Merck to Pay $830 Million to Stockholders in Settlements

merck

By Parth Parikh,   
Money and Investing Writer

What was considered one of the most prolific and profitable drugs ever created by Merck & Company (NYSE: MRK), Vioxx not only has had its production stopped twelve years ago, but now the victims and investors of the company are now going to be paid in a lawsuit.

Two weeks ago, Merck and Company agreed to pay $830 million to those affected by the drug after the company misled and misinformed Vioxx users about the risks and side effects of the drug that the company intentionally downplayed and denied.

Vioxx was a drug created in 1999 to heal the pain associated with arthritis and other conditions that are related.

The drug was introduced in the markets and the response was tremendous: in a span of five years, Merck was able to accumulate $11 billion in revenue and Vioxx quickly became one of Merck’s signature drug that was bound to solidify Merck as one of the top pharmaceutical companies in the world.

One of the biggest causes for concern was Vioxx’s increased risk of stroke and heart attacks that Merck tried to deny until 2004, when further studies showed that not only do users of Vioxx expose themselves to higher risks of stroke and heart attack, but also caused severe cardiovascular issues.

Trying their best to keep Vioxx on the market, the company decided to put more health risks on the prescription label on the containers so users will be more aware of the dangers.

After numerous protests and experiments not favoring Merck’s product, Vioxx was taken off the market and production of the drug has stopped since then.

Unfortunately, the damage had been done and nearly 160,000 people had faced internal injuries with an added 38,000 users dying from the effects of the drug.

Many victims took the company to court in 2008 and families of those who died taking the drug filed lawsuits nationwide, looking for financial compensation. As a result of numerous trials, Merck paid a total of $4.9 billion to some 35,000 patients to avoid media coverage and protection from public harassment.

The lawsuits did not end there, as 25,000 extra claims came forward and Merck was forced back into court.

With settlements ranging from $5,000 to $820,000, victims and patients were given their fair share of compensation depending on the situation of the victim, the dosage they had taken, and if they had died as a result of taking Vioxx.

The $830 million settlement that was recently settled goes to the shareholders of the Merck stock from 1999-2004 who invested in the company because they were not aware of the hidden risks and damages by the drug that was not advertised to the public.

Investors claim they paid too much for the Merck stock when the Vioxx drug was released in the market because a drug with those kinds of risks and dangers would most certainly bring down their stock price, along with those who invested in the stock and faced losses after the Vioxx drug was stopped, considering the market capital of Merck plunged $37 billion when news broke that Vioxx would not be sold any longer.

Many lawsuits remain unsettled, so expect to see Merck appear in the news more often as settlements are reached and finalized.

A version of this article appeared in the Tuesday, January 26th print edition.

Contact Parth at
parth.parikh@student.shu.edu

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