Monday, October 4, 2010

Boles II Fosamax® ONJ Multiplication: "Size Matters" | One-Tenth Of A BP Deepwater Horizon Spill

Okay -- one other way to think about the even the reduced jury verdict in Manhattan -- the aggregate liability this Boles II Fosamax® memorandum opinion would imply — would be to call it (when multiplied out) about "one-tenth" of the 2010 BP Deepwater Horizon gulf oil spill claims reserve-fund.


The math, here: 1,200 times $1.5 million, equals $1.8 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 full trial to verdict -- 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 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. The Q2 2010 SEC Form 10-Q lists no new reserves in the Fosamax discussion -- on pages 22 and 23. So, look for a significant addition to Merck's litigation reserves -- in the Merck Q3 SEC Form 10-Q financials, some time after October 30, 2010.

Like I say -- Ouch.

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