Somewhat immodestly, I would like to point out that I called this one, back in August, as a conceptual problem (inadequate legal expense reserves), in connection with the then-depleted Fosamax® reserves, and then again, last week, specifically about Vioxx®. . . .
From New Merck's Q3 press release this morning, then:
. . . .Other (income) expense was $1.1 billion of expense in the third quarter of 2010, which includes the unfavorable impact of a $950 million legal reserve, compared with $2.8 billion of income in the third quarter of 2009. . . . The company has established the legal reserve in connection with an anticipated resolution of the previously disclosed investigation by the U.S. Attorney's Office for the District of Massachusetts related to Vioxx. Merck's discussions with the government are ongoing. Until they are concluded, there can be no certainty about a definitive resolution. . . .
So, pile another $1 billion, on top of the earlier $4.85 billion in product liability settlement-payments, and even for the No. Two Pharma in the World, with $40 billion plus in annual revenue. . . . nearly $6 billion begins to be a fair chunk of change.
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