I'll Take "Half" -- Of A BP Gulf Spill, Here -- Thanks, Merck!

It just hit me: one other way to think about the aggregate size of liability this Boles II Fosamax^® verdict would imply — would be to call it (when multiplied out) about "one-half" of the 2010 BP gulf oil spill claims fund.

OUCH.

The math, here: 1,500 times $8 million, equals $12 billion; bp's 2010 gulf oil spill fund currently equals $20 billion. Note that the Fosamax multiplication assumes no amount for Merck's own attorneys' fees -- in defending these matters. In fact, Merck has very-likely spent more than $30 million defending Boles I and Boles II, just on its own attorneys', and experts' fees. These costs will come down, on a per trial basis, as more and more are tried, but an on-going $5 million per trial -- in attorneys' and experts' fess, is a good (perhaps even conservative) guess.

Don't forget -- Whitehouse Station's reserves for such fees, at end of Q1 2010 (before Boles II began) stood at $52 million (see pages 56 and 57 of that SEC Form 10-Q link -- $38 million, minus $6 million, plus $20 million equals $52 million as at March 31, 2010). That is almost certainly all but gone, given the Maley trial (which Merck won -- probably cost about $15 million), and the Boles II trial (which Merck lost -- probably cost $28 to $36 million, for the two trials) -- most of which came after that figure was reported to the SEC in Merck's Q1 Form 10-Q. So, look for write-offs (and additions to the reserves) in the Merck Q2 SEC Form 10-Q financials.

Like I say -- Ouch.