Merck to Pay $830M to Settle Vioxx Class Action

     (CN) – Merck will pay $830 million to settle a federal class action alleging it hid from investors heart health risks of its now-recalled pain medication, Vioxx, the company announced.
     After U.S. regulators approved the drug as a new pain reliever in 1999, it soared commercially, being taken by about 20 million Americans, according to CNBC.
     Five years later, however, Merck recalled Vioxx, based on a colon-polyp prevention study showing that 18 months of taking the drug more than doubled the risk of heart attacks or stroke.
     Thousands of former users of Vioxx allegedly harmed by the drug then sued Merck.
     While Merck settled most of those product-liability lawsuits for $4.85 billion in 2008, a multidistrict shareholder class action remained pending in New Jersey federal court.
     In that suit, investors claimed Merck failed to tell them about negative data from earlier company-sponsored trials of Vioxx.
     On Friday, Merck announced its will pay $830 million, plus attorneys’ fees, to resolve its dispute with the investors.
     Merck says it will pay about $680 million of the settlement in cash, after reimbursement from certain insurance policies.
     The firm will record a charge for the payment in the fourth quarter of 2015, which will be excluded from non-GAAP results, according to its press release.
     GAAP is short for “general accepted accounting practices” and is simply the commonly accepted ways of recording and reporting accounting information.
     Many large companies also report non-GAAP earnings, claiming these more accurately reflect the health of the company. These include EBITDA, meaning earnings before interest, taxes, depreciation and amortization, and cash earnings.
     The deal reportedly applies to investors who bought Merck stock between May 21, 1999 and Oct. 29, 2004, but awaits approval from U.S. District Judge Stanley Chesler.
     “The settlement does not constitute any admission by Merck or any of the individual defendants of any liability or wrongdoing,” the firm’s press release states.
     Merck says it “still faces previously disclosed individual securities lawsuits related to Vioxx.”
     The parties have yet to return requests for comment emailed Wednesday.
     In October, Merck announced third-quarter 2015 worldwide sales of $10.1 billion.

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