Wednesday, June 9, 2010

A Very Cogent Analysis: Recent Australian Vioxx® Case Against Merck

The Association of Corporate Counsel's "Lexology" blog is running a very well thought out, and balanced review of the recent decision in the Australian courts, called Peterson v. MSD -- a Vioxx® as "defective product" case -- do go read it all -- but here is a snippet:

. . . .On the Trade Practices Act claims, Justice Jessup found that Vioxx was a “defective” product, for the purposes of the Act. However, he accepted Merck’s defence that the state of “scientific or technical knowledge” at the time Vioxx was supplied to Mr Peterson was not sufficiently advanced to enable the defect to be discovered.

Mr Peterson however also argued that Vioxx was not reasonably fit for the purpose for which it was supplied (section 74B of the Act) and that it was not of “merchantable quality” (section 74D of the Act). Since taking Vioxx involved almost a doubling of the risk of heart attack, Justice Jessup found it was not fit to be used as an arthritis treatment. It therefore followed that it was not of “merchantable quality”. Since the “scientific knowledge” defence was not applicable to those sections of the Act, Merck was liable on those bases.

Interestingly, Justice Jessup was also prepared to find that Merck’s marketing of Vioxx and failure to warn doctors about its risks amounted to misleading and deceptive conduct under section 52 of the Act. However, as he had already found that Mr Peterson would have taken Vioxx even if his doctor had been appropriately informed, that breach did not “cause” the harm to Mr Peterson in a legal sense.

The decision is significant for several reasons. First and most obviously, it establishes a basis for the hundreds (or perhaps thousands) of other claims against Merck by Australian consumers. It however also illustrates the dangers for manufacturers and their insurers, in that claims for allegedly “defective” products can succeed even where negligence has not been established. . . .

I'll keep you informed of any material ensuing Vioxx litigation developments in Australia. Here is one of my earlier posts, on the decision (including a link to the full 100-plus pages of PDF file decision).

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