Don't Bother

Jane Galt at Assymetrical Information has as good a discussion as I have seen on the Merck / Vioxx case.

Every successful big lawsuit against a pharmaceutical company reduces the capital available to the industry, and the willingness of the industry to spend capital on developing new drugs, rather than novel ways to package things already on the market that they haven't been sued for. As Richard Epstein says, it's no good saying you only want to target the bad companies; investors have no way of telling, in advance, which companies jurors will decide are "bad". This case was widely viewed as a slam dunk for Merck, given that the plaintiff's deceased husband had neither the use profile, nor the cause of death, associated with Vioxx's problems. In the case of companies that are misbehaving, that is a cost we have to bear. But there seems to have been little evidence that Merck was misbehaving, and no scientific evidence that the drug caused the death the plaintiff was suing over.

This case is disturbing on so many levels, it is hard to know where to begin to discuss it.

I wonder what will happen when companies like Merck are forced out of business by lawsuits that refuse to recognize that every drug on the market has risks to the consumer? There was no negligence on Merck's part. The scientific evidence was clear--just not to the jury, who apparently couldn't be bothered to do their homework and were predisposed (probably by the unrelentingly negative media) to think that businesses in general, and evil capitalists in particular, deliberately set out to kill their customers.

Of course, we all know that without government intervention, those capitalists would have probably killed off every single American citizen by now and our standard of living would have plummetted way below Europe....

Juries and plaintiffs in cases like this have become less interested in truth than in "sending a message" to companies that dare to want to profit from products that take decades to develop; and that ease the suffering of the vast majority of people who use them.

Unfortunately, the message they send is loud and clear: Don't Bother.