A New Jersey federal judge has granted final approval to the $1.06 billion settlement between Merck & Co. Inc. and the drug company’s investors to resolve multidistrict litigation (MDL) over the alleged illegal marketing of the painkiller Vioxx. U.S. District Judge Stanley R. Chesler said the settlement was an “extremely fair and reasonable” conclusion to the long-running case. Judge Chesler signed off on the pharmaceutical giant’s $830 million payment to shareholders and an additional $232 million for legal fees and expenses. It should be noted that there were very few objections to the settlement received and those were rejected by the court.
The agreement represents the largest securities class action settlement ever with a pharmaceutical company, marking an end to a case that was on the eve of trial after 12 years of “hard-fought litigation,” including a unanimous victory for the Plaintiffs at the U.S. Supreme Court.
The settlement class includes those that purchased Merck securities sometime between May 21, 1999, through Oct. 29, 2004, when the drug company recalled Vioxx in the wake of widespread media reports about the drug’s risks.
In 2011, the company agreed to a plea bargain to pay $950 million to 43 states, the District of Columbia and the U.S. Department of Justice (DOJ), which said that the company put profits ahead of patient safety. As in the criminal case, the investors alleged that Merck attempted to conceal Vioxx’s cardiovascular risks and claimed that rheumatoid arthritis patients taking the drug in a clinical study were five times more likely to suffer a heart attack than those who took a drug called Naproxen. The reports of the drug’s risks and the recall sent the company’s stock tumbling, according to the investors.
The investors’ claims against the company were consolidated in a New Jersey federal court in 2005. The investors accused the company of making misrepresentations to inflate the stock’s value and also accused several executives of insider trading, among other violations. The investors stated they faced substantial risks in establishing liability if the case had gone to trial. Among the challenges facing the investors was having to show that Defendants knew or recklessly disregarded certain data regarding drug safety and knowingly made false statements.
Judge Chesler cited the overwhelmingly favorable response to the settlement from class members and the very small number of objections. Only 14 objections were made and Judge Chesler rejected them as being “insubstantial.” The lead Plaintiffs are represented by Max W. Berger and Salvatore Graziano of Bernstein Litowitz Berger & Grossmann LLP; David A.P. Brower of Brower Piven, Matthew A. Kupillas of Milberg LLP; Mark Levine of Stull Stull & Brody; and James E. Cecchi and Lindsey H. Taylor of Carella Byrne Cecchi Olstein Brody & Agnello PC. The case is In re: Merck & Co. Inc. Securities, Derivative & ERISA Litigation in the U.S. District Court for the District of New Jersey.
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