Wyeth in talks to settle diet-drug liability cases

Wyeth confirmed Tuesday that it is negotiating to settle thousands of remaining liability cases stemming from allegations that its diet drugs, Redux and Pondimin, damaged heart valves, report The Wall Street Journal and other news sources. The drugmaker has reached a tentative agreement with lawyers representing about 11,000 outstanding cases, and the deal would apply to cases brought by over 60,000 people who decided not to participate or were not eligible to participate in a national class-action settlement reached in 1999.

It is not clear how much the new payments would cost Wyeth. The drugmaker had originally set aside nearly $17 billion to cover the diet-drug litigation, of which about $3 billion remains. "The [Wall Street] Journal reported that a person familiar with the recent negotiations said Wyeth is trying to settle the outstanding cases for $2 billion or less," as reported in CBS MarketWatch.

The plaintiffs would have two options under the new agreement, as reported in the news sources. An expedited option would pay on average $20,000 to plaintiffs who can not prove that they took the diet drug for at least 90 days, reports CBS MarketWatch. For those who can document that they took the company's drug for 90 days or longer, payment would be based on the "severity of their injuries," reports CBS MarketWatch. The tentative agreement for the settlement of the remaining cases must be approved by the court, as reported in the news sources.

"This is a promising development, but many complex issues remain to be resolved," said Lawrence V. Stein, general counsel for Wyeth, in a prepared statement, TheStreet reports. The drugmaker also said that Tuesday's announcement was not related to its report last week stating that "the company supports an updated revision of the class-action settlement that would deal with 'the least serious but most numerous claims' in the settlement," reports TheStreet.

Wyeth said it would continue to defend itself in the ongoing litigation, until the final settlements are reached. The drugmaker's stock rose 4.7 percent to $44.27, near its 52-week high of $44.70, on the news, TheStreet reports.

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