Somebody fetch the Maxalt. Merck’s migraine medicine might come in handy as the company, its employees, investors, and consumers reel from the ongoing headache caused by Vioxx litigation. The latest symptom manifested itself in yesterday’s announcement that the pharmaceutical giant will lay off 11% of its workforce and close five of its 31 plants in an effort to achieve $4 billion in savings by the end of the decade. If that sounds bad, just wait for what happens if the sharks in the tort bar succeed in their assault on the company.

The chief executive and president, Richard T. Clark, billed the move as “an important first step in positioning Merck to meet the challenges the Company faces now and in the future.” The company’s press release didn’t say it, but Vioxx litigation is at the top of everyone’s list of those “challenges.” Estimates of Merck’s possible liability from Vioxx lawsuits range between $18 billion and $50 billion. Assuming the worst, one can reckon that this works out to roughly eight times Merck’s 2004 profits of $6 billion and more than 12 times its research and development expenditures last year. Approximately 4,000 suits are pending. Of the two that have already gone to verdict, the company is batting .500, having won one in New Jersey and lost one – worth $253 million, although that amount will be reduced on appeal – in Texas.

Other market forces have played a role in Merck’s troubles. It’s facing the expiration of its patent on its only current “blockbuster,” the cholesterol drug Zocor, in the middle of next year. Even before it pulled Vioxx from the market in September 2004, the company was under pressure from an aging product list and a lack of more wonder drugs ready for imminent release, though its future may not be entirely bleak; it has a promising vaccine for human papillomavirus in the pipeline.

However, the company’s tort worries loom. Nor is Merck the only pharmaceutical target of the trial bar. A recent study by the Manhattan Institute’s Center for Legal Policy found that litigation has had profound effects on the entire industry and on patient care. As many as 43% of doctors in one poll reported being afraid to prescribe drugs involved in litigation for fear that they themselves would be sued. Lawsuits have shut down other areas of research and development, for example in the field of contraceptives. Before Vioxx was pulled, researchers were investigating whether it could be used to help prevent colon cancer. At some point enough will be enough. The question is whether any drug companies like Merck will still be around to invent new remedies by the time the attack of the tort bar is stopped.