$125,000 is all it costs to profit from a heart attack
Last weekend I railed against the $4.85B settlement reached by Merck in settling its lawsuits over the deaths and heart attacks caused by Vioxx. An listener took me to task by noting that Vioxx was approved in 1999, during the Clinton Administration, so I shouldn’t blame it on Bush.
Feh. There were no (publicly released) acknowledgments of Vioxx’s propensity to induce heart attacks back in 1999, so how could the Clinton Admin do anything about it?
But once the deaths and reports of heart attacks started flowing in 2001, who was in office, putting the heads of various lawbreaker industries in charge of oversight of the same various lawbreaker industries?
Anyhow, when I mentioned that Merck was getting away with paying about $175,000 per death, it turns out that I was really overestimating:
Last week it announced it had reached a capped settlement of $4.85 billion that would allocate roughly $125,000 per plaintiff, less than it costs to treat a heart attack.
Merck’s payout is less than the $10 or $20 billion predicted and, significantly less than Vioxx generated in profits before being withdrawn from the market in 2004.
So it wasn’t a bad trade.
This is why your “compassionate conservatives” have been fighting tooth and nail for years to enact what they call “tort reform”, but what should be called “death profits”.
They like to enrage you with the story of the the woman who got millions suing McDonald’s over spilling hot coffee in her lap and others designed to elicit the feeling that tort lawsuits are “frivolous” and damage awards are “ridiculous”. Average folks hate to see other folks seemingly getting away with gaming the system and getting something for nothing.
Notwithstanding the fact that such stories are usually false or exaggerated, or that some of the key facts are distorted or omitted, the point of such damage awards are to affect the behavior of the corporation at fault, using the only punishment they respond to: hurting their bottom line.
So when they offer up “tort reform”, what they mean is “cap the damages to fixed amounts based on static criteria, so that we may sell the product and hurt the public anyway, and we can figure the cost of the damages from the lawsuits against the potential profit and decided whether it’s worth it to kill a few people.”
If Merck had known that their drug would kill 55,000, but the damages would only be $125,000 per, then they just multiply and come up with $6,875,000,000. Then they look at how many people would buy their drug and what their profit margin on the drug is. If selling the drug brings in more than $6.875 billion, then they’ll go ahead and sell it. 55,000 deaths be damned – Merck needs more profit.
But if there is no fixed cap, Merck can’t know that the damages won’t exceed the profits, so perhaps they use more caution. If they don’t, then the damages hurt the bottom line so badly that they will use more caution next time.
Well, unless there’s a Big Pharma-friendly Bush in office… then all bets are off.