Chicago Injury Blawg post on Vioxx

Chicago injury blawg, http://www.chicagoinjurylawblog.com/vioxx-98-vioxx-verdict-is-justice-not-a-jackpot.html, has an interesting post on the punitive (or lack of punitive) effect of the Vioxx decision on Merck. In this post, William Pintas, a injury attorney, reports that the the Vioxx award is far from a jackpot award. He states that due to tort reform in Texas, the award will be reduced to around $1.6 million. He says that this amount is equal to about a $30 fine for the average household.

However, the direct effect of the award of $1.6 million on Merck is even LESS than a $30 ticket on an average household!

As economists we are asked to do these types of punitive damage analyses all the time. Based on Merck’s 2004 earnings of about $17 billion a year, the $1.6 million fine on Merck is equal to about a fine of about $3.17 for a household earning $35,000 a year. So all else equal, the punitive effect is even less.