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Diet drug settlement OK'd
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August 28, 2000: 6:26 p.m. ET
Judge approves $3.75B American Home Products class action settlement
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NEW YORK (CNNfn) - A federal judge on Monday approved a $3.75 billion negotiated settlement that pharmaceutical company American Home Products Corp. reached with users of its diet drugs Pondimin and Redux.
"This settlement represents the resolution of the vast majority of diet drug cases filed against American Home Products," said Douglas Petkus, an American Home Products spokesman.
The Madison, N.J.-based company reached the settlement last November. It consolidated thousands of lawsuits filed against it by former users across the country who claimed AHP (AHP: Research, Estimates) failed to warn them about possible side effects of mixing either of the two drugs with another appetite suppressant, creating what was referred to as a "fen-phen diet cocktail."
Either Pondimin or Redux was typically combined with an appetite suppressant called Phentermine to make the fen-phen slimming cocktail. AHP recalled Pondimin and Redux in 1997 after some of the six million Americans who had taken fen-phen developed heart problems, including leaky valves. Phentermine is still sold by other companies and has not been linked to the problems.
The settlement is one of the largest in the history of product liability cases, covering almost all of the estimated six million people who used either drug for more than 60 days. Under the terms of the settlement, fen-phen users will get as much as $1.5 million, though most will receive much less, depending on their level of injury and how long they took the drugs.
 In the third quarter of last year, the company took a charge of $4.75 billion in connection with the settlement, reserving the additional funding to cover any settlements or additional cases that had been resolved prior to this settlement, Petkus said.
As part of the agreement, AHP -- which also makes consumer products such as Advil and Anacin -- agreed pay for long-term "medical monitoring" for people exhibiting no symptoms. However, if it is later found that they have been injured by the diet drugs, they may opt out of the agreement and pursue a case against the company for compensatory damages but not for punitive damages.
Not all of the plaintiffs in the case against AHP have agreed to the terms of the negotiated settlement.
Earlier this summer, Houston attorney Edward F. Blizzard objected to it on behalf of a group of diet-drug users, saying it would be reversed because of all the other lawsuits pending against the company. He has also promised to appeal the settlement if was approved.
Other opponents of the settlement say it does not provide enough in the way of monetary damages and does not compensate for people who may develop health problems later.
AHP shares rose $1.69, or 3.1 percent, to $56.25 in New York Stock Exchange trade prior to the news Monday. 
-- The Associated Press contributed to this report
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