Fen-Phen Settlement Clears Last Hurdle

PHILADELPHIA —  American Home Products Corp. on Wednesday overcame the final challenge to its $3.75-billion settlement of lawsuits over the withdrawn fen-phen diet drug combination, after rival Interneuron Pharmaceuticals Inc. and insurers dropped their appeals of the agreement.

Interneuron and a group of health insurers led by HMO Louisiana Inc. withdrew their appeals as part of an agreement reached just before arguments on the diet drug settlement were to begin Wednesday in federal appeals court, American Home’s lawyers said. Those were the only outstanding objections to the national settlement.

The settlement includes $1 billion for future medical checkups for users of American Home’s Pondimin and Redux drugs and an additional $2.34 billion to resolve individual damage claims over the diet aids. American Home pulled the drugs off the market in 1997 after they were linked to heart problems and a fatal lung disease.

“It’s over,” said Arnold Levin, a Philadelphia attorney who led a group of dieters’ lawyers who negotiated the 1999 settlement. “We now have an unappealable fen-phen settlement.”

American Home lawyers refused to comment on the completion of the settlement.

The settlement also resolves a state court suit Interneuron filed in Massachusetts, alleging American Home mishandled the diet drugs. Interneuron, the maker of Redux, licensed the drug to American Home. The suit claimed that American Home hid side-effect reports from Pondimin users that might have helped Interneuron researchers better assess the risks their Redux diet aid posed to consumers.

Under the settlement, American Home will pick up the tab for Redux users’ claims against Lexington, Mass.-based Interneuron that aren’t covered by the national fen-phen settlement, Interneuron officials said.

Resolving objections to the settlement doesn’t mean the fen-phen litigation is concluded, however. American Home officials estimate there still are more than 4,000 suits from dieters who opted not to join in the nationwide agreement that must be resolved, according to filings with the Securities and Exchange Commission.

American Home shares rose 56 cents to close at $62.80 on the New York Stock Exchange. Interneuron shares rose $1.08, or 19%, to $6.74 on Nasdaq.