JURIST Guest Columnist Melissa Brumer Fordham University School of Law Class of 2015, discusses the differences in settlement amounts between recent contraceptive lawsuits and argues that Merck may be getting out much more cheaply than its competitors…

On Friday, February 7, 2014, Merck & Co., Inc. (Merck) announced its agreement to pay $100 million to settle mass litigation concerning Merck’s NuvaRing, a vaginal contraceptive device. The thousands of product liability lawsuits allege that Merck failed to adequately warn consumers about the increased risk of potentially fatal blood clots caused by NuvaRing. Merck’s settlement agreement [PDF] denies fault and must be accepted by 95 percent of the over 3,800 eligible claimants. Eligible claimants must enroll in the settlement program by March 10, 2014.

On August 22, 2008, the Judicial Panel on Multidistrict Litigation (MDL) consolidated pending NuvaRing cases and transferred [PDF] them to Judge Rodney Sippel of the Eastern District of Missouri. On Friday, New Jersey Superior Court Judge Brian Martinotti supported the settlement for the over 200 consolidated cases brought before him and Judge Sippel subsequently approved the settlement for the consolidated cases in the MDL litigation. In 2001, Organon began selling NuvaRing after the company obtained Food and Drug Administration (FDA) approval. Schering-Plough Corp. obtained Organon in 2007, which was subsequently acquired by Merck in 2009. Thus, Merck inherited the pending products liability suits concerning NuvaRing.

The $100 million dollar settlement is much less than other competing contraceptive lawsuits, such as the $1.6 billion dollar settlement that Bayer AG offered to settle litigation concerning Yaz and Yasmin contraceptive pills. Like the plaintiffs in the NuvaRing litigation, more than 10,000 plaintiffs in the Yaz and Yasmin litigation claimed that Bayer failed to adequately warn consumers about the increased risks of blood clots caused by the contraceptive pills.

But the discrepancy in settlement amounts reflects the strength of the plaintiffs’ cases. According to Merck’s quarterly report for June 30, 2013, at the outset of the litigation, Judge Sippel ordered the parties to select a pool of more than 20 cases, later narrowed down to seven cases to serve as bellwether trials. Judge Sippel denied Merck’s summary judgment motion on the first NuvaRing MDL trial that was scheduled to take place in January 2014. In New Jersey, Judge Martinotti ordered the parties to select a pool of nine cases for bellwether trials. The plaintiffs voluntarily dismissed two cases with prejudice and Judge Martinotti granted Merck’s summary judgment motion to dismiss the remaining seven cases.

In his opinion granting Merck’s summary judgment motion, Judge Martinotti revealed the weaknesses in the plaintiffs’ claims in New Jersey. He faulted the plaintiffs on causation, noting that they failed to testify whether they still would have taken the drug if its labeling included the information they claimed was missing, about the additional risks posed by NuvaRing in comparison with older contraceptives. Because “the test is whether the [NuvaRing] label’s language met the standard of adequacy in each jurisdiction,” Judge Martinotti applied New Jersey’s products liability law, found in New Jersey’s Products Liability Act, to the seven cases that were before him. Judge Martinotti noted that “only New Jersey had a presumption of adequacy based on FDA approval.” Thus, Martinotti was bound by New Jersey’s “super-presumption” of adequacy where the FDA had approved the NuvaRing warning label.

Under New Jersey law, the presumption of adequacy can be rebutted by plaintiffs under two exceptions: the McDarby exception and the Perez exception. Judge Martinotti explained that in Perez v. Wyeth Labs, Inc., the court held that a presumption of adequacy could be overcome “through the introduction of evidence that the pharmaceutical company ‘deliberate[ly] conceal[ed] or [did not] disclose after-acquired knowledge of harmful effects.'” Additionally, in McDarby v. Merck & Co., Inc., the court held that a presumption of adequacy could be overcome “through the introduction of evidence of the manufacturer’s ‘economically-driven manipulation of the post-market regulatory process.'” Judge Martinotti found that plaintiffs were unable to overcome the “super-presumption of adequacy” required by New Jersey law and were unable to meet the Perez or McDarby exceptions.

Still, at the time of the settlement, there were only 200 consolidated cases before Judge Martinotti in New Jersey. More than 1,500 consolidated cases were still pending before Judge Sippel in the Eastern District of Missouri and other cases were filed in state courts in California and Illinois. However, the settlement bound all of these pending cases and several unfiled cases, for a total of over 3,800 cases. University of Richmond professor Carl Tobias explained, “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 than against the other contraceptives.”

The mere fact that NuvaRing gained and maintained FDA approval for its products and labels distinguishes the litigation concerning the product from similar litigation, such as that surrounding Bayer for Yaz and Yasmin. The differences between the two are reflected in Bayer’s larger settlement agreement amount. In 2009, Yaz and Yasmin cases were consolidated in the United States District Court for the Southern District of Illinois before Chief Judge David Herndon. Although a series of bellwether trials were scheduled, Judge Herndon delayed the trial schedule while the parties negotiated settlements.

In April 2012, the FDA ordered Bayer and other contraceptive makers to change the warning labels on their products to reflect research that showed that pills like Yaz and Yasmin increased, perhaps even tripled the risk of blood clots. FDA reports linked at least 50 deaths to Yasmin from 2004 to 2008. Like Merck, Bayer denied fault in its settlement agreement. However, unlike Bayer, NuvaRing’s product and labels remained in compliance with the FDA after it was put on the market. Despite allegedly over one dozen studies and a 2011 FDA report that showed that NuvaRing may be linked to a higher risk of blood clots, Merck remained in compliance with the FDA and was not required to change NuvaRing’s warning labels to reflect the higher risks associated with the product. Accordingly, the plaintiffs’ cases against Merck are more difficult to prove than those cases against Bayer, as reflected in the differences in the settlement amounts.

The $100 million settlement is still contingent upon acceptance by 95 percent of the 3,800 eligible claimants. Some claimants, like Erika Langhart’s family, whose story was featured in Vanity Fair in 2013 may be reluctant to accept a settlement offer. Langhart suffered a massive double pulmonary embolism, which caused her death and was a direct result of the NuvaRing. The Vanity Fair article suggests that although the NuvaRing manufacturers negotiated with the FDA for warning labels that downplayed the risks associated with the drug, NuvaRing makers were aware of the risks that caused Erika Langhart’s death.

Melissa Brumer received a BA in American Studies from Fordham University. She is a staff member for the Fordham Journal of Corporate and Financial Law and a member of the Fordham Prisoners’ Rights Advocates. She will work as a summer associate at Cahill Gordon & Reindel LLP during the summer of 2014.

Suggested citation: Melissa Brumer, Merck’s $100 Million NuvaRing Settlement: Is Merck “Getting Off Easy?”, JURIST – Dateline, Mar. 22, 2014, http://jurist.org/dateline/2014/03/melissa-brumer-nuvaring-settlement.php