the drug�s dangers outweighed its benefits.

While that kind of weighing of risk and benefit may be medically rational, in the legal arena it�s poison. Nothing infuriates juries like finding out that companies knew about dangers and then "balanced" them away. In fact, any kind of risk-benefit analysis, honest or not, is likely to get you in trouble with juries. In 1999, for instance, jurors in California ordered General Motors to pay $4.8 billion to people who were injured when the gas tank in their 1979 Chevrolet Malibu caught fire. The jurors made it plain that they did so because G.M. engineers had calculated how much it would cost to move the gas tank (which might have made the car safer). . . . Even if the company puts a very high value on each life, the fact that it has weighed costs against benefits is, in itself, reprehensible. "We�re just numbers, I feel, to them" is how a juror in the G.M. case put it. "Statistics. That�s something that is wrong."

Surowiecki also refers to a study by Harvard's Kip Viscusi, which entailed an experiment involving 500 juror-eligible citizens surveying potential automobile cases. Viscusi found not only that "sound benefit-cost analyses of safety measures did not reduce the likelihood of punitive damages," but also that "[i]nternal use of higher value of life numbers serves as an anchor that boosts rather than reduces jury awards."



Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.