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Fen-phen deal to proceed
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April 13, 2000: 5:47 p.m. ET
American Home Products reports that $3.75 billion diet drug settlement is near
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NEW YORK (CNNfn) - American Home Products Corp. said Thursday that it is on track to proceed with a $3.75 billion national settlement with users of the diet combination known as "fen-phen," saying that less than 1 percent of the former users of the anti-obesity treatment have opted out of the deal.
A federal judge in Philadelphia has given preliminary approval to the settlement, which was announced in October 1999. But analysts have said that if a large number of people "opt out" of the settlement deal and choose to pursue legal action on their own, it could derail the pact.
"The number of opt-outs is well within the expected range for a nationwide settlement of this magnitude and the company is confident that it can continue to manage this level of opt-outs," AHP general counsel Louis L. Hoynes Jr. said in a statement Thursday.
The company also said that it believes the $4.75 billion reserve charge recorded in its 1999 third-quarter results "is adequate" to cover the settlement, although that figure continues "to be under review."
The Madison, N.J.-based drug maker pulled the diet remedy Pondimin (fenfluramine) - the "fen" in the fen-phen combination - and a related drug Redux (dexfenfluramine) from the market in 1997, after the diet cocktail was linked to health problems, including possible heart valve damage.
Phentermine, the other half of the fen-phen combination, has not been linked to medical problems when taken alone. It is made by another company and is still on the market.
An estimated 5.8 million people used the anti-obesity drugs, the company said. AHP said that according to preliminary data, about 200,000 people have registered for the settlement, while another 45,000 people opted out during the four-month public notice period that ended March 30.
Judge Louis Bechtle of the U.S. District Court in Philadelphia is scheduled to hold a hearing on the deal May 2.
The announcement was made after Thursday's market close. Shares of American Home slipped 2 to 53-3/8 in New York Stock Exchange composite trading. 
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