This is a pretty big deal and probably a good deal for Merck, since some analysts thought they'd be paying out over $10 billion. Merck had set aside $1.9 billion just to pay for their legal defense!
Merck Agrees to Blanket Settlement on Vioxx - washingtonpost.com
Saturday, November 10, 2007; Page D01
Merck & Co. agreed to pay $4.85 billion to settle thousands of cases brought by people who suffered heart attacks and strokes after taking its Vioxx painkiller, validating a forceful defense strategy in one of the nation's largest and most widely publicized drug recalls.
Vioxx, which averaged $2.5 billion in sales a year, was yanked from the market three years ago over widespread concern about its safety. The drug more than doubled the risks of heart attacks and strokes among patients who used it to ease arthritis pain, according to clinical studies. One scientist estimated that it had caused as many as 138,000 heart attacks and 55,000 deaths in the United States.
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Yesterday's deal represents a fraction of the $10 billion or more that analysts initially had predicted Merck would pay if it stuck to its plan to fight every lawsuit. But patients who took their cases to court have won only five victories to date, largely because judges have required them to present detailed medical evidence and expert opinions to prove the drug had caused their health problems.
In addition, judges had thrown out 5,000 lawsuits against the company and had determined that the time limit for filing new claims had expired in the overwhelming majority of states, said Kenneth C. Frazier, a Merck executive who served as the architect of its uncompromising legal strategy.
"Merck is paying a very large amount of money, but it is saving a lot more than analysts predicted two years ago. That sounds like a good business deal to me," said Richard Nagareda, a law professor at Vanderbilt University who studies such cases.
The agreement announced yesterday would put an end to as many as 50,000 cases that threatened to drain the company of billions of dollars in defense costs for years to come, Frazier said in a conference call with analysts. Merck had set aside $1.9 billion to cover legal expenses. The company did not admit fault as part of the settlement, reached with a consortium of plaintiff law firms at the urging of judges overseeing the massive docket.
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