Wyeth Backs Diet Drug Deal Changes
Wyeth said Monday that it would support changes in a nationwide legal settlement with users of its “fen-phen” diet drugs, speeding up compensation to as many as 40,000 people who say they were harmed by the recalled medicines.
Wyeth endorsed the proposed changes that would guarantee payments to many patients who otherwise risked getting nothing.
The move came after more than 95% of the affected people in the larger national settlement agreed to the changes.
The drugs Pondimin and Redux, used in the popular fen-phen slimming cocktail, were recalled in 1997 after being linked to heart valve damage and a often fatal lung condition.
Madison, N.J.-based Wyeth reached a national settlement in 1999. Users in the United States were entitled to different levels of compensation.
The changes would create a new claims processing structure, funding arrangement and payment schedule for the less serious, but most numerous, claims. The changes must be approved by U.S. District Judge Harvey Bartle.
Leerink Swann & Co. analyst Andrew Oh said he expected final approval of the changes this month, after Bartle clears the path.
The changes will represent a “modest positive” for the company by reducing its litigation risk.
But Oh warned that the biggest legal danger to Wyeth remained from about 60,000 former users who opted out of the settlement and sued the company for damages.
Wyeth has set aside nearly $17 billion to cover costs from the settlement and other fen-phen legal liabilities and has warned it may need to take additional charges.
Wyeth said in July that the proposed changes to the settlement would help stem the number of medical claims it believes were fraudulent.
Under the proposed changes, Wyeth said Monday that it would set aside $1.28 billion to pay claimants who pass a medical review determining that they suffered damage from the drugs.
Anyone participating in the new part of the settlement who has heart valve surgery or other more serious medical conditions by Dec. 31, 2011, would remain eligible to submit claims to the existing settlement trust.
Shares of Wyeth rose 17 cents to $42.27 on the New York Stock Exchange.
