While paying out nearly $5 billion could break many companies, shelling out such a sum to settle most of its Vioxx lawsuits looks like cause for celebration at Merck & Co.

The New Jersey-based drugs giant has entered into an agreement with the executive committee of lawyers that represent all the plaintiffs’ legal teams who have sued Pfizer in federal court over the withdrawn COX-2 inhibitor Vioxx (rofecoxib), plus representatives looking to resolve state and federal myocardial infarction (MI) and ischemic stroke claims already filed against the company in the USA.

The agreement, which was signed after a meeting with three of the four judges overseeing more than 95% of the current claims in the Vioxx litigation, will see Merck pay a fixed amount of $4.85 billion into a settlement fund for qualifying claims, which will be evaluated on an individual basis. The company noted that this is not a class-action settlement and it “does not admit causation or fault” in any of the cases.

The settlement comes with a whole range of conditions. For example, claimants will need to demonstrate how long they were taking Vioxx, how many tablets were taken (30 minimum) and whether the pills were taken “in sufficient number and proximity” to the event to support a presumption of ingestion of Vioxx within 14 days before the claimed injury. Merck also stated that the agreement will go into effect if certain stipulations are met by March 1 next year, including the participation of at least 85% of pending MI and stroke claims, 85% of claims involving a death and 85 percent of claims in which plaintiffs allege more than 12 months of use.

Defence strategy has worked
Chief executive Richard Clark said the deal “is a good and responsible agreement” while Bruce Kuhlik, senior vice president and general counsel for Merck, said it is the product of our defence strategy in the USA during the past three years and is consistent with our commitment to defend each claim individually through rigorous scientific scrutiny”. He added that the agreement also makes sense for the company “because since 2004, we have reserved approximately $1.9 billion for defending Vioxx” and without the deal “could anticipate that the litigation might stretch on for years”.

The lawyers for the plaintiffs also seemed happy and Russ Herman, who was involved in drafting the settlement, said that "specific causation has been a very difficult issue. This is an opportunity to end a long and difficult litigation that has stretched on for more than three years. A fair resolution is in everybody's best interests." Another lawyer, John Newcomer added that “this settlement was a long time coming, but one that will finally give our clients some relief from the harm they suffered". One of those clients, Alvin Jupiter, of Tampa, who suffered a heart attack in 2001 after taking Vioxx, said: "I'm glad to see something coming to fruition on this. So many people were hurt."

Happiest of all, however, has to be Merck and its shareholders. $4.85 billion is considerably better than some analysts had predicted and costs of up to $20 billion had been feared. The firm said it still intends to fight all claims not included in the settlement and its win record since the withdrawal of Vioxx in 2004 has been impressive. Analysts too have breathed a sigh of relief and in a research note, Deutsche Bank’s Barbara Ryan said that "the company's aggressive and successful defence strategy has given it a heavy hand in the bargaining process and produced a favourable outcome in the Vioxx settlement, at a cost that is clearly at the low end of general expectations".