SGH Slater and Gordon Limited

An Australian court Friday held Merck & Co. (MRK) liable in the heart attack of a patient using the painkiller Vioxx, but it rejected allegations that the U.S. drug maker was negligent in keeping on the market a drug it later withdrew.

In Melbourne's Federal Court, Justice Christopher Jessup said Graeme Peterson is entitled to compensation after Merck's local distribution arm failed to adequately warn his doctor of potential cardiovascular risks from the drug's use, despite knowing of them as early as March 2000.

The court found that the drug was "not reasonably fit" for relieving arthritis pain and "not of merchantable quality" as it approximately doubled the risk of heart attack in patients.

However the court rejected the allegation that Merck knew, or ought to have known, about Vioxx's increased cardiovascular risks before its worldwide withdrawal of the drug in September 2004 and said the impact on any other parties to the Australian class action would still need to be determined.

Peterson's lawyers, Slater & Gordon, said he had been awarded A$287,912 plus interest and that the firm had now had approaches from about 3,000 more people claiming to have suffered ill effects as a result of using Vioxx.

Of these approaches, Slater & Gordon said more than 600 people appeared to meet the criteria to join a class action against Merck.

A spokesman for the lawyer said this could mean total claims of more than A$150 million, but that the figure could rise to between A$200 million and A$300 million depending on how many more people were deemed to have genuine complaints.

Merck has already agreed to pay US$4.85 billion to settle personal-injury claims of more than 40,000 Vioxx users in the U.S., after a study showed the painkiller doubled the risk of heart attack or stroke.

In response Friday, Merck said it would appeal the "limited portions," of the judgment handed down against its subsidiary distribution arm MSD Australia, but that the court had dismissed all claims against the pharmaceutical maker, "specifically finding that Merck was not negligent in its development, scientific study and sale of Vioxx."

In a statement, Merck also said the class action in Australia "remains at an early stage" and maintains it acted responsibly throughout the development and sale of Vioxx, through to its decision to voluntarily withdraw the drug from sale.

The judge ruled that Merck did view March 2000 drug trial results as a "worrisome and important signal" of the potential cardiovascular risks linked to the use of Vioxx, rejecting Peterson's claims that Merck, "turned a blind eye to these results."

He also said that a finding of negligence against the drug's local distributor hinged on an "axis of communication," specifically between MSD Australia and Peterson's doctor, and said he is therefore "not in a position to make any such findings, at this stage, in relation to other group members," under the class action.

"In a number of important respects, my determination of the applicant's claim in this proceeding will have consequences for the claims of other group members. There are, however, many respects in which it will not," added the judge.

He also said that while the distributor's advice to Peterson's doctor amounted to misleading conduct under Australian trade practices law and a failure of its duty of care to warn about the 2000 trial while emphasising the "safety" of the drug, Jessup was not convinced this shortcoming contributed to the applicant's December 2003 heart attack.

"I have not been satisfied that, had a sufficient warning been given, or had the safety of Vioxx not been emphasised, the applicant would not have taken Vioxx exactly as he did," said the judge.

-By Bill Lindsay, Dow Jones Newswires; 61-2-8272-4694; bill.lindsay@dowjones.com

(Alex Wilson in Melbourne contributed to this article)

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