Pharmaceutical giant Merck & Co. said Friday that it will pay $4.85 billion to end thousands of lawsuits over its painkiller Vioxx.
The amount, to be paid into a so-called settlement fund, is believed to be the largest drug settlement ever.
Claims must meet certain criteria to qualify for payment as the settlement is not a class action.
The Whitehouse Station, N.J.-based drug maker emphasized that it is not admitting fault.
The settlement lets Merck avoid the personal-injury lawsuits of some 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.
Merck pulled Vioxx from the market Sept. 30, 2004, after its researchers determined the then-blockbuster painkiller doubled risk of heart attacks and strokes.
"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," Chairman, President and CEO Richard Clark said in a statement.
The agreement is open only to those cases filed or tolled on or before Nov. 8, 2007, according to the statement.
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," said Chris Seeger, one of the six plaintiff lawyers who helped negotiate the settlement. "It's a tremendous way to resolve this litigation."
Under the agreement, Merck will create separate funds: one for $4 billion for myocardial infarction claims; and another for $850 million for ischemic stroke claims.
Myocardial infarction (MI) is the damaging or death of a part of the heart muscle caused by a reduction or a complete stoppage of the blood supply to that area of the heart.
The $4.85 billion payout is a fixed amount that will be allocated after evaluation of each claimant.
"There will be an orderly, documented and objective process to examine individual claims to determine if they qualify for payment," said Bruce N. Kuhlik, senior vice president and general counsel of Merck.
The drug manufacturer doesn't know the exact number of claimants but the total dollar amount is fixed.
Payments to individual qualifying claimants could begin as early as August 2008.
Key criteria for payment include the plaintiff proving having suffered a heart attack or stroke as well as receiving enough pills to support taking them 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.
Whitehouse Station, N.J.-based Merck will cover the settlement's cost by taking a $4.85 billion charge, before taxes, against fourth-quarter results.
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. Merck shares advanced $2.60, or 4.75 percent, to $57.37 in afternoon trade on the New York Stock Exchange.
The deal becomes binding only if 85 percent of the plaintiffs in about 26,600 lawsuits agree to drop their cases.
With additional reporting by The Associated Press
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