Merck tactic may be model

Experts see Vioxx strategy as winner

November 10, 2007|By Molly Selvin

Merck & Co.'s decision to pay $4.85 billion to settle tens of thousands of claims from patients who took the popular painkiller Vioxx could stiffen the resolve of other companies facing litigation over pharmaceutical products or other consumer goods.

The settlement, which was announced yesterday, also might vindicate the drugmaker's initial strategy of aggressively fighting virtually every injury claim, legal experts said.

Other corporate defendants that have stonewalled plaintiffs, including asbestos manufacturers, have ended up in bankruptcy.

Merck pursued a more strategic approach - trying enough cases to get a sense of how juries valued the drug-related injuries and then opting for a comprehensive agreement limiting liability and allowing Merck to move on.

The nearly $5 billion fund, which could cover as many as 26,500 of the more than 30,000 claims filed against the company, "is actually a good settlement for Merck," said Benjamin Zipursky, a Fordham Law School professor who studies product liability.

Although the company has been hit with several multimillion-dollar verdicts, Merck won 12 of the 17 trials to date and has yet to pay out anything, while appealing its losses. "Playing hardball can be a very smart idea sometimes," Zipursky said.

The deal covers most of the lawsuits filed against the company in U.S. courts, removing a millstone that has weighed on Merck since it pulled Vioxx off drugstore shelves three years ago.

The company withdrew the blockbuster painkiller, which racked up $2.5 billion in annual sales, in September 2004 after a study showed it doubled the risk of heart attack and stroke in patients taking it for more than 18 months. By that point more than 20 million people in the United States had taken the drug.

Individual payouts will depend on the number of people who qualify for the settlement, their age, health status and the length of time they took the drug. Payments could start as early as August.

Plaintiffs dissatisfied with their offer still could opt to go to trial; but more than 85 percent of eligible claimants must decide to participate for the settlement to take effect. Merck stressed that the agreement was not a class action settlement and that it was not admitting fault.

Lawyers for Merck and the plaintiffs forged the agreement in meetings over the past year with the four judges overseeing more than 95 percent of the current Vioxx cases nationwide.

The accord, which the parties signed yesterday after a final all-night negotiating session in New Orleans, was announced jointly by U.S. District Judge Eldon Fallon of New Orleans, New Jersey Superior Judge Carol Higbee and California Superior Judge Victoria Gerrard Chaney. Texas County Judge Randy Wilson was involved but unable to attend.

The deal is limited to Vioxx users or their relatives who allege the drug caused stroke, heart attacks or sudden cardiac death. Plaintiffs who blame the drug for gastrointestinal or other problems will not be covered.

"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," Merck Chief Executive Officer Richard T. Clark said.

The company's $5 billion payout represents 22 percent of its $22.6 billion in revenue last year.

Los Angeles attorney Thomas Girardi, who represents more than 800 Vioxx claimants, acknowledged there were "significant issues" facing plaintiffs in these cases. Many had pre-existing medical problems, making it more difficult to prove that the drug caused their heart attacks or strokes.

"Some excellent trial lawyers" have gone up against Merck, he said, but the Whitehouse Station, N.J.-based company won the majority of those cases.

Moreover, Girardi said that cases pending before the Supreme Court could bar plaintiffs from suing for injuries caused by drugs that have won approval by the Food and Drug Administration.

The fact that studies strongly linked Vioxx with a discrete set of "signature" injuries made settlement appealing to Merck, said Stephan Landsman, who teaches tort law at DePaul University College of Law in Chicago.

Landsman said the company appears to have learned from the experience of other companies that rejected efforts to settle and saw their legal costs spiral out of control.

The Vioxx deal could set a model for agreements in litigation involving widespread instances of food poisoning, cardiac defibrillators and other products, legal experts said.

"You stand your ground, set some case values through trial and at the same time deter the marginal cases from filing," Landsman said.

Merck still faces lawsuits brought by attorneys general in New York, Colorado and other cases seeking reimbursement for millions of dollars in public funds spent on Vioxx prescriptions for patients with preexisting heart conditions.

Molly Selvin writes for the Los Angeles Times.

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