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Merck Settles Investor Lawsuit, Will Pay $830 Million

By Jonathan R. Tung, Esq. on January 15, 2016 2:58 PM

The giant pharma company Merck just settled an investor suit with a figure of $830 million. Although Merck admitted no wrongdoing, it was faced with allegations that it failed to inform its investors about less than encouraging data from early company-funded trials of its famous drug, Vioxx.

The $830 million number is large, but it's not the biggest pill that Merck & Co. has had to swallow. In 2008, it settled a plethora of suits related to drug to the tune of $4.85 billion.

Vioxx: Ask Your Doctor About Pain -- and Stroke

The drug that was to become Vioxx was R&Ded at Merck and quickly approved in the late 90s as a treatment for pain. It quickly became a popular drug with estimates of approximately 20 million users across the United States. But scandal quickly arose when a large intestine-polyp study indicated that the drug doubled the risk of heart-attack and stroke after prolonged use. This quickly resulted in the drug's recall.

Thousands of Vioxx users sued Merck and in 2008 and the company settled at the $4.85 billion number mentioned above.

Class Action Suit From Investors

Now that the users have been dealt with, next comes another injured party: Merck's investors.

Investors in the company also brought suit against the Merck in a lawsuit that involved multiple federal districts, all converging in a small federal court in New Jersey. The allegations were that the company failed to disclose data from earlier Merck-funded studies that cast negative prospects on Vioxx.

Settled -- Finally?

The sued settled a week ago for $830 million. According to Merck's attorneys, the settlement does not amount to any admission of wrongdoing or liability by Merck. The loss will be reflected on the company's financials for the fourth quarter of 2015.

Merck says that it still faces other individual Vioxx-related lawsuits. For Merck's sake, we hope the drug's profits were enough to defray all of this lawsuit mess.

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