Drugs Log

Merck & Co. said it will pay $4.85 billion to end thousands of lawsuits over its painkiller Vioxx in what is believed to be the largest drug settlement ever.

Merck faced personal injury lawsuits representing 47,000 plaintiffs, and about 265 potential class action cases, filed by people or family members who claimed the drug proved fatal or injured its users. The agreement covers cases filed in both federal and state courts.

Negotiating teams met more than 50 times in eight states and spoke hundreds of times over the telephone to hammer out the deal, according to attorneys.

“I’m very happy with it,” Chris Seeger, one of the six plaintiff lawyers who helped negotiate the settlement, said Friday. “It’s a tremendous way to resolve this litigation.”

Merck pulled Vioxx from the market Sept. 30, 2004 after its researchers determined the then-blockbuster painkiller doubled risk of heart attacks and strokes.

To qualify for a settlement, plaintiffs must have filed claims by Thursday and meet several criteria, including medical proof that they suffered a heart attack or stroke, that they received at least 30 Vioxx pills and that they received enough pills to support a presumption that they were ingested within two weeks before injury.

That is a big concession by Merck, which has long claimed that Vioxx caused harm only after 18 months of use.

Those claims were dismissed by independent scientists and plaintiffs lawyers.

Merck stressed that the agreement is not a class action settlement and that it is not admitting fault.

Company executives and attorneys said as recently as last month that every case would be fought individually.

Analyst Steve Brozak of WBB Securities called Merck’s’ handling of the litigation “a Harvard casebook study of how to deal with a problematic product.”

Investors seemed to agree, as Merck shares jumped 4.6 percent, or $12.50, to $57.27 Friday.

Analysts predicted early on that liability could reach $50 billion, but after losing its first case in a $253 million verdict, Merck has won a string of civil cases.

Merck may now have put the uncertainty of millions of dollars in legal costs behind it, though it has been fairly successful fighting cases individually, winning 10 of 15 court verdicts to date.

The company said last month it had added $70 million to its reserves for defending lawsuits. As of Sept. 30, Merck had reserved a total of $1.92 billion for legal expenses and spent a total of $1.2 billion.

The deal becomes binding only if 85 percent of the plaintiffs in about 26,600 lawsuits agree to drop their cases. It was finalized in the early morning hours after attorneys for Merck and the plaintiffs met with three of the four judges overseeing nearly all Vioxx claims.

Seeger said the deal was put in motion last December when three key judges pushed the parties to open out-of-court talks.

“Every claimant is going to be compensated” once their claim is validated, he said.

Seeger believes it is the largest settlement ever in the industry and said he will recommend that his 2,000 clients accept the deal.

Payments would vary, depending on severity of injuries and the length of time that Vioxx was used.

“The agreement is structured to provide a significant degree of certainty toward resolving the majority of the outstanding VIOXX product liability claims in the United States for a fixed amount,” Richard T. Clark, chairman, president and chief executive officer of Merck, said in a statement.

Attorneys for both sides were to present the deal Friday morning to U.S. District Judge Eldon E. Fallon in New Orleans.

“In light of significant costs and delay that would result in protracted litigation, the settlement program will ensure that those who suffered injuries as a result of Vioxx are compensated fairly and efficiently,” according to a statement from one of the lead plaintiffs law firms in the case, Beasley, Allen, Crow, Methvin, Portis & Miles of Montgomery, Ala.

Merck agrees to pay $4.85 bln in Vioxx settlement

Merck & Co has agreed to pay $4.85 billion to settle claims that its painkiller Vioxx caused heart attacks and strokes in thousands of users, the drugmaker said on Friday.

The agreement covers lawsuits filed against the company in U.S. courts, resolving a major legal battle that has dogged the drugmaker since it pulled Vioxx off the market three years ago.

Merck recalled the popular painkiller, which had $2.5 billion in annual sales, in September 2004 after a study showed it doubled the risk of heart attack and stroke in patients taking it for more than 18 months.

In the settlement, reached with representatives of plaintiffs in federal and state courts, Merck did not admit Vioxx caused patient injury and did not admit fault.

The drugmaker, whose shares rose nearly 2 percent in pre-market trade on news of the deal, said it would take a charge of $4.85 billion to cover costs of the agreement.

The settlement marks a shift in strategy for Merck, which previously said it intended to fight Vioxx litigation on a case-by-base basis rather than consider a broad settlement.

“The agreement is structured to provide a significant degree of certainty toward resolving the majority of the outstanding Vioxx product-liability claims in the United States for a fixed amount,” said Richard Clark, chairman, president and chief executive officer of Merck.

The drugmaker said it would still defend all claims not included in the settlement. Since the withdrawal of Vioxx, Merck has won 11 court cases over the drug and lost five.

While it is appealing those cases that it lost, analysts said the settlement will solidify Merck’s future.

“They’re trying to reduce the uncertainty surrounding the costs related to Vioxx,” said Damien Conover, an analyst at Morningstar. “While it will probably bring a little more clarity, I think there are still going to be a lot of cases that won’t settle within this agreement.”

Conover said the cases included in the settlement are likely the weakest cases.

“What you’re going to be left with is a significant number of plaintiffs who will want to address Merck on an individual basis, which means they will likely seek higher compensation,” he said.

Conover said that while it is difficult to gauge how many people will try to fight Merck alone, he estimates the company could be facing 1,000 to 2,000 outstanding claims and could face more than $1 billion in additional costs.

Mike Ward of Nomura Securities in London said a settlement value of less than $5 billion likely would be taken positively by the market, noting that litigation over Wyeth’s Phen-Fen diet drug was only now coming slowly to a close after 10 years in the courts and over $21 billion in settlement costs.

Merck shares tumbled on news of the withdrawal of Vioxx in 2004, losing more than a third of their market value. But with Merck’s Vioxx victories in court, and a string of successful new medicines, the shares have recouped those losses.

The stock, even with the major litigation drag, has outperformed its peers on the American Stock Exchange pharmaceutical index this year, rising 25 percent, compared with little change in the index.

Merck shares rose to $55.70 in pre-market trade from a Thursday close at $54.77 on the New York Stock Exchange. The stock is trading just below a four-year high of $58.36, reached earlier this month.

!Vioxx was withdrawn from the U.S. market in 2004!

The manufacturer of Vioxx has announced a voluntary withdrawal of the drug from the U.S. and worldwide market. This withdrawal is due to safety concerns of an increased risk of cardiovascular events (including heart attack and stroke) in patients taking Vioxx.

Notify your doctor immediately if you develop abdominal pain, tenderness, or discomfort; nausea; blood in your vomit; bloody, black, or tarry stools; unexplained weight gain; swelling or water retention; fatigue or lethargy; a skin rash; itching; yellowing of your skin or eyes;”flu-like” symptoms; or unusual bruising or bleeding. These symptoms could be early signs of dangerous side effects.

What is Vioxx?

!Vioxx was withdrawn from the U.S. market in 2004!

Vioxx is in a class of drugs called nonsteroidal anti-inflammatory drugs (NSAIDs). Vioxx works by reducing substances that cause inflammation, pain, and fever in the body.

Vioxx is used to reduce pain, inflammation, and stiffness caused by osteoarthritis, rheumatoid arthritis and certain forms of juvenile rheumatoid arthritis; to manage acute pain in adults; to treat migraines; and to treat menstrual pain.