As pointed out in the Capital Comments Section of the December issue of the JLB Report, Vioxx claims have been settled for $4.85 billion. Because our firm has received a good number of inquiries about how the settlement process will work, Mr. Beasley will briefly explain it.

First, the Settlement Program is limited to cases that were filed in court or tolled through the MDL tolling mechanism as of November 9, 2007, and applies only to those cases where a heart attack, stroke, or sudden cardiac death was alleged in the complaint or tolling profile form. These are referred to as the “eligible” claims. Eighty-five percent of all eligible claims must agree to participate in the Settlement Program to trigger Merck’s duty to fund the settlement.

The Vioxx Settlement Program will evaluate individual cases based upon objective criteria only. In most cases, only injury “event” records, pharmacy records, and cardiology/neurology follow-up records are required for a claim to be processed. The submission of medical records for 10, 5, or even 3 years preceding an injury is not necessary. To qualify for compensation through the Settlement Program, eligible claimants must satisfy three threshold criteria:

• The medical records submitted must confirm the injury as alleged.

• Pharmacy records or other medical records must confirm the dispensation of 30 Vioxx pills in a 60 day period prior to the injury.

• Pharmacy records or other medical records must confirm Vioxx use within 14 days of the injury.

Once the three threshold criteria are established, an eligible claimant qualifies for compensation through the Settlement Program. But if the three threshold requirements can’t be established, the claim will be excluded from the Settlement Program. In that event, that claimant will then be required to pursue his or her claim through the tort system.

Once a claim qualifies for compensation through the Settlement Program, the Claims Administrator will objectively review the event records, pharmacy records, and follow-up records to determine the level of injury and duration of usage.

The claimant’s age, level of injury, and duration of usage will determine the basis points to be assigned to the claim. The basis points will be adjusted upward or downward based upon the date of the injury. It will be determined whether the injury was post-Vigor, pre-Vigor label change, or post label change. The consistency of Vioxx usage by the claimant will be determined.

The Claims Administrator will then review the medical records for preexisting medical conditions (co-morbidities) that predisposed the claimant to a heart attack or stroke absent Vioxx ingestion.

The existence of certain co-morbidities further reduces the award points by varying percentages, depending upon the severity of the risk. For instance, if the event records document a history of controlled diabetes, award points will be reduced by 20%. If, however, event records document a history of uncontrolled diabetes, award points would be reduced by 30%.

The Claims Administrator will provide written documentation of the points to be awarded each claimant. There is a limited right of appeal to a Committee as well as to a Special Master. The decisions of the Claims Administrator, the Committee, and/or the Special Master are final. There is no option to reject the award points and to return to the tort system for a trial by jury. Once a victim elects to stay in the settlement, that person must stay in.

Because the value of each award point cannot be determined until each claim has been evaluated by the Claims Administrator, final settlement amounts will not be available until the resolution of the entire claims process.

However, to allow claimants to receive some settlement funds quickly, many claimants will be entitled to an early, initial payment of 40% of the estimated final settlement value of the claim. Those initial payments are anticipated to begin in August 2008. Only claimants who meet the deadlines in submitting all necessary materials to the Claims Administrator will be entitled to the initial payments.

A Lien Administrator has been retained to resolve all third-party government liens such as Medicaid and Medicare. Claimants and their lawyers are responsible for resolving any other third-party lien.

We feel real good about this Settlement Program. It was designed to compensate qualified claimants quickly and efficiently and, most importantly, to pay very fair settlement values. If you have questions about the program, please call Roger Smith or Leigh O’Dell in our office at (334) 269-2343.

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