New fen-phen settlement in works

TRENTON, N.J. – Former fen-phen users seeking compensation for heart problems under a national class-action settlement would get payments sooner but would receive less under a proposed new agreement between drug maker Wyeth and claimants’ attorneys.

The new agreement, announced Thursday, must be approved by a federal judge after some details are ironed out over the next couple weeks. It would affect about 41,600 former users of the diet drugs Pondimin and Redux who suffered moderate heart valve damage.

Wyeth pulled the drugs, part of the once wildly popular fen-phen combination, from the market in September 1997 amid reports they had caused heart valve damage and, in a small number of users, a potentially deadly lung condition.

“It is, I think, a great day for Wyeth and a great day for the claimants,” said attorney Jim Doyle, of Houston, who helped hammer out the agreement and represents about 1,000 claimants in the class. “It does inject a lot of new money to take care of the plaintiffs and will help Wyeth put an end to this.”

According to court documents, the deal requires Madison-based Wyeth to add $1.275 billion to the $3.75 billion trust fund it set up to cover the settlement. Wyeth has already reserved $16.6 billion to cover the trust fund, legal fees, jury awards and out-of-court settlements, as well as the lung damage cases. Of that, only $3.3 billion remains, according to Wyeth spokesman Lowell Weiner.

Some analysts have speculated that the long-running litigation could bankrupt Wyeth, which is appealing a $1 billion jury award in a Texas case.

Kenneth Martin, Wyeth’s chief financial officer, told analysts and investors during a conference call Wednesday that if the new agreement is agreed to and approved, “it is likely that additional reserves will be required.”

The new agreement is called the Seventh Amendment because it is the seventh change in provisions covering the class-action settlement originally reached in November 1999. Attorneys began hammering it out after both sides realized the trust fund would run out of money.

Besides streamlining the evaluation process for those with moderate valve damage, the new agreement requires Wyeth to pay for heart valve replacement surgery needed by any of those claimants over the next eight years. Previous agreements made it unclear who would pay if a claimant needed surgery after settling a claim.