Merck Settles Vioxx Litigation for $4.85 Billion

Whitehouse Station, NJ (Nov. 9)-Looking to resolve litigation over Vioxx (rofecoxib), Merck & Co reached an agreement to settle the vast majority of Vioxx claims for $4.85 billion. Merck voluntarily withdrew Vioxx, a COX-2 selective nonsteroidal anti-inflammatory drug, from the market in 2004 following safety concerns that the drug increased the incidence of strokes and heart attacks and has since faced thousands of lawsuits over the product. 

“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,” said Richard T. Clark, chairman, president and chief executive officer of Merck, in a company release. “The agreement is structured to provide a significant degree of certainty toward resolving the majority of the outstanding Vioxx product liability claims in the United States for a fixed amount.”

Merck signed the agreement with the law firms that comprise the executive committee of the Plaintiffs’ Steering Committee of the federal multidistrict Vioxx litigation as well as representatives of plaintiffs’ counsel in state-coordinated proceedings to resolve state and federal myocardial infarction (MI) and ischemic stroke claims already filed against Merck in the United States. The agreement, which also applies to tolled claims, was signed by the parties after meeting with three of the four judges overseeing the coordination of more than 95% of the current claims in the Vioxx litigation.

As of Oct. 9, 2007, in the United States, Merck had been served or was aware that it had been named as a defendant in approximately 26,600 lawsuits, filed on or before Sept. 30, 2007, which include approximately 47,000 plaintiff groups, alleging personal injuries resulting from the use of Vioxx, and in approximately 264 putative class actions alleging personal injuries and/or economic loss.

Under the agreement, Merck will pay a fixed amount of $4.85 billion into a settlement fund for qualifying claims that enter the resolution process. Claims will be evaluated on an individual basis. The agreement is open only to those cases filed or tolled on or before Nov. 8, 2007, and is subject to certain conditions. These conditions are:

• To qualify, claimants will have to pass three gates: an injury gate requiring objective, medical proof of MI or ischemic stroke (as defined in the agreement), a duration gate based on documented receipt of at least 30 Vioxx pills, and a proximity gate requiring receipt of pills in sufficient number and proximity to the event to support a presumption of ingestion of Vioxx within 14 days before the claimed injury

• Individual cases will be examined by administrators of the resolution process to determine qualification based on objective, documented facts provided by claimants, including records sufficient for a scientific evaluation of independent risk factors

• The agreement provides that Merck does not admit causation or fault

• Hemorrhagic stroke claims or transient ischemic attacks do not qualify

• Law firms on the federal and state Plaintiffs’ Steering Committees and firms that have tried cases in the coordinated proceedings must recommend enrollment in the program to 100% of their clients who allege either MI or ischemic stroke

• The parties agree to seek court orders from the four coordination judges requiring plaintiffs’ attorneys to promptly register all of their Vioxx claims, whether filed or tolled, and to identify the alleged injury in order to establish the universe of all existing claims in the United States

• Payment obligations under the agreement will be triggered only if, by March 1, 2008 (subject to extension by Merck), plaintiffs enroll in the settlement process: (a) 85% or more of all currently pending and tolled MI claims, (b) 85% or more of all currently pending and tolled ischemic stroke claims; (c) 85% or more of all eligible claims involving a death; and (d) 85% or more of all eligible claims alleging more than 12 months of use

• This agreement applies only to US legal residents and those who allege that their MI or ischemic stroke occurred in the United States.

Merck expects to record a fourth-quarter 2007 pretax charge in the amount of $4.85 billion to cover the cost of the agreement. “This agreement is the product of our defense strategy in the United States during the past three years and is consistent with our commitment to defend each claim individually through rigorous scientific scrutiny.  Under the agreement, there will be an orderly, documented and objective process to examine individual claims to determine if they qualify for payment,” said Bruce N. Kuhlik, senior vice-president and general counsel of Merck. “This agreement also makes sense for the company because since 2004, we have reserved approximately $1.9 billion for defending Vioxx litigation and, absent this agreement, could anticipate that the litigation might stretch on for years.”

Merck may begin making payments to individual qualifying claimants as early as August 2008.