Merck agrees to $4.85B Vioxx settlement

Merck & Co. recently agreed to pay $4.85 billion to settle the majority of claims over injuries linked to its Vioxx painkiller.
Without admitting wrongdoing, the Whitehouse Station, N.J. pharmaceutical company agreed to settle most claims filed as of Nov. 9.
Under the agreement, Merck will set up a $4 billion fund for claims of myocardial infarction and an $850 million fund for ischemic stroke claims. The amount awarded to individual plaintiffs will vary, but is estimated at about $100,000 before legal fees and expenses.
The settlement – one of the largest ever – is contingent on 85 percent of 45,225 plaintiffs’ groups accepting the deal.
Negotiations began in December 2006, after the four federal and state judges involved in the litigation pressed both sides for a settlement.
The agreement came just weeks before a new wave of Vioxx trials was scheduled to begin.
Merck, which faced more than 27,000 lawsuits from people who claim to have been injured by the widely used arthritis and pain medicine, spent more than $1.2 billion in Vioxx-related legal fees. The company had vowed to aggressively defend itself in court.
Juries decided in favor of the company 12 times and sided with the plaintiffs five times. One Merck verdict was set aside and has not been retried. Another Merck verdict was set aside and retried, leading to one of the five plaintiffs’ verdicts. There have been two unresolved mistrials.
Andy Birchfield, a shareholder with Beasley, Allen, Crow, Methvin, Portis & Miles, who also served on the plaintiffs’ negotiating committee, said the bellwether trials conducted over the past two years provided solid information to both sides about what issues a settlement would have to address.
“The injuries involved in these cases are very serious, but these cases are very challenging to prove causation, because there are many causes of heart attack or stroke,” he commented.
“Each side had their challenges, and through this model of having bellwether trials and coordinated state courts conducting trials both sides were able to assess the strengths and weakness of the cases and reach a compromise that works out well for [all] parties,” Birchfield added.
New Orleans attorney Russ Herman, a principal at Herman, Herman, Katz & Cotlar, said the negotiating teams for both sides met more than 50 times over the past year, in New Orleans; Montgomery, Ala.; Philadelphia; New York; Washington, D.C.; Memphis, Tenn. and St. Louis.
“It took us almost a year to hammer out a resolution,” Herman said. The agreement was signed by Merck attorneys and the executive committee of the Plaintiffs’ Steering Committee for the federal multidistrict Vioxx litigation, as well as representatives from the plaintiffs’ lawyers in state proceedings.
Chris Seeger, a partner at Seeger Weiss in New York and a member of the plaintiffs’ negotiating committee, said that every claim filed as of Nov. 9 is eligible to be part of the settlement.
Claimants will have to prove they had a heart attack or stroke and had been on Vioxx at least 14 days prior to the injury.
“I’m happy Merck did it,” Seeger said. “It’s the right thing to do.”
Birchfield said each claim will be evaluated separately.
“The settlement program is set up in such a way that they will consider the age and level of injury, how long the person was taking Vioxx and what the person’s risk factors were,” he said.
J. David Prince, a law professor at William Mitchell College of Law in St. Paul, Minn., noted that the $4.85 billion settlement was far less than the initial estimated payouts of $10 billion to $25 billion.
“Merck was probably wise to test the waters and see how strong these claims really were, and they ended up winning more claims than they lost,” he said. “That sent a message to the plaintiffs about the liability.”
The settlement agreement does not include 266 putative class actions. But Prince noted that in September the New Jersey Supreme Court rejected a potential class action brought by a union health plan on behalf of all health plans that paid for Vioxx prescriptions.
In light of the New Jersey ruling, Merck attorneys may feel the company’s exposure to class action liability isn’t significant, Prince said.
Plaintiffs have the option of rejecting the settlement and pursuing claims individually. But it is expected most will accept the settlement, since most of the leading plaintiffs’ lawyers have endorsed the deal, according to Prince.
The personal injury settlement was entered before U.S. District Court Judge Eldon E. Fallon in New Orleans, as well before New Jersey Superior Court Judge Carol E. Higbee and Los Angeles Superior Court Judge Victoria Chaney, who have coordinated the New Jersey and California Vioxx litigations, respectively.