Closing another chapter in the painful saga over withdrawn arthritis pill Vioxx, Merck & Co. has agreed to settle lawsuits brought by shareholders who lost billions, by appointing two committees and a chief medical officer to monitor drug safety and keep the company honest.
Merck to settle Vioxx-related shareholder lawsuits
Vioxx, which had peak sales of $2.5 billion a year, was pulled from the market in 2004 because it doubled the risk of heart attacks and strokes. Thousands of lawsuits brought by patients, their survivors and others alleged Merck officials knew about those risks and hid them. In November 2007, Merck reached a $4.85 billion settlement to resolve most of the roughly 50,000 lawsuits alleging Vioxx users were harmed or killed.
The new settlement would end state and federal lawsuits Merck stockholders filed against the Whitehouse Station, N.J.-based company and more than two dozen current and former Merck executives and board members.
Shareholders lost a combined $28 billion when Merck stock plunged overnight after it pulled Vioxx from the market on Sept. 30, 2004, but they won’t receive any reimbursement under the settlement, other than $12.15 million to cover their attorneys’ fees.
“This proposed settlement is the best and most appropriate resolution of these suits and enables the company to put this matter behind it. It does not constitute an admission of liability or wrongful conduct,” Merck spokesman Ron Rogers said. “The company acted appropriately and in the best interests of patients with respect to Vioxx.”
“This is the perfect end" to Merck’s "flawlessly executed strategy,” to fight all the lawsuits over Vioxx, analyst Steve Brozak of WBB Securities said. “Any time you have a settlement with these low-dollar amounts, it’s good news for them.”
He said Merck's refusal to settle any lawsuits—except the $4.85 billion product liability settlement, a fraction of what analysts initially feared Merck would have to pay—blocked any “trickle-down effect” of having to pay out in other lawsuits.
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