Don't Do The Math
In the business world, bad news is usually good news—for somebody else. Ever since Merck announced, this past fall, that the pain reliever Vioxx could be linked to an increased risk of strokes or heart attacks, ads from lawyers trolling for potential plaintiffs (“Hire a Texas Vioxx lawyer,” “Vioxx injury claims”) have become ubiquitous on the Internet and cable television. Merck is already defending itself against almost five hundred lawsuits, and the number is expected to soar in the next few months. One Wall Street analyst has estimated that the company could face a total bill of more than fifty billion dollars. The impending parade of jury verdicts and out-of-court settlements may render a kind of rough justice. But you may not realize just how rough.
In recent years, juries have become more willing to punish corporate offenders by issuing immense damage awards. According to the Harvard law professor W. Kip Viscusi, more than half of all “blockbuster awards”—those totalling more than a hundred million dollars—have been decided since 1999. The system that produces these awards is often perplexingly arbitrary. Where a case is tried, for instance, can have an enormous effect on how much a company ends up paying. (Two states, Texas and California, have been responsible for almost half of all blockbuster awards.) Nor is the level of scientific rigor in such cases always high: litigation over silicone breast implants cost Dow Corning $2.3 billion and forced it into bankruptcy even though the implants have never been proved to cause immune disorders, as plaintiffs alleged.
Merck would seem to have one big thing in its favor: the company voluntarily withdrew Vioxx from the market. But while Merck executives may have hoped to persuade people that they were acting responsibly, plaintiffs’ attorneys have taken the withdrawal as an admission of guilt. Questions about Vioxx’s potential risks have been common since its introduction, six years ago, especially after a 2000 trial suggested that the drug increased the risk of heart disease. Merck did not hide these data, and beginning in 2002 the drug’s label included a warning about the possible cardiovascular risks. Some critics, however, have suggested that the company soft-pedalled the dangers. Internal company documents show that Merck employees were debating the safety of the drug for years before the recall.
From a scientific perspective, this is hardly damning. The internal debates about the drug’s safety were just that—debates, with different scientists arguing for and against the drug. The simple fact that Vioxx might have risks wasn’t reason to recall it, since the drug also had an important benefit: it was less likely to cause the internal bleeding that aspirin and ibuprofen cause, and that kills thousands of people a year. And there’s no clear evidence that Merck kept selling Vioxx after it decided that the drug’s dangers outweighed its benefits.
While that kind of weighing of risk and benefit may be medically rational, in the legal arena it’s poison. Nothing infuriates juries like finding out that companies knew about dangers and then “balanced” them away. In fact, any kind of risk-benefit analysis, honest or not, is likely to get you in trouble with juries. In 1999, for instance, jurors in California ordered General Motors to pay $4.8 billion to people who were injured when the gas tank in their 1979 Chevrolet Malibu caught fire. The jurors made it plain that they did so because G.M. engineers had calculated how much it would cost to move the gas tank (which might have made the car safer). Viscusi has shown that people are inclined to award heftier punitive damages against a company that had performed a risk analysis before selling a product than a company that didn’t bother to. Even if the company puts a very high value on each life, the fact that it has weighed costs against benefits is, in itself, reprehensible. “We’re just numbers, I feel, to them” is how a juror in the G.M. case put it. “Statistics. That’s something that is wrong.”
In everyday life, of course, we’re always making trade-offs between safety and things like cost or convenience. There’s not a car on the road that couldn’t be made safer, if you didn’t care about looks, mileage, cost, and so on. It’s just that the trade-offs we make are seldom explicit: we don’t tell ourselves that a sixty-five-mile-an-hour speed limit means a certain number of extra deaths, that buying this car instead of that car will affect our life expectancy—and, as individuals, we often don’t see the costs. In the courtroom, the calculations can be seen in all their cold rationality, and the costs are vividly embodied. Before a jury, then, a firm is better off being ignorant than informed.
Obviously, there’s something wrong with a system that discourages the careful weighing of costs against benefits—we want companies to learn as much as they can about the downsides of their products. But companies like Merck, which spend hundreds of millions on ads targeting consumers, have themselves to blame, too. Instead of getting people to think about drugs in terms of costs and benefits, these ads encourage people to think of medicine in the same way they think of other consumer goods. It would be one thing if Merck had marketed Vioxx only to people who really needed it—people who couldn’t take ibuprofen or aspirin safely. Instead, the company marketed it aggressively to everyone, so that some twenty million Americans had Vioxx prescriptions. That’s why the potential damages against Merck are so vast. If juries have a hard time accepting a risk-benefit trade-off when it comes to drugs, it’s in part because the drug companies have convinced them that no such trade-off has to be made.
posted by UncommonBusiness @ 12:09 AM
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