Merck agrees to pay $4.85 billion in Vioxx settlement

The agreement with plaintiffs lawyers heading the U.S. federal and state cases against Merck resolves a legal battle that threatened to drag on for years and had already dogged the drugmaker since Vioxx was pulled off the market three years ago.

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.

Regardless of how many plaintiffs enter the settlement, the total pie is fixed at $4.85 billion.

While the drugmaker said it would still defend all claims not included in the settlement, the deal marks a shift in strategy for Merck. It had maintained since the day of the withdrawal it would fight Vioxx litigation on a case-by-base basis rather than consider a broad settlement.

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 at least 18 months.

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

"If Merck can put this to bed for anything close to ($4.85 billion), it will be a home run," said Samuel Davis, an attorney with Davis, Saperstein & Salomon in Teaneck, New Jersey who represents about 100 clients who took Vioxx.

Davis said he had not yet decided whether to recommend the settlement to them.

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