I have been following Merck’s screwup with the recall of Vioxx and I have also developed a formula for estimating Merck’s Vioxx liability. This is an excellent case study in how not to develop your business and legal strategy. As of today, my formula shows that Merck is looking at at least $200 billion in liabilities and I am being very conservative with my calculations.
So what should Merck do?
- Stop treating your (past) customers like your enemies. Your current and future customers are eventually going to react to their mistreatment by buying competitive drugs (unless you have a monopoly). Blasting Vioxx users and/or juries is not excellent PR strategy.
- Stop celebrating your win as if this is a sports match. For God’s sake, tens of thousands of people died after taking Vioxx. In litigation of this magnitude, there will be some frivolous lawsuits, others will fail to present their case, and some will just be screwups, but self-congratulatory press releases and antagonistic statements merely make it appear as if Merck is fighting a war with Vioxx victims.
- Stop misleading your shareholders. Fighting one-case-at-a-time is definitely good for your lawyers (Oh! Don’t we all love to get paid $500 a hour with no end in sight) but not so good for your shareholders.