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Merck Settles Vioxx Claims

Agreement with plaintiffs will allow company to refocus on R&D

by Lisa M. Jarvis
November 19, 2007 | A version of this story appeared in Volume 85, Issue 47

MORE THAN THREE YEARS after withdrawing its anti-inflammatory drug Vioxx, Merck & Co. has taken a giant step toward putting the debacle behind it. The company has reached a $4.85 billion settlement with plaintiffs that will enable it to shift its focus back to the day-to-day business of discovering and developing drugs.

The settlement "basically removes any future Vioxx liability and draws to a close an ugly chapter in Merck's history book," says Morgan Stanley stock analyst Jami Rubin.

Merck pulled Vioxx from the market in September 2004 after the release of studies linking the drug to an increased risk of heart attack and stroke. Thousands of people subsequently filed lawsuits against the company, claiming they were injured by the drug.

The settlement has been carefully mapped out to avoid any loopholes that could enable new plaintiffs to jump on the bandwagon. Only cases that were filed by Nov. 8 can tap into the fund, and because the settlement is not a class-action agreement, plaintiffs cannot opt-out and take Merck back to court.

Patients must clear three hurdles to qualify: Only myocardial infarction or ischemic stroke patients will be eligible; patients must be able to prove having received at least 30 Vioxx pills; and patients must be able to prove they received enough pills to have taken them within 14 days of the cardiac event.

Merck CEO Richard T. Clark says the pact is structured so that the company can get back to business as usual. "This agreement means that we can concentrate even more fully on our mission of discovering, developing, and delivering novel medicines and vaccines," Clark said in a conference call discussing the settlement.

At its peak, Vioxx brought in $2.5 billion in annual sales for Merck. Despite the disruption of the withdrawal and subsequent flood of lawsuits, the company was fairly successful at keeping up its R&D efforts. Clark pointed out that in a 24-month period Merck launched eight new drugs and vaccines, including the potential blockbusters Januvia and Gardasil.

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