Merck to Pay $4.85B Vioxx Settlement

TRENTON, N.J. -

Merck & Co. said Friday it will pay $4.85 billion to end thousands of
lawsuits over its painkiller Vioxx in what is believed to be the
largest drug settlement ever.

Merck faced personal injury lawsuits representing 47,000 plaintiffs,
and about 265 potential class action cases, filed by people or family
members who claimed the drug proved fatal or injured its users. The
agreement covers cases filed in both federal and state courts.

Negotiating teams met more than 50 times in eight states and spoke
hundreds of times over the telephone to hammer out the deal, according
to attorneys.

"I'm very happy with it," Chris Seeger, one of the six plaintiff
lawyers who helped negotiate the settlement, said Friday. "It's a
tremendous way to resolve this litigation."

Merck pulled Vioxx from the market Sept. 30, 2004 after its
researchers determined the then-blockbuster painkiller doubled risk of
heart attacks and strokes.

To qualify for a settlement, plaintiffs must have filed claims by
Thursday and meet several criteria, including medical proof that they
suffered a heart attack or stroke, that they received at least 30
Vioxx pills and that they received enough pills to support a
presumption that they were ingested within two weeks before injury.

That is a big concession by Merck, which has long claimed that Vioxx
caused harm only after 18 months of use.

Those claims were dismissed by independent scientists and plaintiffs
lawyers.

Merck stressed that the agreement is not a class action settlement and
that it is not admitting fault.

Company executives and attorneys said as recently as last month that
every case would be fought individually.

Analyst Steve Brozak of WBB Securities called Merck's' handling of the
litigation "a Harvard casebook study of how to deal with a problematic
product."

Investors seemed to agree, as Merck shares jumped 3 percent, or $1.63,
to $56.40 in pre-market trading.

Analysts predicted early on that liability could reach $50 billion,
but after losing its first case in a $253 million verdict, Merck has
won a string of civil cases.

Merck may now have put the uncertainty of millions of dollars in legal
costs behind it, though it has been fairly successful fighting cases
individually, winning 10 of 15 court verdicts to date.

The company said last month it had added $70 million to its reserves
for defending lawsuits. As of Sept. 30, Merck had reserved a total of
$1.92 billion for legal expenses and spent a total of $1.2 billion.

The deal becomes binding only if 85 percent of the plaintiffs in about
26,600 lawsuits agree to drop their cases. It was finalized in the
early morning hours after attorneys for Merck and the plaintiffs met
with three of the four judges overseeing nearly all Vioxx claims.

Seeger said the deal was put in motion last December when three key
judges pushed the parties to open out-of-court talks.

"Every claimant is going to be compensated" once their claim is
validated, he said.

Seeger believes it is the largest settlement ever in the industry and
said he will recommend that his 2,000 clients accept the deal.

Payments would vary, depending on severity of injuries and the length
of time that Vioxx was used.

"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,"
Richard T. Clark, chairman, president and chief executive officer of
Merck, said in a statement.

Attorneys for both sides were to present the deal Friday morning to
U.S. District Judge Eldon E. Fallon in New Orleans.

"In light of significant costs and delay that would result in
protracted litigation, the settlement program will ensure that those
who suffered injuries as a result of Vioxx are compensated fairly and
efficiently," according to a statement from one of the lead plaintiffs
law firms in the case, Beasley, Allen, Crow, Methvin, Portis & Miles
of Montgomery, Ala.