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Ernst v. Merck - one more view

Ted Frank
Medical Progress Today
September 1, 2005

You might've thought that you needed to marry a billionaire to get $24 million from a one-year marriage, but we now know that that a one-year marriage to a 59-year-old Wal-Mart produce manager with arteriosclerosis is worth $24 million in compensatory damages. Mrs. Ernst is apparently very lucky that her new husband died from a sudden arrhythmia rather than from a brain tumor or lightning strike, because I'll bet a year's salary that she didn't have a $24 million life insurance policy on him to compensate her in the event of a sudden death.

Compensatory damages are supposed to be compensatory and leave the plaintiff in the same position as if the tort never happened. Awards like this demonstrates the problem with uncapped non-economic damages, which, with no rational basis for computation, are determined solely by the self-serving testimony of the plaintiff and friends, and the whim of the jury. If Mrs. Ernst were less grandmotherly looking, or of a different race than the jurors, or had a hideously grating speaking voice, or if the jury decided to value more her testimony that she didn't even know the children of the husband she told the jury was a great family man she mourned so much, the award is completely different.

With a $250,000 cap on non-economic damages, and Texas's punitive damages cap, the jury's award would still have been a healthy and over-compensating $2.3 million, surely more than whatever insurance policy the Ernsts bought - and the Ernst might not even have been able to obtain insurance if his arteriosclerosis had been known.

This verdict is bad news for all of us, and some of us will die prematurely because the lawsuit deterred the research and development of life-saving drugs.

And Vioxx was one such life-saving drug. The painkillers that it replaced (and is now replaced by) cause their own health problems, and current medical thinking is that, for at least some people, Vioxx would be a safer as well as a more effective pain-killer than aspirin, despite what we now know to be the latter's better cardioprotective profile. But Merck can't collect $26 million from each person whose life they save, even if it were possible to point to a particular Alvy Singer of Hypothetical City, Iowa, who didn't die of aspirin-related complications because he was taking Vioxx.

One can even envision a drug that saves the lives of a hundred people for every person killed by a side-effect needing to be pulled from the market because of the cost-benefit analysis that the plaintiffs' bar wishes to impose on the pharmaceutical industry.

If only the surest, safest drugs are allowed to be sold without risk of bankrupting the company that develops them, that makes the odds of successful development of a drug all the more of a long-shot, and the probability that a drug company deciding a research project is not worth the candle all the more likely.

There are already hints of ripple effects from this case that will delay approval of drugs for multiple sclerosis and a non-injectable form of insulin, but the real downside will be the research & development projects that never begin but would've been successful, if not for liability induced concerns.

Too bad we won't be able to sue the trial lawyers when these inevitable deaths happen.

Ted Frank is Director of the Liability Project at the American Enterprise Institute. Portions of this article originally appeared on the Manhattan Institute Web site Point of Law on August 22, 2005.

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