Merck & Co. faces a number of disputes with its insurers over coverage for the huge potential liability it faces stemming from the Texas jury verdict in favor of the plaintiff in the first Vioxx product liability case.
According to the Whitehouse Station, N.J.-based company's 10-Q filed for the second quarter of this year, the company has product liability coverage for claims brought in the Vioxx product liability lawsuits with stated upper limits of about $630 million after deductibles and co-insurance.
Vioxx is a painkiller, known as a Cox-2 inhibitor, primarily used by people with arthritis.
On Friday a state court in Brazoria County, Texas, returned a verdict in favor of the plaintiff, Carol Ernst, for more than $250 million for her claim the product contributed to the death of her husband, Robert Ernst. But state limits on punitive awards are expected to whittle the judgment down to $26 million.
"The Company believes that this insurance coverage extends to additional Vioxx product liability lawsuits that may be filed in the future," the document states.
Merck also has directors and officers coverage relevant to the case with upper limits of $190 million along with ERISA-related liability with stated upper limits of about $275 million.
"There are disputes with certain insurers about the availability of some or all of this coverage and there will likely be additional disputes," the document states. "At this time The Company believes it is reasonably possible that its insurance coverage with respect to Vioxx lawsuits will not be adequate to cover its defense costs and any losses."
In addition, Merck said it received notice that upper-level excess insurers began arbitration seeking to cancel the related policies.
"Merck intends to vigorously contest the insurers' claims and will attempt to enforce its rights under the applicable policies," the document stated.
The company said it has reserved $675 million to pay attorneys and litigation-related expenses.
A spokesman from Merck was unavailable for comment.
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