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Vioxx deal may cause pain
The $4.85-billion settlement offered last week by pharmaceutical giant Merck & Co. to patients stricken by heart attacks and strokes after taking the company's painkiller Vioxx could mean the end to one of the most unpleasant and costliest chapters in the pharmaceutical industry's history.
But could it unravel?
About 47,000 plaintiffs have until March 1 to decide whether to take immediate payouts estimated to range from $50,000 to $1.5 million. But some little-noticed provisions of the deal are controversial and threaten to derail the settlement.
The highly unusual agreement not only requires 85% of plaintiffs to agree before it can be finalized but also might unduly force some claimants to settle or risk losing their lawyer.
That's because the deal includes highly unusual restrictions on plaintiffs' lawyers. The settlement requires them to recommend the deal to all of their clients or none. In addition, lawyers must stop representing any clients who turn it down as long as they don't violate ethics rules.
The agreement was hammered out by Merck and a committee of top trial lawyers who represent Vioxx claimants. Lawyers for both sides said it was a good deal because it provided immediate and fair compensation instead of lengthy trials with uncertain outcomes. Merck requested the all-or-nothing conditions because it feared lawyers would settle weaker cases and cherry-pick stronger ones for trial and possible higher payouts.
Some legal experts, however, are worried that the unusual legal maneuvers might provide attorneys a financial incentive to urge clients to go along with the settlement.
Ironically, those who feel they have the strongest cases and want to go to trial would be the ones who potentially have the most to lose under the deal, experts say.
As a result, some legal experts are calling on lawyers to cautiously scrutinize the agreement and the effect it might have on their clients.
"This is a black-and-white issue," said Stephen Gillers, a professor of legal ethics at New York University, who worries that the proposal could establish a dangerous precedent. "Clients are not inventory that lawyers can just shed when they become inconvenient. It's forbidden."
Merck sold more than $9 billion worth of the drug before pulling it from the market in late 2004 after research tied it to higher risk of heart attack and stroke. Analysts estimated that the Whitehouse Station, N.J.-based company could pay as much as $50 billion in judgments, settlements and other litigation costs associated with the drug.
Despite losing a $253-million award in the first Vioxx trial in 2003, Merck has won 11 of 16 Vioxx cases to date. The company has gained momentum in court on the argument that although studies linked the drug to specific ailments, it's hard to pinpoint how the medication leads to such common diseases in individuals.
Payouts under the proposed settlement will depend on the number of people who qualify, their age, health status and the length of time they took the drug. Payments are expected to average $100,000 to $200,000 before lawyers' fees and other expenses, which usually amount to 30% to 50%.
Some plaintiffs like Nancy Tufford of Minneapolis want nothing to do with the deal.
Tufford, a 69-year-old retired administrative assistant who developed congestive heart failure in 2004 after taking Vioxx for two years, said she was healthy and swam several times a week before developing her heart problems. She blames the medication for her condition.
Tufford believes the deal isn't good enough and wants a jury to decide whether the company is to blame. She is also holding out because she believes the company relied on improper animal data to support its claims that the drug was safe.
"They were totally misleading," Tufford said. "Money won't bring back my healthy heart."
Ted Mayer, a partner at Hughes Hubbard & Reed in New York who is representing Merck, said the proposal allowed payouts based on the severity of a plaintiff's case, so the settlement was not a one-size-fits-all deal.
U.S. District Judge Eldon Fallon of New Orleans will oversee the settlement to make sure lawyers who withdraw from a case don't violate ethical guidelines, Mayer added.
Los Angeles attorney Thomas Girardi, who is representing hundreds of Vioxx cases, is one of the lead plaintiff lawyers who negotiated the deal with Merck.
The settlement, he said, is the best attainable deal for clients. Girardi said he was confident that 85% of plaintiffs nationwide would agree to the proposal. He said if any of his clients turned it down, he would petition the court to withdraw as their attorney and provide them with a list of other lawyers who could represent them.
"It's always the clients' decision to accept a settlement or not, and lawyers aren't going to do anything that's unethical," he said. But "those considering this should know these are not easy cases to try in court."
Experts say it's too soon to know how many plaintiffs will ultimately sign on to the settlement. Several top plaintiff lawyers involved in the settlement are sponsoring seminars across the country, including Los Angeles, in coming weeks to explain the nearly 70-page deal to lawyers handling Vioxx cases.