Closing another chapter in the painful saga over withdrawn arthritis pill Vioxx, Merck & Co. has agreed to settle lawsuits brought by shareholders who lost billions, by appointing two committees and a chief medical officer to monitor drug safety and keep the company honest.
Vioxx, which had peak sales of $2.5 billion a year, was pulled from the market in 2004 because it doubled the risk of heart attacks and strokes. Thousands of lawsuits brought by patients, their survivors and others alleged Merck officials knew about those risks and hid them. In November 2007, Merck reached a $4.85 billion settlement to resolve most of the roughly 50,000 lawsuits alleging Vioxx users were harmed or killed.
The new settlement, announced late Tuesday, would end state and federal lawsuits Merck stockholders filed against the Whitehouse Station, N.J.-based company and more than two dozen current and former Merck executives and board members.
Shareholders lost a combined $28 billion when Merck stock plunged overnight after it pulled Vioxx from the market on Sept. 30, 2004, but they won't receive any reimbursement under the settlement, other than $12.15 million to cover their attorneys' fees.
"This proposed settlement is the best and most appropriate resolution of these suits and enables the company to put this matter behind it. It does not constitute an admission of liability or wrongful conduct," Merck spokesman Ron Rogers said. "The company acted appropriately and in the best interests of patients with respect to Vioxx."
"This is the perfect end" to Merck's "flawlessly executed strategy," to fight all the lawsuits over Vioxx, analyst Steve Brozak of WBB Securities said. "Any time you have a settlement with these low-dollar amounts, it's good news for them."
He said Merck's refusal to settle any lawsuits — except the $4.85 billion product liability settlement, a fraction of what analysts initially feared Merck would have to pay — blocked any "trickle-down effect" of having to pay out in other lawsuits.
Brozak said Merck already has in place most of the people who will serve on the new oversight committees, and that the company likely would comply with the settlement.
"It makes good sense for this not to be lip service. You can only have a breakdown like this (Vioxx) once," he said.
The settlement calls for Merck, the world's second-biggest drugmaker, to fill a previously announced position of chief medical officer. It did so back in December, when it hired Dr. Michael Rosenblatt, then dean of Tufts University School of Medicine.
Rosenblatt will be the company's public voice on product safety issues, be independent of Merck Research Laboratories, work with government regulators and oversee the truthfulness of product advertising. He will report directly to Merck's chief executive, serve on the company's executive committee and be able to meet with other board members without any Merck executives being present.
He also will serve on two new committees Merck must establish under the proposed settlement.
The new product safety committee would draft and implement procedures to monitor the safety of any drug sold or studied by Merck and would set up procedures enabling employees to raise safety concerns.
The other committee would identify and promptly address risks that could affect the company, its products or customers — and so protect the interests of shareholders.
Merck also must publicize all new and ongoing studies of experimental drugs it is developing and all results of those studies.
The settlement must be approved by a New Jersey judge. Superior Court Judge Carol Higbee has scheduled a final hearing on the settlement for March 22 in Atlantic City.