By Roger Parloff
November 9, 2007

As CNNMoney reported here on Friday, Merck (MRK) has signed a global settlement that could end the nationwide litigation over the painkiller Vioxx, with the company agreeing to pay $4.85 billion into a settlement fund.

The strategy and timing behind the settlement had largely been foreseen by plaintiffs lawyer Mark Lanier, though he was off by a year.

When he was trying the first Vioxx personal injury trial in Angelton, Texas, in August 2005 — the one that ended in the $253 million verdict, later reduced to about $26 million under Texas tort reform rules (and now on appeal) — I had asked him one night what his advice would be to Merck.

With astonishing candor, Lanier said he would tell Merck to “hang tough” for the first two years; then, after most of the statutes of limitation had run and Merck could be sure that a settlement wouldn’t invite the filing of additional, opportunistic, frivolous cases, he’d advise them to do a global settlement.

That’s exactly what Merck did, though it waited an extra year. Merck pulled the blockbuster painkiller off shelves on September 30, 2004. It then waited three years, until September 30, 2007, when, by its calculations, the statutes of limitations had run in 42 states and it had a good idea of the entire universe of cases it would have to deal with: 26,600 suits on behalf of about 47,000 plaintiff groups. (A plaintiff group might include the spouse or dependents of a victim, who might be alleging “loss of consortium” or other damages related to the loss of a loved one or breadwinner.) Then it worked out the settlement.

Unlike asbestos-related diseases, which can become apparent 20 or 30 years after the exposure, most of the science suggested that the risks of Vioxx only lasted for as long as the patient continued to take it.

According to Merck, to qualify for recoveries, claimants will have to pass, at a minimum, these three “gates”: (1) objective medical proof of either a heart attack of ischemic stroke; (2) documented receipt of at least 30 Vioxx pills; and (3) receipt of pills in sufficient number and proximity to the event to support a presumption that the patient was still taking the pills within 14 days before the heart attack or stroke. Here is the Merck press release.

The settlement is conditional, and won’t take effect unless 85% of all the strongest cases can be resolved by it. I.e., it won’t take effect unless its terms are accepted by 85% of all heart attack plaintiffs; 85% of all the ischemic stroke plaintiffs; 85% of all deceased plaintiffs’ survivors; and 85% of all plaintiffs who took Vioxx for more than 12 months.

The amounts paid to each claimant will depend on such factors as how serious his injuries were, how long he took Vioxx, and how many claimants are able to submit qualifying documentation (since they’re divvying up a pie of set magnitude).

The settlement does not conclude international cases, pension-fund and third-party cases, or state attorney general cases.

All told, I think Merck made out well. In my humble opinion, I thought the facts of the case were not great for Merck, in that it bent itself into contortions to believe the rosiest possible explanations of adverse outcomes that showed up in its studies, and it lobbied the FDA forcefully (and successfully) to persuade it not to place warnings on the drug at an earlier stage that ultimately turned out to have been warranted.

What do others think?

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