Merck Agreement to
Resolve U.S. VIOXX® Product Liability Lawsuits
From
www.angelreyesblog.com
By Angel Reyes
November 9, 2007
Big news hit this morning as
VIOXX
manufacturer, Merck agreed to resolve 95% of the outstanding VIOXX
claims with a $4.85 BILLION settlement fund. The fund will be established
and victims will be evaluated on a case-by-case basis, with varying amounts
being paid from the fund. This is one of thelargest "resolutions" of
its kind ever and clearly indicates Merck's acceptance of responsibility
for the dangers this drug posed and the thousands of people that suffered. Below
is Merck's official press release:
Merck Agreement to Resolve U.S.
VIOXX® Product Liability
Lawsuits
Agreement Provides for $4.85 Billion Payment
WHITEHOUSE STATION, N.J., Nov. 9, 2007 - Merck & Co., Inc. today
announced that it has entered into an agreement with the law firms that
comprise the executive committee of the Plaintiffs' Steering Committee
of the federal multidistrict VIOXX litigation as well as representatives
of plaintiffs' counsel in state coordinated proceedings to resolve state
and federal myocardial infarction (MI) and ischemic stroke claims already
filed against the Company in the United States. The agreement, which
also applies to tolled claims, was signed by the parties this morning after
they met with three of the four judges overseeing the coordination of more
than 95 percent of the current claims in the VIOXX litigation.
If certain conditions under the agreement are
met, the Company will pay a fixed amount of $4.85 billion into a settlement
fund for qualifying claims that enter into the resolution process. This is not a class-action
settlement. Claims will be evaluated on an individual basis.
"This is a good and responsible agreement that will allow the Company
to concentrate even more fully on its mission of discovering, developing
and delivering novel medicines and vaccines," said Richard T. Clark,
chairman, president and chief executive officer of Merck. "The
agreement is structured to provide a significant degree of certainty toward
resolving the majority of the outstanding VIOXX product
liability claims in the United States for a fixed amount."
The conditions in the agreement, which is open only to those cases filed
or tolled on or before Nov. 8, 2007, include:
• To qualify, claimants
will have to pass three gates: an injury gate requiring objective, medical
proof of MI or ischemic
stroke (as defined in the agreement), a duration gate based on documented
receipt of at least 30 VIOXX pills, and a proximity gate requiring receipt
of pills in sufficient number and proximity to the event to support a presumption
of ingestion of VIOXX within 14 days before the claimed injury;
• Individual cases will be examined by administrators
of the resolution process to determine qualification based on objective,
documented facts provided by claimants, including records sufficient for
a scientific evaluation of independent risk factors;
• The agreement provides that Merck does not admit causation
or fault;
• Neither stroke
claims that are hemorrhagic in nature nor transient ischemic attacks
will qualify;
• Law firms on the federal and state Plaintiffs' Steering
Committees and firms that have tried cases in the coordinated proceedings
must recommend enrollment in the program to 100 percent of their clients
who allege either MI or ischemic stroke;
• The parties agree to seek court orders from the four
coordination judges requiring plaintiffs' attorneys to promptly register
all of their VIOXX claims, whether filed or tolled, and to identify the
alleged injury - in order to establish the universe of all existing claims
in the United States;
• Participation conditions: payment obligations under
the agreement will be triggered only if, by March 1, 2008 (subject to extension
by Merck), plaintiffs enroll in the settlement process: (a) 85 percent
or more of all currently pending and tolled MI claims, (b) 85 percent or
more of all currently pending and tolled ischemic stroke claims; (c) 85
percent or more of all eligible claims involving a death; and (d) 85 percent
or more of all eligible claims alleging more than 12 months of use; and
• This agreement applies only to U.S. legal residents
and those who allege that their MI or ischemic stroke occurred in the United
States.
>Under the agreement, separate funds will be
created by the Company in the amount of $4 billion for MI claims and
$850 million for ischemic stroke claims. Once triggered, Merck's total payment for both funds of $4.85
billion is a fixed amount to be allocated among qualifying claimants based
on their individual evaluation. While at this time the exact number
of claimants covered by this agreement is unknown, the total dollar amount
is fixed. Payments to individual qualifying claimants could begin
as early as August 2008 and then will be paid over a period of time. Merck
retains its right to terminate this process without any payment to any
claimant, and to defend each claim individually at trial if any of the
participation conditions in the agreement are not met.
The Company expects to record a fourth-quarter 2007 pre-tax charge in
the amount of $4.85 billion to cover the cost of the agreement.
"This agreement is the product of our defense strategy in the United
States during the past three years and is consistent with our commitment
to defend each claim individually through rigorous scientific scrutiny. Under
the agreement, there will be an orderly, documented and objective process
to examine individual claims to determine if they qualify for payment," said
Bruce N. Kuhlik, senior vice president and general counsel of Merck. "This
agreement also makes sense for the Company because since 2004, we have
reserved approximately $1.9 billion for defending VIOXX litigation and,
absent this agreement, could anticipate that the litigation might stretch
on for years."
"Creating a process to look at individual claims is the fairest way
to efficiently and quickly provide payment to qualified claimants," said
Russ Herman, Liaison Counsel in the federal multidistrict VIOXX litigation
and Chair of the Plaintiffs' Negotiating Committee. "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 interest. This
agreement would only apply to claims already filed or tolled."
"This is the right time for an agreement," said Mr. Kuhlik. "Recent
court rulings confirmed that the window has closed for filing suits in
a number of states, consistent with our view that statutes of limitations
have expired in almost every state. Additionally, three of the coordination
judges have issued orders that require non-eligible and non-participating
plaintiffs to provide documentation of the factual basis for their claims
early in the litigation process. Merck reserves the right under this
agreement to terminate our involvement unless the vast majority of eligible
claimants elect to participate."
Forty-two states, Puerto Rico and the District
of Columbia have statutes of limitations of three years or less. Already, New Jersey Superior
Court Judge Carol Higbee and Federal District Court Judge Eldon Fallon
have issued orders in cases from New Jersey and eight other jurisdictions
ruling that the statutory period for making VIOXX personal injury claims
has passed. Merck voluntarily withdrew VIOXX from the marketplace
on Sept. 30, 2004.
The discussions between Merck and the plaintiffs
were originally requested by Judge Fallon, Judge Higbee, California Superior
Court Judge Victoria Chaney, and Texas County Court Judge Randy Wilson. Judges
Fallon, Higbee and Chaney, who met with the parties prior to the agreement
being signed, issued case management orders that will require plaintiffs
seeking to pursue VIOXX claims outside this resolution process to provide
in a timely fashion certified copies of their medical and pharmacy records,
as well as expert causation opinions.
Merck has submitted a similar order to Judge Wilson.
The Company will continue to defend all claims that are not included in
the resolution process.
Plaintiffs requesting additional information should contact the Chair
of the Plaintiffs' Negotiating Committee for further information:
Russ Herman of Herman, Herman, Katz & Cotlar, LLP at (504) 581-4892.
Status of Litigation
Juries have now decided in favor of the Company 12 times and in plaintiffs'
favor five times. One Merck verdict was set aside by the court
and has not been retried. Another Merck verdict was set aside and
retried, leading to one of the five plaintiff verdicts. There have
been two unresolved mistrials.
As of Oct. 9, 2007, in the United States, the Company had been served
or was aware that it had been named as a defendant in approximately 26,600
lawsuits, filed on or before Sept. 30, 2007, which include approximately
47,000 plaintiff groups, alleging personal injuries resulting from the
use of VIOXX, and in approximately 264 putative class actions alleging
personal injuries and/or economic loss.
Merck has entered into a tolling agreement
with the multidistrict litigation Plaintiffs' Steering Committee that
establishes a procedure to halt the running of the statute of limitations
for certain categories of claims allegedly arising from the use of VIOXX
by non-New Jersey citizens. The
Tolling Agreement requires any tolled claims to be filed in federal court. As
of Sept. 30, 2007, approximately 14,100 claimants had entered into Tolling
Agreements. The parties agreed that April 9, 2007, was the deadline
for filing Tolling Agreements and no additional Tolling Agreements are
being accepted.
The claims of over 5,550 plaintiff groups had
been dismissed as of Sept. 30, 2007. In addition, about 20 cases
scheduled for trial were either dismissed or withdrawn from the trial
calendar by plaintiffs before a jury could be selected.
Investor Conference Call
Investors and media are invited to a live audio web cast of a conference
call today from 8:30 a.m. EST until 9:30 a.m. EST by visiting the Newsroom
section of Merck's Web site, www.merck.com/newsroom/webcast/. Institutional
investors, analysts and media can participate in the call by dialing
(706) 758-9927 or (877) 381-5782. To listen to the replay, dial
(706) 645-9291 or (800) 642-1687 and enter ID # 22970377 or access the
web cast. Replays will be available starting at 10:00 a.m. EST
today. Participants will include:
• Richard T. Clark, Merck
chairman, president and chief executive officer;
• Bruce N. Kuhlik, Merck senior vice president and general
counsel;
• Kenneth C. Frazier, Merck executive vice president
and president, Global Human Health;
• Peter N. Kellogg, Merck executive vice president and
chief financial officer;
• Graeme Bell, Merck executive director investor relations;
and
• Theodore V.H. Mayer, Hughes Hubbard & Reed LLP,
Merck outside counsel for VIOXX.
Forward-Looking Statement
This press release contains "forward-looking statements" as that
term is defined in the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and involve risks
and uncertainties, which may cause results to differ materially from those
set forth in the statements. The forward-looking statements may include
statements regarding product development, product potential or financial
performance. No forward-looking statement can be guaranteed and actual
results may differ materially from those projected. Merck undertakes
no obligation to publicly update any forward-looking statement, whether
as a result of new information, future events, or otherwise. Forward-looking
statements in this press release should be evaluated together with the
many uncertainties that affect Merck's business, particularly those mentioned
in the risk factors and cautionary statements in Item 1A of Merck's Form
10-K for the year ended Dec. 31, 2006, and in its periodic reports on Form
10-Q and Form 8-K, which the Company incorporates by reference.
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