Now that a Food and Drug Administration advisory panel has rehabilitated Vioxx, Celebrex, and the other arthritis medications known as Cox-2 inhibitors, it’s time to consider the wisdom of Merck’s panicky withdrawal of Vioxx from the market last September.

Merck pulled the drug because new data from a clinical trial indicated that Vioxx users had twice as many heart attacks as placebo users (15 events per 1,000 Vioxx users versus 7.5 per 1,000 placebo users over an 18-month period).

“Although we believe it would have been possible to continue to market Vioxx with labeling that would incorporate these new data, given the availability of alternative therapies and the questions raised by the data, we concluded that a voluntary withdrawal is the responsible course to take,” Merck CEO Raymond Gilmartin said.

“Responsible,” may be the new watchword in corporate public relations, but which meaning of the word – “reliable” or “liable” – best characterizes Merck’s actions?

When Merck announced it was forgoing Vioxx sales worth $700 million to $750 million per quarter, its market capitalization fell 27% or about $25 billion. Merck lost another $15 billion by the time its stock bottomed out in mid-November.

Merck’s announcement launched a trial lawyer feeding frenzy. Many lawsuits have been filed and the company’s liability has been estimated as high as $30 billion – a sum that dwarfs the $675 million Merck has reserved for Vioxx litigation.

One thing is for certain, based on today’s trends in personal injury litigation involving medical devices and pharmaceuticals: Merck will be fortunate to survive the Vioxx mess.

In the litigation involving silicone breast implants and the diet drug combination known as “fen-phen,” few, if any, deaths were alleged, yet the settlements were in the multibillion dollar range. In contrast, recently published studies allege – though not necessarily credibly – that tens of thousands of deaths may be attributable to Vioxx.

Merck’s potential liability could reach asbestos-like proportions.

What should Merck have done?

Though Vioxx might pose some health risks, the drug could have remained on the market but been re-labeled so it wouldn’t be prescribed, for example, to patients at high risk of cardiovascular events. It’s important to remember that the vast majority of Vioxx patients – more than 99% according to the clinical trial launching the controversy – didn’t suffer cardiac events. Merck should also have defended Vioxx’s safety more vigorously. The clinical trial triggering the panic is contradicted by many earlier studies not reporting any increased risk of heart attack or stroke. Nor is the new trial particularly statistically impressive. The reported risk correlations are small and may, in fact, be byproducts of inappropriate study design. The clinical trial giving rise to the Vioxx controversy wasn’t, after all, specifically designed to test whether the drug posed a heart attack risk. The data came from a study of Vioxx’s potential gastrointestinal effects. Better-designed scientific study will be needed to flesh out whether Vioxx actually harmed anyone.

In contrast to Merck, Celebrex manufacturer Pfizer didn’t panic when caught up in the frenzy and pull its drug from the market. Pfizer will nevertheless be targeted by trial lawyers – in part thanks to Merck’s capitulation – but no lawyer will be able to point to Pfizer in front of a jury and say that “the manufacturer was uncertain of its product’s safety.” Moreover, Pfizer’s fate doesn’t now lie with a federal agency under a political microscope. Despite the FDA advisory committee ruling, Merck’s withdrawal of Vioxx means the FDA will now have to decide whether Vioxx can be marketed again. The FDA may very well decide – and not necessarily for scientific reasons – against Merck. As in the case of silicone breast implants, an adverse FDA decision would certainly be exploited by trial lawyers and could help seal Merck’s fate – that is, bankruptcy and, ultimately, a takeover. Merck’s misguided notions of “responsibility” may prove a real liability to itself and others.

Mr. Milloy publishes CSRwatch.com and is an adjunct scholar at the Competitive Enterprise Institute.