When Merck reported its second quarter earnings in late July, it noted that worldwide sales had dropped to US$5.5 billion for the quarter from $6.0 billion in Q2-2004. Total sales had decreased 9% for the quarter, reflecting a decrease of 11% that it attributed to the withdrawal of Vioxx from the market. The company also reported that it could not reasonably estimate the possible loss or range of loss from Vioxx Lawsuits.

That was before the foreign claimants started lining up to add to the estimated 4,000+ lawsuits filed in the United States. Lawyers in Italy, France, Britain, and Australia reportedly were working on lawsuits, with class actions planned in Italy and France.

One of the consequences of selling globally is that you expose yourself to the vagaries of international markets, but in this case we see the propagation of the best and worst practices from around the world. As other countries legitimately sue to protect the rights and health of their residents, they move inexorably in the direction of the overly litigious United States. Thus, Merck will face the same kind of scrutiny, massive payouts, and management diversion as faced by asbestos and tobacco companies — first in the U.S., then elsewhere. Companies operating globally will find themselves increasing their liability insurance and budgets for legal counsel to defend their interests. Such companies will have to chalk this up as another cost of globalization.