Merck & Co., Inc. 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 per cent 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: ยท
● 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 enrolment in the program to 100 per cent 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 enrol in the settlement process: (a) 85 per cent or more of all currently pending and tolled MI claims, (b) 85 per cent or more of all currently pending and tolled ischemic stroke claims; (c) 85 per cent or more of all eligible claims involving a death; and (d) 85 per cent or more of all eligible claims alleging more than 12 months of use; and
● This agreement applies only to US 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 defence 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, 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.
Juries have now decided in favour of the company 12 times and in plaintiffs' favour 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.
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.