Justinian C. Lane, Esq.
Let Justice Be Done, Though the Heavens May Fall

Justinian Lane's Blog

Justinian's Blog

Comparing the Vioxx Settlement to...

By now, the blawgosphere is aflame with commentary about the Vioxx settlement.  The "reformers" are apoplectic over the sheer size of a $4.8 billion settlement.  Let's look at that $4.8 billion number.

I recently read Creating Winning Trial Strategies and Graphics (a great read, btw) and that book points out that all numbers are meaningless without some sort of reference. According to the book, the relevant question about all numbers is, "Compared to what?"

So I took it upon myself to figure out what to compare that $4.8 billion figure to.  At the top of the list is the total sales figures for Vioxx from 1999 to 2004.  The number I came up with is only an estimate.  I reviewed the annual reports from Merck from 1999 to 2004 and their own sales figures aren't consistent from year to year.  One report claims that Merck sold $2.2 billion worth of Vioxx in 2002, while another puts the figure at $2.3 billion.  So the estimate below might be off by a few percent. 

Here are a few numbers to compare the Vioxx settlement to:

  • Vioxx Settlement Cost: $4.85 billion
  • Average cost of developing a drug like Vioxx: $800 million
  • Total Vioxx Sales from 1999 - 2004: $11+ billion
  • Total number of deaths caused by Vioxx: 56,000+
  • Total number of Americans killed in Vietnam: 58,000+
  • Cost to Merck for each death: ($4.85 billion divided by 56,000) $86,000

I'm obviously not privy to Merck's internal financial reports, so I don't know how much of that $11 billion in sales was profits.  But I'm willing to bet that Merck still pocketed at least a couple billion in profit even after deducting development costs, the settlement costs, and the cost of manufacturing and selling Vioxx. 

You'll pardon me if I don't believe that the tort system has enough deterrent power.