Attorneys who spent nearly one year negotiating a $4.85 billion Vioxx settlement were left pondering a paradox. Since each side now is certain that the other is prepared for, if not relishing, a litigation Verdun, wouldn’t it make better sense to settle after a minimum number of skirmishes?

Both plaintiffs’ and defense counsel expressed satisfaction with the mammoth deal through which Merck & Co. Inc. will compensate 50,000 plaintiffs whose medical records link the anti- inflammatory drug Vioxx with a heart attack or stroke. In re Vioxx Prod. Liab. Litig., No. MDL-1657 (E.D. La).

Plaintiffs’ attorneys who earlier had savored a number of multimillion-dollar Vioxx verdicts wondered whether pharmaceutical companies that watched as Merck invested $1.9 billion on litigation before paying a hefty settlement would be more open-minded to early settlement of future mass torts.

“I think the [Vioxx] case did a lot to teach the pharmaceutical companies how to handle litigation,’ said Tom Girardi of Girardi & Keese in Los Angeles, who filed the first Vioxx cases in California and was among a team of plaintiff attorneys who negotiated the settlement.

Girardi said that Pfizer Inc., embroiled in a class action centered on Bextra, an anti-arthritis drug similar to Vioxx that is alleged to cause a serious skin disease as well as sometimes triggering heart attacks or strokes, could avoid the litigation grind that Merck went through before it ultimately settled.

“They see [that] Merck paid a couple billion in legal fees, billions in bad publicity, and paid a substantial amount anyway. I sense they are more willing to think about settling early and moving on instead of litigating every case,’ Girardi said.

Pfizer did not respond to requests for comment. Richard Nagareda, a professor at Vanderbilt University Law School and author of a recent book on settling mass torts, believes that Merck got the better deal. “Merck’s strategy of resisting any quick, comprehensive settlement and of taking cases to trial had the ultimate effect of a significant markdown in the overall price tag for peace,’ he said via e-mail.

Emotional attachment

Attorneys who negotiated the Merck deal stressed that neither side in a high-stakes case can afford to settle simply because litigation is expensive.

Christopher A. Seeger of Seeger Weiss in New York, who filed the first Vioxx cases in New Jersey in 2001 and served on the plaintiffs’ committee, described himself as “emotionally and financially’ attached to the litigation after years of contingency work. He won a $47.5 million Vioxx verdict in 2005 – but only after seeing many similar cases lose. Humeston v. Merck & Co. Inc., No. ATL-L-2272-03 (Atlantic Co., N.J., Super. Ct.).

“People started to run for the hills when plaintiffs lost a couple of cases,’ Seeger said. “I was convinced on the science; we had documents proving the company knew about the risks. So when there were losses, I just doubled down.’

Jere L. Beasley of Beasley, Allen, Crow, Methvin, Portis & Miles in Montgomery, Ala., which represents 6,000 Vioxx plaintiffs, expected protracted litigation when the firm began filing cases in 2001. “We knew quickly it would be a long, tough fight. We realized we had to risk losing classes,’ said Beasley, whose firm won a $51 million Vioxx verdict. Barnett v. Merck, No. 06-485 (E.D. La.).

Andy Birchfield, co-lead counsel for Beasley Allen in Barnett and a negotiator of the Vioxx settlement, said both sides got what they wanted in that deal.

“Merck wanted no continuing litigation after the settlement, and that took a lot of work, but 98% of the people who have filed a lawsuit have joined the settlement,’ Birchfield said. “We got an agreement that is in the best interest of each individual client.’

Douglas Marvin, a partner at Williams & Connolly in Washington who negotiated the settlement for Merck, said that the number of Vioxx lawsuits had jumped from around 300 to 60,000 when Merck took the drug off the market on Sept. 30, 2004. Litigation and settlement costs of $6.75 billion are a fraction of the $20 billion or more in liability that some analysts estimated the company might face.

“Litigation costs are always a factor, but only one,” Marvin said. “The overriding factor is finality.” He noted that Merck had won most of the 17 cases decided by juries and was fighting the others in appellate courts.

Judge Eldon E. Fallon of the U.S. District Court for the Eastern District of Louisiana encouraged the Vioxx negotiations, which required a few marathon all-nighters, culminating in the deal announced on Nov. 7, 2007. By then, the statute of limitations on Vioxx claims had tolled nearly everywhere in the country, and all sides wanted to report a deal during a hearing scheduled in New Orleans, Marvin said.

Although the settlement is hefty, Merck got the plaintiffs to agree to a screening process that will limit claims to people who can demonstrate an actual injury. Additionally, the company now is certain it will face no new suits, Marvin said. Those are the only circumstances likely to get drug companies to settle instead of fight, he said.

“Settlement is possible if you can close the door to further lawsuits,’ Marvin added. “Companies want the settlement to close the chapter, not spark a new wave of litigation.’

Eye on the Supreme Court

Girardi said that both sides were watching an appeal by Wyeth Pharmaceuticals Inc. to be argued before the U.S. Supreme Court in November. The case potentially could mean that U.S. Food and Drug Administration (FDA) approval of a drug provides drug makers with protection against state tort claims. Wyeth v Levine, No. 06-1249.

In that case, the company is appealing a Vermont Supreme Court ruling upholding a $6.8 million jury award to a woman whose right arm required amputation because of damage caused by Phenergan, a motion sickness medication.

The plaintiff alleged that Wyeth knew that the drug could cause irreversible tissue damage to arteries and should have warned doctors not to administer it via intravenous push injection. Wyeth argues that the claim was pre-empted because the drug had secured FDA approval and because its label warned that hitting an artery when injecting the drug could cause irreversible damage.

“We knew the Levine case is out there creating the possibility our cases might be pre-empted,’ Girardi said. “With this settlement, all our clients get compensated.’

Source: The National Law Journal

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