Plaintiffs Must Drop Cases in $4.85B Merck Deal The pharmaceutical company Merck announced Friday that it will pay nearly $5 billion dollars to settle claims involving the painkiller Vioxx. The settlement only goes into effect if a large number of plaintiffs agree to drop their cases, but that looks likely.
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Plaintiffs Must Drop Cases in $4.85B Merck Deal

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Plaintiffs Must Drop Cases in $4.85B Merck Deal

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Plaintiffs Must Drop Cases in $4.85B Merck Deal

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MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

ROBERT SIEGEL, host:

And I'm Robert Siegel.

We begin this hour with two stories involving the pharmaceutical company Merck - one about prospects for an AIDS vaccine, the other about the painkiller Vioxx. We'll start with Vioxx. Merck has agreed to pay nearly $5 billion to settle tens of thousands of cases, charging that people suffered injury or death after taking the drug. Vioxx was pulled from the market more than three years ago. A study found that it increased the risk of heart attacks in some patients.

NPR's Wendy Kaufman reports.

WENDY KAUFMAN: The settlement is one of the very largest involving a prescription drug. The deal will become binding only if 85 percent of the plaintiffs drop their cases and take the settlement, but that seems likely. The amount individual plaintiffs would get is expected to vary widely based on the specifics of their claims. Some individuals could get up to $2 million, though attorneys' fees and costs could reduce the actual payout to about $1.2 million. On the other hand, those with very weak claims would likely get just a few thousand.

Mark Lanier is one of the plaintiffs' lawyers.

Mr. MARK LANIER (Lawyer): We're pleased with these settlements. These should take care of most of the personal injury victims here in America. And for them, I'm very excited.

KAUFMAN: Roughly 26,000 Vioxx cases have been filed. So far, Merck has won 11 and lost five of those that have gone before a jury. But hundreds of cases were being set for trial in the coming months, putting huge burdens on the court, Merck and plaintiffs' lawyers. The federal judge overseeing the litigation felt it was time to reach an accord.

According to plaintiffs' lawyer Daniel Becnel the judge called Merck's executives to his office.

Mr. DANIEL BECNEL (Lawyer): And said, look, we have two alternatives. We can keep doing what we're doing. We can keep trying these cases in New Jersey. We can keep trying these cases in my court. We can try the cases in California. But where is that getting us? No close to the resolution.

KAUFMAN: Prodded by that judge and two others, the two sides hammered out an agreement. According to one lawyer involved in the talks, plaintiffs' lawyers sought a deal worth 15 or $20 billion. Merck wanted to settle for practically nothing. The compromise? $4.85 billion. Sometimes, when the defendant is facing massive product liability lawsuits, it settles quickly and tries to limit the damage.

But as Seton Hall law professor Howard Erichson explains, Merck took a different approach.

Professor HOWARD ERICHSON (Law, Seton Hall Law School): Merck decided to litigate case after case and by doing that, I think they were able to drive down the settlement value of the cases. That was a risky strategy, however, because if more of the cases had gone in favor of the plaintiffs rather than Merck, then it would have had the opposite effect. It would have driven up the settlement value. In this case, they gambled on it correctly, most people think.

KAUFMAN: Indeed Merck calls this a good settlement, and as lawyer Jim Fitzpatrick who represents the drug maker notes, it allows the company to put most of the Vioxx cases behind it.

Mr. JIM FITZPATRICK (Lawyer): It really lets them get back to doing what it is that Merck does, and that's to develop new medicines and new vaccines and to get those to patients. And this agreement allows Merck to focus even more fully on that mission.

KAUFMAN: Wall Street reacted positively to the settlement. Though much of the market was down today, Merck stock closed up.

After Vioxx was withdrawn from the market in 2004, some analysts said they feared Merck's liability could run to $50 billion. Two years ago, the stock was $26 a share. But since then, it's climbed steadily to more than twice that, aided in part by eight new products, including the potential blockbuster, Gardasil, a preventative treatment for cervical cancer.

Wendy Kaufman, NPR News.

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