By Linda A. Johnson
The Associated Press
Even when it was winning most Vioxx lawsuits in the courtroom, the maker of the withdrawn painkiller was losing in other areas, giving Merck considerable impetus for Friday’s $4.85 billion nationwide settlement.
Its bill just for its teams of lawyers was approaching $2 billion with only 15 of roughly 60,0000 cases settled, and the company was on the hook for tens of millions in jury verdicts if it didn’t win appeals.
Besides, the litigation was obscuring Merck’s many recent business successes, from improved profit and stock price to recent approvals and successful launches of several new vaccines and medicines.
“Without this settlement, the litigation might very well stretch on for years,” said Executive Vice President Kenneth Frazier, the former general counsel who had developed Merck’s fight-every-case strategy.
He said the “responsible and reasonable” agreement was the result of that strategy, with about 5,000 cases already dropped or dismissed and plaintiffs seeing how well Merck defended itself in the courtroom, with victories in 10 of 15 cases.
Other factors also were important, from the statute of limitations recently closing the door on further lawsuits in 42 states to several judges, each swamped with thousands of Vioxx cases, pushing the two sides to enter settlement talks that have continued since last December.
Merck removed Vioxx from the market Sept. 30, 2004, after researchers determined the arthritis treatment, then pulling in about $2.5 billion a year, doubled risk of heart attacks and strokes.
Company officials said the deal, if accepted, would end 45,000 to 50,000 personal-injury lawsuits involving U.S. Vioxx users who had heart attacks or strokes.
Those people are eligible for a claim, if they can prove they had a heart attack or stroke and took Vioxx shortly before, but Merck said it will continue to vigorously fight all other lawsuits, including those from people in foreign countries.
Analysts, who had estimated Merck’s liability at up to $50 billion, universally called the deal a good move for Merck, which does not have to admit causation or fault under the settlement.
“We believe the company’s aggressive and successful defense strategy has … produced a favorable outcome … at a cost that is clearly at the low end of general expectations,” Deutsche Bank North America analyst Barbara Ryan wrote in a research report.
Wall Street also registered its approval, as shares rose $1.13, or 2 percent, to close Friday at $55.90, near its 52-week high of $58.36.
Andy Birchfield, co-lead counsel for the federal litigation, said claimants will receive a minimum of $5,000, with amounts determined by a complex formula. He said some people will get “well in excess of $1 million.”
The deal becomes binding only if accepted by 85 percent of all eligible plaintiffs. Experts said they expected the deal to go through.