Merck agrees $4.85bn Vioxx settlement

Merck moved on Friday to put an end to its litigation over painkiller Vioxx, with the US drugmaker agreeing to a $4.85bn settlement of lawsuits claiming the drug caused heart attacks and strokes.

Merck withdrew Vioxx in September 2004. The move left Merck facing 27,000 lawsuits, representing tens of thousands of individual injury claims.

Merck’s settlement, finalised early Friday with plaintiffs’ lawyers, will resolve about 45,000-50,000 individual heart attack and stroke claims out of 60,000 total claims. In its settlement, the company admitted no liability.

Dick Clark, chief executive of Merck, said: “The agreement is structured to provide a significant degree of certainty toward resolving the majority of outstanding Vioxx product liability claims in the United States for a fixed amount.”

A settlement to ring-fence Merck’s Vioxx liabilities marks the most significant step yet for the company to put behind it one of the pharmaceutical industry’s biggest controversies.

The resolution of the most significant outstanding federal and state cases follows Merck’s wins in key Vioxx court trials, and compares with predictions of liabilities of $25bn or more three years ago. The deal is structured to try to avoid the ongoing loopholes that forced US rival Wyeth into more than $20bn in liabilities from its withdrawn fen-phen diet drug.

Merck’s shares jumped 5 per cent to $57.50 in New York lunchtime trading as investors saw a positive end to a nagging distraction.

Barbara Ryan, analyst at Deutsche Bank, said: “We believe the company’s aggressive and successful defence strategy has given it a heavy hand in the bargaining process and produced a favourable outcome in the Vioxx settlement at a cost that is clearly at the low end of general expectations.”

Merck had vowed to fight every case, but said the timing was right to try to put an end to the litigation. It said one of the key reasons was that the statute of limitations had ended the possibility of new lawsuits in most states.

Chris Seeger, a lead plaintiffs’ attorney in the cases at Seeger Weiss, said: “It’s been a long, hard fight in achieving justice for the many injured victims of Vioxx nationwide and I believe this global resolution is the best and fairest way to resolve this litigation.”

Under its terms, the settlement is subject to conditions including a provision for 85 per cent of all claimants to agree to take part. At least 85 per cent of heart attack, death and ischemic stroke cases must enter the settlement for it to take effect, and participating attorneys must include all their cases. Claims must also prove an injury and use of Vioxx.

Merck plans a fourth-quarter pre-tax charge for the $4.85bn cost. Merck said it would continue to defend itself in ongoing government investigations into its conduct over Vioxx.