Merck & Co. said today it will pay $830 million to settle a class action lawsuit in New Jersey filed by shareholders over losses blamed on company statements concerning Vioxx.
The shareholders were within a class of plaintiffs who purchased Merck shares between May 21, 1999 and October 29, 2004. A month earlier on September 30, 2004, Merck announced a voluntary withdrawal of Vioxx (rofecoxib) from the market.
After the withdrawal, the price of Merck stock fell an initial 27%, followed a month later by a further drop of about 10% drop following a report in The Wall Street Journal alleging that the company knew as early as 2000 about risks associated with the non-steroidal anti-inflammatory drug (NSAID).
According to an FDA announcement at the time, the withdrawal occurred after the data safety monitoring board overseeing a long-term study of the drug recommended a halt due to increased risk of serious cardiovascular events, including heart attacks and strokes, among patients taking Vioxx compared to patients receiving placebo.
The Public Employees’ Retirement System of Mississippi and other shareholders filed suit, complaining that Merck and several of its officers deceived them about the pharma giant’s finances in order to boost share prices, in violation of U.S. securities laws.
The multidistrict case was consolidated in New Jersey, where Merck is headquartered, in 2005. Judge Stanley R. Chesler of the U.S. District Court for the District of New Jersey is presiding over the class action case, known as In re Merck & Co., Inc. Securities Litigation. In 2013, Judge Chesler certified the shareholders as a class.
Merck said it will pay the $830 million as well as unspecified additional payments toward approved attorneys’ fees and expenses. After available funds under certain insurance policies, Merck’s cash payment for the settlement and fees will be approximately $680 million.
The company will record a charge in its fourth quarter 2015 results, set to be released February 3. The charge will be excluded from non-GAAP results.
Merck said the settlement agreement—which is subject to court approval—did not constitute an admission by the company or individual defendants of any liability or wrongdoing.
Merck still faces lawsuits filed by individual plaintiffs against the pharma giant over Vioxx. The FDA approved the drug in 1999 for the reduction of pain and inflammation caused by osteoarthritis, as well as for acute pain in adults and for the treatment of menstrual pain.