Uh oh! More problems for Merck & Co., which recently withdrew its $2.5 billion painkilling drug Vioxx from the market. Anxious to make a buck on the Vioxx debacle, the legal eagles are swarming in on the drug giant, which, some of them tell me, could be liable for billions of dollars in damages.

“If you’re a Vioxx victim, you need to learn the facts about your legal rights,” read a couple of recent ads from the law firm of Weitz & Luxenberg.

Yet another law firm, Specter & Kline, has taken the TV route to advertise for potential clients. Its Web site is also on the prowl with the pitch: “Heart attack or stroke from Vioxx? Attorneys ready to help you learn more.”

On September 30, Merck announced it was withdrawing the drug after a study indicated it doubled the risk of heart attacks and strokes after 18 months of use. Further, a Food and Drug Administration study projects that Vioxx’s use may have led to more than 27,000 heart attacks and deaths. Critics have long connected Vioxx with heart problems, but Merck has repeatedly denied any such link. The drug was approved in May 1999 and has been taken by more than 80 million patients.

In response, Merck stockholders have taken a drubbing. The shares plunged more than $26.5 billion in market value on September 30 alone and have since fallen about 25%. They’re currently trading at $31.26, up modestly from their 52-week low of $29.75 and down sharply from their 2003 close of $46.20.

Moreover, net income plunged 29% for the pharmaceutical giant in the third quarter due to the cost of pulling Vioxx from the market.

Merck said yesterday it earned $1.33 billion, or 60 cents a share. That was down from $1.86 billion, or 82 cents a share, in the July-September period of 2003.

Revenues fell 4% to $5.54 billion, despite a 3% boost from price increases and favorable exchange rates.

Merck’s liabilities in the Vioxx matter are anybody’s guess. Merck wouldn’t comment on any specific legal actions, but it did say, “we believe we have strong and meritorious defenses.” In contrast, some Wall Streeters speculate the liabilities could run in the billions, with one money manager describing Vioxx as “another fen-phen,” a diet drug that was recalled by American Home Products. Battered by legal actions, AHB’s board eventually approved a national settlement of about $2.5 billion for people who claimed they had been harmed by the drug.

A partner in Specter & Kline, Shanin Specter, contends that Merck faces a serious problem, an exposure, he believes, that could run into the billions because a lot of people have sustained serious injuries. He sees a bevy of lawsuits from Vioxx users who are still alive and from the estates of Vioxx users who have died and notes his firm has already had “many, many contacts.”

Another lawyer involved in the Vioxx debacle, Michael Monheit of Jenkintown, Pa., who is coordinating his activities with two other law firms, tells me “we’ve spoken to more than 100 people in the last two weeks who have been involved with Vioxx and now represent 40 clients. “Thousands of people, maybe as many as 10,000, may have been adversely affected by Vioxx, and the damages could easily run into the billions, he added. Mr. Monheit, who has been in touch with Merck’s counsel, insists the company knows legal action on the Vioxx front is for real and he predicts the many claims will result in favorable actions.

“Given its great exposure,” he believes “Merck will be forced to merge to survive. Its days of being a stand-alone company are numbered.”

On the other hand, Morgan Stanley’s legal consultant, Victor Schwartz, isn’t as grim. In a recent conference call, he said Vioxx doesn’t look like another fenphen and suggested any liability would be minimal. He sees the risk of personal injury involving punitive damages as low and feels causation would be difficult to prove since plaintiff attorneys have yet to find the “magic bullet” in terms of causation. He also thinks plaintiffs would have trouble proving that Merck was negligent by withholding information, given the known cardiovascular risks in the label and the company’s prompt withdrawal of the drug after indications of adverse affects.

Meanwhile, Eric J. Topol, chairman of the department of cardiovascular medicine at the Cleveland Clinic, is critical of Merck, which, he notes, has denied for three years that Vioxx could induce heart attacks and strokes. Dr. Topol was part of a team from the Cleveland Clinic that published a paper in 2001 alleging significant heart attack risk from Vioxx. Merck, in turn, described the conclusions as flawed.

Dr. Topol, who also blames the Vioxx fiasco on the Food and Drug Administration’s failure to take the necessary precautionary steps, observes that none of the manufacturers of Vioxx’s class of drugs, called Cox-2 inhibitor agents, have studied patients who already have heart disease. So the number of patients who may have sustained a heart attack or stroke as a result of using these drugs could be in the tens of thousands, he points out. He also notes it would be premature to conclude that other drugs still on the market, like Celebrex and Bextra, do not carry some risk of heart attack until sufficient testing is done.