MERCK AGREES TO PAY $12.15 MILLION IN PLAINTIFF’S LEGAL FEES

The Food and Drug Administration approved the drug commonly referred to as Vioxx as a safe and effective medication for arthritis and acute pain on May 20, 1999. On September 30, 2004, Merck & Co. announced a voluntary worldwide withdrawal of Vioxx.  In the company’s press release, Merck stated the decision to recall the medication was, “based on new, three-year data from a prospective, randomized, placebo-controlled clinical trial, the APPROVe (Adenomatous Polyp Prevention on VIOXX) trial” which began in 2000, and showed there was an increased risk of heart attack and stroke after 18 months of treatment. An estimated 88,000 to 139,000 heart attacks, up to 40% of which were fatal, have been linked to the drug while it was on the market. Despite the FDA urging Merck to return Vioxx to the shelves in 2005, claiming the benefits outweighed the risks, Merck has kept the drug off the market.

 In addition to the approximately 10,000 claims made against Merck as a result of adverse effects of Vioxx and the inadequacy of Merck’s warnings, shareholder derivate suits were filed which charged Merck’s current and former directors with breaching their fiduciary duties by promoting the drug despite evidence the drug caused heart problems. The company aggressively marketed and continued to sell Vioxx for a year after learning the drug caused heart problems.  In fact, the year before the drug was taken off the shelves, worldwide sales were $2.5 billion dollars. On February 16, 2010, in an effort to end the Vioxx suits, Merck agreed to pay $12.5 million in Plaintiffs’ legal fees. In addition, Merck has agreed to create two product safety committees. Consumers should feel safe knowing the fox is guarding the hen house.

Allison Luxenberg, JD

Merck Pays $12 Million in Lawyer Fees to End Vioxx Suits

Charles Toutant

New Jersey Law Journal

February 16, 2010

Merck & Co. has agreed to pay $12.15 million in plaintiffs' legal fees to settle two shareholder derivative suits over its painkiller Vioxx -- one in state court in New Jersey and the other in the 3rd U.S. Circuit Court of Appeals.

The suits charged the Whitehouse Station, N.J., manufacturer's current and former directors and officers with breaches of their fiduciary duty in connection with the promotion of Vioxx despite evidence that it caused heart problems.

As part of the settlement, Merck agreed to create two committees to address product safety. One would identify and address risks that could impact customers and require immediate action. The other would draft and implement procedures to monitor the safety of drugs marketed or studied by the company and would establish and publicize internally procedures by which employees can raise concerns about drug safety.

The settlement also calls for Merck to appoint a chief medical officer, who would work to establish procedures addressing product safety issues; and ensure registration of clinical trials and submission of results to a federal registry and databank, as mandated by the Food and Drug Administration Amendments Act of 2007. The company must adopt and publicize on its intranet its procedures for compliance with the act with respect to the clinical trial registry. And Merck will retain an independent third party to monitor compliance.

"We believe the reforms negotiated here are substantial. They will prevent this sort of thing from happening again and thereby protect the corporation against the abuses of what happened during Vioxx," says Peter Pearlman of Cohn, Lifland, Pearlman, Herrmann & Knopf in Saddle Brook, N.J., who represented the federal plaintiffs. "We'd be happy if this had never happened, but we're satisfied that this is a good result for the company."

A Merck spokesman, Ronald Rogers, says the company considered the settlement "the best and most appropriate way to put these suits behind us," and adds, "we believe the company has always acted appropriately and in the best interests of patients and we believe this settlement is consistent with that belief."

Merck's lawyer in both cases, Mary Eaton of Willkie, Farr & Gallagher in New York, did not return a call.

The settlement does not apply to a separate damages suit filed against Merck by shareholders, which is pending before the U.S. Supreme Court.

Merck introduced Vioxx in 1999 but pulled it off the market in 2004 because of studies suggesting an increased risk of heart attacks and strokes in long-term users. The company has set aside $4.85 billion to pay damages to users.

The parties in the state case, Fagin v. Scolnick , ATL-L-3406-07-MT, reached an agreement last Oct. 19 during a settlement conference with Superior Court Judge Carol Higbee, according to a Form 8-K that Merck filed Tuesday with the Securities and Exchange Commission. Higbee gave preliminary approval on Monday and has scheduled a hearing on final approval for March 22.

The federal suit, In re Merck & Co., Inc. Consolidated Derivative Litigation, 08-3158, consolidates shareholder suits around the country that the Judicial Panel on Multidistrict Litigation transferred to New Jersey.

The case is in the 3rd Circuit on appeal from U.S. District Judge Stanley Chesler's order of dismissal on the grounds that the plaintiffs had failed to make a pre-suit demand to Merck and had failed to adequately plead that the demand would have been futile. The case was argued last July 15.

Last Nov. 19, the 3rd Circuit granted the parties' joint motion to stay proceedings pending final approval of the state court settlement, at which point the federal court plaintiffs will move for dismissal, Pearlman says.