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Contingent Settlement of the Year: Merck Agrees to Pay $4.85 Billon to Settle Vioxx Suits

We were just talking the other day at the IP ADR Blog about the power of contingent agreements to settle lawsuits in connection with the recent Verizon/Vonage settlement here.

Now its the turn of another BIG “V” LAWSUIT — Merck’s Vioxx litigation — to benefit itself with the largest drug settlement ever but only in the event 85% of all 26,600 litigants agree to drop their cases.

Here’s an except and link to the MSNBC article on the settlement:  

TRENTON, N.J. – Merck & Co. said Friday it will pay $4.85 billion to end thousands of lawsuits over its painkiller Vioxx in what is believed to be the largest drug settlement ever.

The deal becomes binding only if 85 percent of all plaintiffs in about 26,600 lawsuits agree to drop their cases. It was finalized in the early morning hours after attorneys for Merck and the plaintiffs met with three of the four judges overseeing nearly all Vioxx claims.

Merck faced personal injury lawsuits representing 47,000 plaintiffs, and about 265 potential class action cases, filed by people or family members who claimed the drug proved fatal or injured its users. The agreement covers cases filed in both federal and state courts.

See the Wall Street Journal Law Blog’s coverage More on Vioxx:  Mass Torts in a World of Settlement here and check out Merck Vioxx by the Numbers for the trial “box scores,” cost of litigation and the like that make this settlement a “win” for Vioxx.

According to Merck’s press release here, a fund will be created and Plaintiffs injured as a result of taking the drug will be entitled to recompense under the following contingencies:

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.

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), the following number of plaintiffs enroll in the settlement process

  • 85 percent or more of all currently pending and tolled MI claims,
  • 85 percent or more of all currently pending and tolled ischemic stroke claims
  • 85 percent or more of all eligible claims involving a death; and
  • 85 percent or more of all eligible claims alleging more than 12 months of use.

My question:  how much of the nearly $5 billion settlement fund does Merck actually project will be paid to Plaintiffs able to jump through all three hoops and what happens to sums remaining in the fund if they are not all expended to compensate Plaintiffs?



Victoria Pynchon

Attorney-mediator Victoria Pynchon is a panelist with ADR Services, Inc. Ms. Pynchon was awarded her LL.M Degree in Dispute Resolution from the Straus Institute in May of 2006, after 25 years of complex commercial litigation practice, with sub-specialties in intellectual property, securities fraud, antitrust, insurance coverage, consumer class actions and all… MORE >

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