Merck to pay nearly $5 billion to end Vioxx suits

TRENTON, N.J. – Merck & Co. said Friday it will pay $4.85 billion to end thousands of state and federal lawsuits over its painkiller Vioxx in one of the largest drug settlements ever.

Company officials estimated the deal, if accepted, would end 45,000 to 50,000 personal injury lawsuits involving U.S. Vioxx users who suffered a heart attack or ischemic stroke, the type in which blood flow to the brain is blocked.

“Without this settlement, the litigation might very well stretch on for years,” Merck executive vice president Kenneth Frazier said during a conference call.

He called the agreement “responsible and reasonable” and allows Merck to better quantify its liability, once estimated as high as $50 billion.

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

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

Merck pulled Vioxx from the market Sept. 30, 2004, after its researchers determined the blockbuster arthritis treatment, then pulling in about $2.5 billion a year, 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.

But on Friday, they said several factors made this “the right time” for the deal, including the expiration of the statute of limitations in 42 states.

Merck said it will take a pretax charge for the full $4.85 billion in the current quarter. It would not say whether insurance will cover any of that, but said much of the charge will be tax deductible.

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 trading jumped nearly 5 percent, or $2.67, to $57.44 – near their 52-week high of $58.36.

After losing its first case in a $253 million verdict that was later sharply reduced, Merck has won a string of civil cases. It has won 10 of 15 court verdicts to date. Some of those cases will be excluded from the settlement, but appeals in others continue.