Settlement Reached in Fen-Phen Suit
Oct. 8, 1999
From Wire Reports
Plaintiffs' attorneys in the fen-phen diet drug litigation and American Home
Products Corporation have entered into the largest personal injury settlement
against any one company in U.S. history.
The landmark, nearly $5 billion nationwide settlement will provide as many as
six million former Pondimin or Redux users with either medical care and
health screening, product reimbursement or payment for injuries, as well as
"This settlement establishes one fund to cover medical monitoring, treatment,
reimbursement and research/education," said attorney Christopher M.
Placitella of Wilentz, Goldman & Spitzer, of Woodbridge, N.J. and New York
City, and a member of the Plaintiffs' Management Committee appointed in the
Federal Diet Drug Litigation. "A second fund provides compensation to class
members who have reached more serious levels of heart valve disease which
are likely to require surgery or impact on their daily lives. No other settlement
in U.S. history is as comprehensive," adds Placitella.
According to Placitella, one of the lead attorneys negotiating for class
members and a veteran of other mass tort class actions involving tobacco,
silicone breast implants and asbestos, "Class members have three
opportunities to exclude themselves or 'opt out' of the settlement and pursue
individual legal remedies."
Redux and Pondimin (one-half of the drug combination Phen-Fen) were
indicated for the treatment of obesity as part of a broader weight management
program, including diet and exercise.
On September 15, 1997, Wyeth-Ayerst Laboratories, the pharmaceutical
division of AHP, voluntarily withdrew Redux and Pondimin from the market
after the FDA presented to the company new and preliminary information
about possible heart valve abnormalities in some patients using these
AHP said the class action settlement is open to all Redux or Pondimin users
in the U.S., regardless of whether they have lawsuits pending. It offers a range
of benefits depending on a participant's particular circumstances.
AHP said it will offer 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.
John R. Stafford, chairman and CEO of AHP said ''This settlement provides
fair and equitable terms for both diet drug claimants and American Home
Stafford said attorneys for the company and by plaintiffs' attorneys involved in
various federal and state cases developed the agreement.
''Settling this matter was in the best interest of those who used Pondimin or
Redux as well as of the company,'' Stafford 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,'' he added.
The settlement is subject to judicial approval. A judicially approved notice
program will provide potential participants with details regarding the settlement
procedures. This will be followed by hearings to obtain judicial approval of the
AHP said initial payments into the settlement funds are anticipated to begin
later this year. Payments will continue for approximately 16 years after final
judicial approval if needed to provide settlement benefits to members of the
Payments to be made during the next two years are anticipated to total $1.85
billion. In the aggregate, all payments under the settlement cannot exceed
$3.75 billion in present value.
In addition, AHP will receive credits for future payments to persons who opt
out of the settlement under certain circumstances.
The company said it will record a charge of $4.75 billion pretax ($3. 29 billion
after tax, equal to $2.51 a share) to provide for expected payments to the
settlement funds, other judgments and settlements, and legal costs.
The charge, which is net of available insurance, will be reflected in the 1999
third quarter financial results.
c. United Press International and PR Newswire