Posted by Jane Akre
The Injury

Wanting to move on from the legacy of its deadly painkiller, the maker of Vioxx, Merck & Co. this morning signed an agreement to pay $4.85 billion to settle the outstanding individual product liability claims against the drug.

“This is a good and responsible agreement that will allow the Company to concentrate even more fully on its mission of discovering, developing and delivering novel medicines and vaccines,” said Richard T. Clark, chairman, president and chief executive officer of Merck in a company statement.

The agreement was signed after meeting with three of four judges overseeing 95% of Vioxx claims.

Merck stresses this is not a class-action settlement.

Individual claims will be evaluated in a one-on-one basis after undergoing “rigorous scientific scrutiny,” according to general counsel Bruce Kuhlik, who stresses the agreement is part of a defense strategy to avoid years of protracted litigation.

Claims could be paid beginning in August 2008.

Certain conditions must be met first says the drugmaker. Merck will not admit fault and will continue to fight all forthcoming claims not already filed. The settlement amount is fixed and will not change and the company reserves the right to terminate the settlement at any time.

The bulk of the settlement, $4 billion will be targeted to settle myocardial infarction or MI claims and $850 million will cover ischemic stroke claims.

The exact number of claimants is unknown at this time according to the company but the Wall Street Journal reports there have been 27,000 who claim they’ve been harmed after taking Vioxx.

Vioxx, made by the Whitehouse Station, N.J. company was approved for sale in 1999 to treat arthritis and other types of pain.

An estimated 20,000 people took the popular pain reliever, a so-called Cox-2 inhibitor, but questions soon surfaced about safety. Merck made $2.5 billion annually before the company pulled Vioxx for heart concerns on September 30, 2004.

Brenda Fulmer, a Tampa, Florida attorney with Alley, Clark, Greiwe & Fulmer who has handled Vioxx claims is not surprised by Mercks’s decision.

“Prior to this they had been able to focus on the small percentage of cases and on these they spent $1.2 billion. They could not continue to spend that kind of money on the multiple trials forthcoming in state court jurisdictions,” she tells IB News.

Fulmer says that the statute of limitations to file new claims was three years and has passed for the majority of states. Two states still have the door open for new claims, Florida and Minnesota.

Jere Beasley, of Beasley, Allen, Crow, Methvin, Portis and Miles P.C. does not believe we’ll see a rush of cases being filed because specific causation is difficult to prove after time.

Beasley Allen has filed about 12 percent of the claims so far. The national firm represents thousands of Vioxx victims.

Beasley tells IB News he believes the settlement is fair.

“It’s a fair settlement to everybody, it will take care of the needs of the victims” he says.

Stockholders speculate that this settlement might not ultimately be good for the company as shares are up 80% for the drug company over the last two years.

Merck stock has rebounded since its company low in in 2004 when it withdrew Vioxx from the market and stocks were in the $20s. On November 1, it hit an all time high of $58.36.

Market watchers believe if tobacco litigation is any bellweather, Merck might have withstood court challenges over time. Merck has won 11 cases so far and lost five.

More good news for the company came in September when New Jersey’s highest court agreed that lawsuits against Merck filed by health insurers could be consolidated into a class action, removing expensive exposure from individual cases.

In April of this year, a Texas judge removed the legal basis for approximately 1,000 plaintiffs from that state.

But Beasley disagrees with stockholders who may have wanted to wait out the litigation.

“We were not going to back down. We’ve put a lot of resources behind this and were not going to quit. It was the smart thing for them to do,” he tells IB News.

Shortly after it was pulled from the market September 30, 2004, during a hearing on Vioxx before the Senate Finance Committee, Dr. David Graham of the FDA’s Office of Drug Safety warned that Vioxx has been a disaster that’s contributed to more than 27,000 deaths from heart attack and sudden cardiac death between 1999-2003.

He told lawmakers the drug represents an unprecedented failure of our national drug approval system.

Just last week the New York Times reported that the FDA cannot assure the safety of the drugs it approves because it inspects few foreign drug manufacturers which provide up to 80 percent of all ingredients used domestically and records are so lax that the safety agency cannot specify which ingredients have been inspected.


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