Merck (NYSE: MRK) lost a lot of legal cases over whether its arthritis drug caused heart problems in patients. It even spent $4.85 billion to settle a lot of the claims against it. But, that did not end every suit, and the company is faced with new data that raises questions about the dangers of the drug.

Tough for Merck. But, putting out dangerous drugs can have side affects for both patient and company. According to Reuters, " A long-term analysis of people who took the arthritis drug Vioxx confirms it doubles the risk of strokes and heart attacks."

Most of these lawsuits come down to "did the company know of the danger, and, if so when?" Merck probably did not settle so many cases because it believed it was entirely in the right. It is hard to imagine that it did not have some sense that the data from the new study is true. It did test its own drug before it went on the market. But, did it test it well? Or, did it find that there were possible health risks but that they were acceptable? At least from a monetary standpoint.

The cynical observers of drug company practices say that the firms balance litigation costs against the money that they get from sales. If a product has some danger, it does not matter too much if it makes a great deal more money than the cost of legal consequences.

If the cynics are right, Merck has a tough road ahead.

Douglas A. McIntyre is an editor at 247wallst.com.

New Vioxx study: more trouble for Merck (MRK) originally appeared on BloggingStocks on Tue, 14 Oct 2008 09:25:00 EST. Please see our terms for use of feeds.