Merck counts the cost of Vioxx withdrawal

The pharmaceutical giant Merck has set aside $604m (£324m) just to pay lawyers' bills as it prepares to deal with legal actions from at least 1,400 patient groups over the withdrawal of Vioxx.

The pharmaceutical giant Merck has set aside $604m (£324m) just to pay lawyers' bills as it prepares to deal with legal actions from at least 1,400 patient groups over the withdrawal of Vioxx.

The company pulled its arthritis medicine from the shelves on 30 September, and yesterday set out the financial costs of the world's worst drug disaster. The figures came on the same day as scientists at the US regulator, the Food & Drug Administration, said they believe Vioxx could have caused 140,000 heart attacks in the US alone.

Merck's net income in the final three months of 2004 fell 21 per cent to $1.1bn as a result of the lost sales, the mounting legal provisions and the cost of cutting 5,100 sales jobs. The company had received 575 lawsuits from 1,400 patient groups by the end of the year, but was yet to set aside any provisions for the likely cost of settling any actions.

Investors, who saw Merck shares tumble by one-third after the withdrawal, saw a silver lining in yesterday's figures for fourth-quarter turnover. Despite the absence of Vioxx, sales rose 2 per cent. Raymond Gilmartin, the chairman, said sales reps were diverted to work on other products, including treatments for asthma, high blood pressure and osteoporosis, all of which showed double-digit percentage sales gains.

The withdrawal of Vioxx has robbed Merck of one of its biggest drugs, and the company has fallen out of the top three global pharmaceuticals companies, as measured by sales.