Healthy Skepticism Library item: 17179

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Publication type: news

Johnson LA
Merck agrees to settle with its shareholders on Vioxx lawsuit
The Boston Globe 2010 Feb 11
http://www.boston.com/business/articles/2010/02/11/merck_agrees_to_settle_with_its_shareholders_on_vioxx_lawsuit/

Full text:

Closing another chapter in the painful saga over withdrawn arthritis pill Vioxx, Merck & Co. has agreed to settle lawsuits brought by shareholders who lost billions, by appointing two committees and a chief medical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.

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, announced late Tuesday, would end state and federal lawsuits Merck stockholders filed against the 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 the company pulled Vioxx from the market in 2004, but they will not receive any reimbursement under the settlement, other than $12.15 million to cover 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,’’ Merck spokesman Ron Rogers said. “It does not constitute an admission of liability or wrongful conduct. The company acted appropriately and in the best interests of patients with respect to Vioxx.’’

Merck shares closed down 27 cents at $36.20.

“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.

Brozak said that Merck already has in place most of the people who will serve on the new oversight committees, and that the company probably would comply with the settlement.

“It makes good sense for this not to be lip service,’’ Brozak said. “You can only have a breakdown like this once.’’

The settlement calls for Merck, the world’s second-biggest drug maker, to fill a position of chief medical officer. The company did so in December, when it hired Dr. Michael Rosenblatt, then dean of Tufts University School of Medicine.

Rosenblatt will be the company’s public voice on product safety issues, be independent of Merck Research Laboratories, work with government regulators, and oversee the truthfulness of product advertising.