NEW YORK, Oct 07 (Reuters Health) -- American Home Products (AHP) announced Thursday that it had reached a proposed national settlement to resolve litigation against the company by people who used the company's diet drugs, dexfenfluramine (Redux) and fenfluramine (Pondimin).
According to AHP, the settlement is open to all Redux and Pondimin users in the US, whether or not they have a suit pending against the company. The settlement includes a refund program for the cost of the drugs, medical screening, additional medical services or cash payments, and substantial compensation in the event of serious heart valve problems.
AHP division Wyeth-Ayerst Laboratories withdrew Pondimin and Redux from the market in September 1997 after the Food and Drug Administration (FDA) presented the company with information linking the drugs with possible heart valve abnormalities. Since then, there have been more than 4,000 lawsuits filed against the company on behalf of an estimated 8,000 plaintiffs.
American Home Products confirmed that the company has settled more than 20 fen-phen cases, with all but a few of them involving patients with primary pulmonary hypertension.
The Madison, New Jersey-based pharmaceutical firm said that the settlement would cover claims arising from the use of Pondimin or Redux at any time, except for claims of primary pulmonary hypertension. The settlement includes two funds, the first of which is for persons who used the drugs for more than 60 days.
People in this class are eligible for an echocardiogram and interpretive visit with a physician and will provide a cash payment of $6,000 or $10,000 in medical services if the echocardiogram shows heart valve regurgitation. Members of this class might also qualify for a refund for their drug costs, up to a $500 cap.
The second class, which includes patients who used Pondimin or Redux for less than 60 days, also provides for drug cost reimbursement. Patients in this class could obtain an echocardiogram on their own, and if it shows heart valve regurgitation, would be entitled for reimbursement for the echocardiogram and be eligible for a $3,000 cash payment or $5,000 worth of medical services.
The first class fund is valued at $1 billion, with an additional $200 million set aside for attorneys' fees. The second fund is valued at $2.55 billion.
The proposed settlement will require judicial approval. American Home Products said that it expects to begin payments later this year, if the plan is approved by the court, and continue to make payments for approximately 16 years.
American Home Products said that it would record a charge of $4.75 billion pretax ($3.29 billion after tax, or $2.51 per share) in the third quarter of this year related to the costs of the settlement program.
John R. Stafford, chairman, president and CEO of American Home Products, said, "We believe that this agreement is a sound way to resolve the claims raised by diet drug users and represents a prudent course for our company. It offers peace of mind to those who used the drugs and permits the company to move beyond the uncertainty and distractions of litigation."
Wilentz, Goldman and Spitzer, attorneys who represented plaintiffs in the class action, said that the program would be the largest personal injury settlement against any single company in US history. The lawyers estimated that 6 million people used Redux and Pondimin before the drugs were removed from the market.
Interneuron Pharmaceuticals, Inc., a Lexington, Massachusetts-based pharmaceutical firm that marketed Redux, said that it believes the proposed settlement is "an important positive step toward a resolution of Redux-related litigation that will benefit both plaintiffs and defendants." Interneuron is currently negotiating a settlement of Redux-related claims against the company.
