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After suffering from class action pains for five years, Medco Health Solutions, Inc., and its parent, Merck & Co., Inc., are close to finding relief. In December the pharmaceutical giant agreed to pay $42.5 million to settle class action suits filed against itself and Medco Health, one of the country’s largest pharmacy benefits management companies. In several suits filed in federal district court in White Plains, New York, in 1997, health plans and individual plan participants allege that Medco Health violated the Employee Retirement Income Security Act (ERISA). The plaintiffs contend that Medco Health neglected its fiduciary duties to its clients by promoting more expensive drugs made by Merck and other manufacturers over less costly alternatives. According to the plaintiffs, Medco Health and Merck wrongly benefited from that arrangement. In the proposed settlement, which must be approved by Judge Charles Brieant, the class includes health plans that have used Medco Health services since December 17, 1994. It would cover nearly all outstanding and future ERISA litigation. While Merck does not admit liability in the cases and contends that they were without merit, it agrees to modify some of its business practices. At press time the plaintiffs’ lawyers were split on the settlement. Solo practitioner Linda Cahn, who initiated the suits, indicated at a hearing that her clients would not sign on to the settlement. Herman, Mathis, Casey, Kitchens & Gerel, an Atlanta-based partnership of five plaintiffs firms representing plan participants, also filed a brief opposing preliminary approval of the settlement. The firm argued that more time was needed to determine whether the settlement amount was appropriate. For plaintiffs n Abbey Gardy (New York): Arthur Abbey and Karin Fisch. n Boies, Schiller & Flexner (Armonk, New York): David Boies, Edward Normand, Philippe Selendy, and Robert Silver. (Selendy is in New York.) Boies, Schiller became involved in early 2001 after Linda Cahn came to the firm from Abbey Gardy, where she initiated the suits. Cahn has since left Boies, Schiller. n Law Offices of Linda Cahn ( Morristown, New Jersey): Linda Cahn. n Herman, Mathis, Casey, Kitchens & Gerel (Atlanta): Leonard Davis, Russ Herman, Stephen Herman, and David McKay. (Davis, Russ Herman, and Stephen Herman are in the firm’s New Orleans office.) For defendants Merck & Co., Inc. (Whitehouse Station, New Jersey) and Medco Health Solutions, Inc. (Franklin Lakes, New Jersey) n In-house: Medco Health: General counsel David Machlowitz and senior attorney Anthony Palmisano, Jr. n Shearman & Sterling (New York): Kenneth Kramer, James Tallon, and associates Marc Ashley and Brenda DiLuigi. Shearman has handled a variety of cases for Merck for about ten years. outlooK At press time Judge Brieant had not ruled on the motion for the settlement’s preliminary approval. — Andrew Longstreth

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