Merck settles Vioxx cases for $4.8bn

Merck has agreed to pay $4

Merck has agreed to pay $4.85 billion to settle most of the claims that its painkiller Vioxx caused heart attacks and strokes in thousands of users, the drug maker said today.

The agreement covers lawsuits filed against the company in US courts, resolving a major legal battle that has dogged the drugmaker since it pulled Vioxx off the market three years ago.

Merck withdrew the popular painkiller, which had $2.5 billion in annual sales, in September 2004 after a study showed it doubled the risk of heart attack and stroke in patients taking it for more than 18 months.

Merck has won most of the Vioxx cases that have since gone to trial and gained leverage in negotiating the settlement that many called favorable for the New Jersey-based drug maker.

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With the settlement, it appears Merck will escape the worst-case scenario for the company and its investors: a settlement approaching the $21 billion in costs drug maker Wyeth has paid related to its diet drug recall.

The drug maker, whose shares rose more than 4 per cent today, near a four-year high, said it would take a charge of $4.85 billion to cover costs of the agreement.

The settlement marks a shift in strategy for Merck, which previously said it intended to fight Vioxx litigation on a case-by-base basis rather than consider a broad settlement.

"We believe that this is the right agreement at the right time for Merck," Kenneth Frazier, Merck's president of Global Human Health and former general counsel, said in an interview.

"We believe that it provides a reasonable and responsible resolution of the litigation that provides us with a significant degree of certainly," Mr Frazier said.

At least 38,000 of the 60,000 Vioxx plaintiffs must sign on to the settlement for it to be viable, according to the company. But Merck officials said they believe the settlement will be attractive to many more than the minimum amount.