For the drug maker Merck to pay almost $5 billion to settle lawsuits from people who contended that the painkiller Vioxx caused their heart attacks and strokes may not seem like a corporate victory.
Carol Ernst of Texas, whose husband, Robert, died after taking Vioxx for less than a year, won punitive damages from Merck.
At a fraction of the price that analysts initially estimated it would pay, Merck, one of the largest American drug makers, hopes to put one of the most troubling episodes in its history behind it.
The settlement amount it announced yesterday, $4.85 billion, represents only about nine months of profit for Merck, whose stock rose 2.3 percent on news of the agreement, even as the broader stock market was sharply lower. Two years ago, some analysts estimated that Merck would have to pay as much as $25 billion to settle Vioxx claims.
The success of Merck ’s strategy — fighting every claim against it in court for several years and only then agreeing to a blanket settlement — could encourage other pharmaceutical companies to take the same route in other lawsuits, independent legal experts say. Merck has won most of the cases to reach juries, as plaintiffs’ lawyers have struggled to convince jurors that Vioxx caused the heart problems their clients suffered.
Clinical trials prove that Vioxx raises the risk of heart attacks, but linking its use to any one person’s problems is difficult, especially when the person had other risk factors like smoking.
More broadly, the case shows that after years of aggressively lobbying against trial lawyers, corporate America has regained substantial leverage against plaintiffs and their lawyers — whose lawsuits bankrupted Dow Corning and the asbestos industry in the 1990s. In many states, changes governing lawsuits have made claims tougher to bring and win, while much public opinion has turned against plaintiffs.
“The law governing class-actions has grown decidedly less favorable than it was,” said Peter Schuck, a professor at Yale Law School who specializes in complex litigation.
Merck said it was agreeing to a settlement now because the judges overseeing the cases had encouraged both sides to come to terms and because it wanted to stop spending $600 million a year on its defense.
Of course, what is good news for Merck may be less so for the patients who suffered heart attacks or strokes after taking Vioxx. Depending on how many claims are filed to the settlement fund, those people will receive payments averaging about $120,000 each before legal fees and expenses, which could swallow about 40 percent of their payments.
Plaintiffs are not required to accept the settlement. But under terms of the agreement their lawyers must encourage them to do so — and would not be allowed to represent those clients if they insisted on bringing their cases to court.
Besides Merck, the biggest winner in the case may be the plaintiffs’ lawyers. They will split nearly $2 billion in fees and expenses, although that figure is far lower than they initially hoped.
Dr. Eric Topol, a cardiologist who in 2001 was co-author of a paper in The Journal of the American Medical Association warning of the risks of Vioxx, said he believed that the payment amounted to little more than a slap on the wrist for Merck.
“I think they’ve gotten off quite easily, frankly, for the problems that they’ve engendered,” Dr. Topol said.
If Dr. Topol’s view is correct, Merck’s lawyers deserve much of the credit. In 2005, as it faced a public relations nightmare, Congressional hearings, angry doctors, a plunging stock price and tens of thousands of lawsuits, Merck could have opted to empty its corporate coffers for a quick settlement. Instead, said Benjamin Zipursky, a professor at Fordham Law School who has closely followed the case, the company chose to fight, despite the short-term public relations hit.
“They decided they would deal with it by taking a ‘no-holds-barred, we’re going to fight every case’ strategy.” Mr. Zipursky said, “What it looks like today is that’s a good strategy when you get in that situation.”
Lawyers for Merck and for plaintiffs said they had been working in secret on the agreement for almost a year. In December 2006, the judges in Louisiana, New Jersey and California who oversee the vast majority of the 27,000 federal and state lawsuits asked the sides to begin negotiating.
Progress toward a deal proceeded in fits and starts, with much of the negotiating taking place in Washington and New Orleans, said Christopher A. Seeger, who is on the committee of lawyers that represents all the plaintiffs’ lawyers who have sued Vioxx in federal court.
