Drug giants like Pfizer and Eli Lilly have set aside hundreds of millions to cover drug liability claims with little long-term damage.
It could mark the start of the next great drug-liability war, and already the drama seems all too familiar: scared patients, contradictory studies, a company that calls the evidence "inconclusive" and is accused of skewing clinical data--and lawyers looking at whether there's enough damage here to cash in.
If the trial bar is successful in the current case, this could be the next big area of product liability against drug makers.
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The decision can only be seen as a positive for Glaxo, compared with losing the drug entirely and facing thousands of patient liability suits.
The risk does not end with approval, as the liability issues associated with a drug that is used exclusively in pregnant women are very significant.
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And this will be a one-time benefit: Cipro has been viewed as a liability by many, because the drug's patent protection will soon end.
The excitement about its newer medicines--including the human papillomavirus vaccine Gardasil, the diabetes pill Januvia and the yet to be approved AIDS drug Isentress--along with reduced fears about liability from Vioxx have helped carry the stock.
"The potential liability is mind-boggling, " says drug industry analyst Hemant Shah.
Wyeth (nyse: WYE - news - people ) hoped the plan would cap its spiraling liability for fen-phen, the diet drug combination that has been linked to potentially fatal heart conditions.
But extending the patent would be a political liability for legislators since the move to a generic drug is likely to save consumers (and insurance companies) hundreds of millions.
Even if Celebrex and Bextra don't make it through the meeting, Pfizer could look like a winner to investors as long as it doesn't face a massive liability cloud like the ever-ballooning diet-drug litigation that has weighed on smaller rival Wyeth (nyse: WYE - news - people ) for years.
Drug companies are well used to class-action suits over product liability.
Much of Clark's time will be spent managing the legal liability from a flood of lawsuits related to the withdrawal of the arthritis drug Vioxx, which was linked to heart attacks and strokes.
Had this been a private-sector enterprise, competition and the threat of liability would have spurred innovation in the form of frequent updating of the drug's purification and formulation with state-of-the art technologies and would have required rigorous adherence to government regulations.
If the Vioxx liability were to magically disappear, Merck could start to look like an exciting drug stock.
Yesterday, the U. S. Supreme Court recognized that Congress meant what it said, holding that the Vaccine Act expressly preempts all state-law products liability suits challenging the design of widely administered childhood vaccines, which the Food and Drug Administration (FDA) has already determined to be safe and effective.
FORBES: High Court Upholds Federal Preemption of Design Defect Claims Against Vaccine Makers
Gruenenthal itself has previously paid compensation to victims of the drug, many in Germany, and has voiced regret over the issue - but has not admitted liability.
Almost two years since Merck's decision to recall the arthritis pill Vioxx, the legal liability from people who say Vioxx caused their heart attacks still casts a shadow over the legendary drug giant--even as Merck unveils some of its most promising new drugs in a decade.
Almost two years since Merck's (nyse: MRK - news - people ) decision to recall the arthritis pill Vioxx, the legal liability from people who say Vioxx caused their heart attacks still casts a shadow over the legendary drug giant--even as Merck unveils some of its most promising new drugs in a decade.
But until it's possible to know how big that liability is, it is impossible to judge the impact on Merck--and on other big drug companies.
Fewer controls apply to research done by private companies with private money, and if the research is not on a drug or device that is federally regulated, it may be subject to no formal controls beyond the risk of liability.
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