The maker of a cardiovascular drug that failed to live up to its billing has taken it on the chin once more agreeing to pay out more than $800 million in the latest in a string of settlements
More than 11 years after pulling its Vioxx painkiller from the market, Merck & Co. agreed to pay another $830 million to settle litigation, raising its total payouts in lawsuits and government investigations to more than $8.5 billion.
The settlement announced Friday resolves a lawsuit with investors who claimed Merck made misleading statements about the safety of the drug, which the company pulled in 2004 after a study found it posed an increased risk of heart attacks and strokes.
The settlement, which needs a judge’s approval, will be offset in part by insurance, and Merck said it will take a charge for the fourth quarter of 2015 of $680 million. The company, which didn’t admit liability or wrongdoing, still faces individual securities lawsuits. The settlement involves investors from May 1999 to October 2004.
The decade-long fallout from Vioxx involved thousands of lawsuits, nearly two dozen personal-injury trials, months of secret negotiations with plaintiffs’ lawyers, a criminal investigation and a series of legal settlements.
“For Merck and Merck shareholders, the worst is behind them,” said Erik Gordon, a professor at the University of Michigan’s business and law schools. “There still are cases left and Merck can’t ignore them, and there is some risk. But I don’t think they’re going to be facing another round of billion-dollar settlements. Merck hasn’t closed the book but they can finally allow themselves a sigh of relief.”
Vioxx Sales
Approved by the U.S. Food and Drug Administration in 1999, Vioxx became Merck’s third-largest-selling drug by 2003, generating $2.5 billion in annual sales. The company pulled the painkiller in 2004 after a study found it posed an increased risk of heart attacks and strokes.
Merck paid $4.85 billion to settle thousands of patient lawsuits claiming injuries, and another $1.9 billion for legal costs. It also paid $950 million, and a unit pleaded guilty to a criminal misdemeanor charge related to the illegal marketing of Vioxx. That settlement included a $321.6 million criminal fine and $628.3 million to resolve civil claims that it sold Vioxx for unapproved uses and made false statements about its cardiovascular safety.
2011 Ruling
A judge ruled in 2011 in federal court in Newark, New Jersey, that the shareholders could pursue claims that Merck misled them about a 2000 study reporting that the medicine caused five times more heart attacks than another painkiller, naproxen.
The company still faces individual securities suits over Vioxx from investors who opted out of the class-action case certified by the judge in January 2013.
“Vioxx has had long-lasting side effects for Merck,” said Gordon, who teaches classes about how drugs are developed and regulated. “This is one of peculiarities of the American legal system. For the same act you can be sued a dozen different ways and you can be sued a decade later. It can take forever to finally say ‘OK, we’re done with that episode.’”
The case is Merck & Co. Inc. Securities Litigation, MDL-1658, U.S. District Court, District of New Jersey (Newark).
Sophia Pearson and David Voreacos, Bloomberg News
The settlement announced Friday resolves a lawsuit with investors who claimed Merck made misleading statements about the safety of the drug, which the company pulled in 2004 after a study found it posed an increased risk of heart attacks and strokes.
The settlement, which needs a judge’s approval, will be offset in part by insurance, and Merck said it will take a charge for the fourth quarter of 2015 of $680 million. The company, which didn’t admit liability or wrongdoing, still faces individual securities lawsuits. The settlement involves investors from May 1999 to October 2004.
The decade-long fallout from Vioxx involved thousands of lawsuits, nearly two dozen personal-injury trials, months of secret negotiations with plaintiffs’ lawyers, a criminal investigation and a series of legal settlements.
“For Merck and Merck shareholders, the worst is behind them,” said Erik Gordon, a professor at the University of Michigan’s business and law schools. “There still are cases left and Merck can’t ignore them, and there is some risk. But I don’t think they’re going to be facing another round of billion-dollar settlements. Merck hasn’t closed the book but they can finally allow themselves a sigh of relief.”
Vioxx Sales
Approved by the U.S. Food and Drug Administration in 1999, Vioxx became Merck’s third-largest-selling drug by 2003, generating $2.5 billion in annual sales. The company pulled the painkiller in 2004 after a study found it posed an increased risk of heart attacks and strokes.
Merck paid $4.85 billion to settle thousands of patient lawsuits claiming injuries, and another $1.9 billion for legal costs. It also paid $950 million, and a unit pleaded guilty to a criminal misdemeanor charge related to the illegal marketing of Vioxx. That settlement included a $321.6 million criminal fine and $628.3 million to resolve civil claims that it sold Vioxx for unapproved uses and made false statements about its cardiovascular safety.
2011 Ruling
A judge ruled in 2011 in federal court in Newark, New Jersey, that the shareholders could pursue claims that Merck misled them about a 2000 study reporting that the medicine caused five times more heart attacks than another painkiller, naproxen.
The company still faces individual securities suits over Vioxx from investors who opted out of the class-action case certified by the judge in January 2013.
“Vioxx has had long-lasting side effects for Merck,” said Gordon, who teaches classes about how drugs are developed and regulated. “This is one of peculiarities of the American legal system. For the same act you can be sued a dozen different ways and you can be sued a decade later. It can take forever to finally say ‘OK, we’re done with that episode.’”
The case is Merck & Co. Inc. Securities Litigation, MDL-1658, U.S. District Court, District of New Jersey (Newark).
Sophia Pearson and David Voreacos, Bloomberg News
