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Statistics for Business and Economics: Excel/Minitab Enhanced
Heinz Kohler
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Statistics in the News: Chapter 5 Generating New Data: Controlled Experiments

A Nightmare for Schering-Plough

One of the worst nightmares that can befall a business firm is being found guilty in a product liability suit and then having to pay monetary damages of such a magnitude that the very existence of the firm is threatened. Such was certainly the case in 2001 when Philip Morris Companies was ordered to pay $5.5 million in compensatory damages and an additional $3 billion in punitive damages to cancer-stricken Richard Boeken, then 56. (Mr. Boeken claimed that he had started smoking cigarettes at age 13, had smoked at least two packs of Marlboros for over 40 years, and had been led to believe by Philip Morris that smoking was "cool" and safe.) Even though a judge later offered a reduced settlement of "merely" $100 million, the case set a scary precedent for business.

In fact, the case terrified the executives of Schering-Plough when it came to light that 10 asthma patients might have died after using the company's drug inhalers. The company recalled millions of inhalers that allegedly were not properly filled with albuterol, a drug that helps asthma sufferers breathe. But the company also noted (as does Chapter 5 of the text) that while evidence supplied by surveys might highlight an association between two variables, controlled experiments would be needed to establish causation.

Accordingly, the company rejected the accusations leveled against it by Public Citizen, a consumer group. The group had gathered death reports typically filed by doctors, medical examiners, or family members, along with such anecdotal evidence as "he reached for his inhaler and obtained no relief." Noting that 5,000 Americans die from asthma each year, the company said, "We have no evidence that a patient was ever harmed by an inhaler subject to the recalls."

Sources: Adapted from "Judge Rejects $3 Billion Verdict for Smoker," The New York Times, August 10, 2001, p. A12, and Melody Petersen, "Group Faults Drug Inhalers in 10 Deaths", The New York Times, August 10, 2001, pp. C1 and C10.

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