Norplant maker agrees to settle

36,000 would get $1,500 each to end birth control lawsuits

A 'business decision'

August 27, 1999|By NEW YORK TIMES NEWS SERVICE

After several years of litigation, American Home Products Corp. said yesterday that it had agreed to pay cash settlements to 36,000 women who contended they were not adequately warned about the possible side effects of the company's Norplant contraceptive.

Under the terms of the settlement, American Home Products is expected to pay out between $50 million and $75 million, according to Turner Branch, one of the lead attorneys for the plaintiffs. Women who choose to settle their lawsuits will receive $1,500 each, far from the jackpot attorneys had hoped for.

"It's a total disappointment," Branch said. "But we didn't get good results in jury trials in South Texas. I'm definitely not jumping with excitement, but the settlement is voluntary. The women can take it or not take it."

A settlement of any kind marked a strong reversal of strategy for American Home Products and its subsidiary, Wyeth-Ayerst Laboratories, which still sells Norplant. The device, six silicone capsules injected into a patient's arm, can prevent pregnancy for up to five years.

Women who used the contraceptive had long complained that Norplant's label did not adequately warn about severe side effects like excessive menstrual bleeding, headaches, nausea, dizziness, mood swings and depression.

American Home Products had vehemently denied these contentions, arguing that the side effects associated with Norplant were clearly described on its label. The company had been successful in its defense of the contraceptive, winning three jury verdicts and 20 summary judgments and having 14,000 claims dismissed.

But Alex Zisson, an analyst with Hambrecht & Quist, said the company was wise to settle.

"When you pit a woman against a big corporation in front of a jury, anything can happen," he said.

The settlement does not cover claims by hundreds of other women who had different types of injuries, including scarring from having the implants removed.

Despite the controversy surrounding Norplant, millions of women have used it. American Home Products said yesterday that Norplant had been used by more than 1 million women in the United States and by nearly 5 million women worldwide. According to the Associated Press, annual U.S. sales peaked in 1992 at $120.7 million but slid to $4.4 million through November 1997.

Analysts said yesterday that American Home Products had offered to settle the Norplant claims to improve its image and allow the company to focus on its troubled operations. Over the past two years, American Home Products has withdrawn three products from the market, including the diet treatment fen-phen, and experienced steep sales declines in its agricultural division.

"Settling these cases was purely a business decision," Joseph Mahady, Wyeth-Ayerst's president for North America, said yesterday in a statement. "Our legal success has come at a steep price because lawsuits are time-consuming, expensive and have a chilling effect on research."

American Home Products has been no stranger to litigation. Its liabilities over claims that fen-phen caused heart-valve damage could exceed $3 billion. While analysts have been concerned over those liabilities, many were relieved over the likely amount of the Norplant settlement.

"If American Home Products pays only $50 million to $75 million, that is a low sum," said Sergio Traversa, a pharmaceuticals analyst with Mehta Partners, a research company in New York. "But for consumers to collect millions of dollars, they have to prove permanent damages. Most of the side effects the Norplant users complained about went away once they had it removed."

Women who filed lawsuits about Norplant before March 1 can participate in the settlement, according to an American Home Products spokeswoman. Lawsuits that are not settled through the agreement will proceed through the courts. American Home Products, which also makes Advil pain reliever and Robitussin cough medicine, said in a statement yesterday that any remaining Norplant lawsuits would be defended aggressively.

American Home Products, based in Madison, N.J., has come to be regarded as one of the pharmaceutical industry's financial laggards. With earnings last year of $2.47 billion, the company can certainly afford to pay for the Norplant settlement, but its performance has trailed many of its competitors.

Earnings at most large pharmaceutical companies are expected to swell 12 percent or more this year. American Home Products' earnings will most likely decline. Shares of American Home Products fell $1.8125 yesterday to $46.

The Associated Press contributed to this article.

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