Merck to Pay $100 Million NuvaRing Pact If Enough Women Join

Feb 08, 2014 12:01 am ET

Feb. 8 (Bloomberg) -- Merck & Co. may pay $100 million to settle thousands of lawsuits over the safety of its NuvaRing contraceptive, a New Jersey judge held, as long as enough women agree to participate in the accord.

The settlement may resolve as many as 3,800 cases in federal and state courts in New Jersey and Missouri, Judge Brian Martinotti in Hackensack said yesterday at a hearing. More than 200 women sued Merck in New Jersey accusing the drugmaker of selling NuvaRing while knowing it posed a higher risk of heart attack-inducing blood clots than competing products.

Martinotti gave preliminary approval to the settlement, subject to 95 percent of the plaintiffs participating in the agreement, according to Steven Blau, a lawyer for women suing over the device. If more than 5 percent of plaintiffs refuse the offer, Merck can walk away from the deal, Martinotti said.

“The settlement is a fair resolution of this litigation,” the judge said. “This is a lump-sum settlement of $100 million that covers the entire litigation nationwide.”

The settlement, which includes cases filed in St. Louis federal court, means Merck, the second-biggest U.S. drugmaker by sales, is paying a fraction of what rivals such as Bayer AG did to resolve lawsuits over their contraceptives. Bayer said last year it has paid more than $1.6 billion to settle claims over its Yasmin and Yaz lines of birth-control pills. Women said Yaz also caused blood clots that led to strokes and heart attacks.

‘Much More’

“Merck may be getting out much more cheaply than its competitors because proving the liability case against the NuvaRing device appears to be more difficult,” Carl Tobias, who teaches product-liability law at the University of Richmond in Virginia, said in a Feb. 6 phone interview.

NuvaRing is a hormonal-vaginal contraceptive that combines both estrogen and progestin in a ring to prevent pregnancy. The product, which was linked in a 2011 U.S. Food and Drug Administration report to a higher risk for blood clots, has been sold in the U.S. since 2001.

Lainie Keller, a spokeswoman for Whitehouse Station, New Jersey-based Merck, said the company isn’t admitting wrongdoing under the settlement and continues to believe NuvaRing is a safe contraceptive. She said Merck continues to “monitor the safety of the medicine.”

Merck rose 1.9 percent to $54.77 in trading in New York yesterday. The shares have risen 33 percent in the past year.

Earnings

Merck reported fourth-quarter earnings this week that fell short of estimates. Earnings excluding certain items were 88 cents a share, 1 cent below the average of 15 analysts’ estimates compiled by Bloomberg. The company also forecast 2014 profit of $3.35 to $3.53 a share, compared with $3.48 projected by analysts.

Lawyers for women suing over the NuvaRing product contend there are almost a dozen studies showing the type of progestin used in the device is twice as likely to cause blood clots. Such clots can block veins and cause heart attacks or travel to the lungs and cause other health issues.

The family of a Nebraska mother who used a NuvaRing device sued Merck in 2010 after the woman was found dead with a blood clot in her lung. Ann Tompkins’ family alleged in their suit that Merck misled users about the device’s health risks.

Women argued in court filings that Merck failed to provide proper warnings about NuvaRing’s higher clot risks on the device’s label to protect sales. Suits have been filed against Merck and Organon USA Inc., a unit that sold the device.

Lawsuits

More than 1,500 NuvaRing suits were consolidated before U.S. District Judge Rodney Sippel in St. Louis in 2008 for pre- trial information exchanges. Sippel had set the first trial over the blood-clot claims for April.

More than 200 suits also have been consolidated in New Jersey before Martinotti. Other cases were filed in state courts in California and Illinois, according to court dockets.

Last year, Martinotti threw out seven NuvaRing cases that were set to be the first trials in New Jersey after he found the plaintiff women couldn’t show the device caused their injuries.

The judge said plaintiffs were unable to show that doctors would have prescribed a different contraceptive if Merck had informed them of higher clot risks on its warning label.

Blau said women suing over NuvaRing had to overcome the legal hurdle of showing that a device approved by the FDA as safe had flaws and that Merck officials didn’t properly warn about its risks.

“That’s a very hard burden to overcome,” Blau said.

The settlement compensates women for three classes of injuries arising from blood clots, he said. They are deep-vein thrombosis, pulmonary embolisms and death, he added.

The settlement is set up so that women with more severe injuries will qualify for larger payments, Shelly Leonard, a New York lawyer for NuvaRing plaintiffs, said yesterday in a phone interview.

The consolidated cases are In Re NuvaRing Products Litigation, 08-md-01964, U.S. District Court, Eastern District of Missouri (St. Louis). The consolidated New Jersey cases are In RE: NuvaRing Litigation, BER-L-3081-09, Superior Court of New Jersey (Bergen County).

--Editors: Charles Carter, David E. Rovella