Merck to Settle Vioxx Suits for $4.85 Billion

Nov. 9.07 | About: Merck & (MRK)

In one of the largest civil settlements in history, Merck & Co. has agreed to pay approximately $4.85 billion to settle 27,000 lawsuits concerning Vioxx, the painkiller it withdrew from the market three years ago on concerns about heart attacks and strokes. In almost 20 Vioxx trials over the past two years, Merck lost one -- the first -- to the tune of $253 million but won all the others that reached juries. In light of that record, a steering committee of lawyers acting for the remaining plaintiffs elected to settle. "It’s a fantastic deal," said Danny Becnel, an attorney who represents about 1,000 plaintiffs. The settlement will be binding if 85% of plaintiffs agree to accept it and drop their cases. Once the deal is finalized, Merck will be able to slash its Vioxx-related defense expenditures, which currently run to over $600 million per year. Settlements will vary according to degree of injury and the length of time each plaintiff took the drug. The average individual payout is expected to be just over $100,000 before legal expenses. The New York Times notes that the settlement, though large, will amount to less than a year's profit for Merck. When Vioxx was first withdrawn, analysts estimated Merck's potential liability at $10-25 billion. Merck will still face civil and criminal investigations into Vioxx by several states and the Justice Department.

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