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Diet Drug Settlement Plan Rejected

September 28, 1999

PHILADELPHIA (AP) _ A federal judge rejected a $100 million settlement a company proposed to pay injury claims by hundreds of users of the once popular diet drug Redux.

U.S. District Judge Louis C. Bechtle said he was uncertain a ``limited fund″ that Interneuron Pharmaceuticals Inc. of Lexington, Mass., proposed to set up to settle the lawsuits would be fair to all who might have claims.

In a 34-page memorandum issued Monday, Bechtle also cited ``constitutional concerns″ because the deal would not allow claimants to opt out and seek separate trials if they wish.

An estimated two million Americans used Redux, which Interneuron marketed from 1996 to 1997 under an agreement with American Home Products Corp. American Home also marketed Redux with another diet pill, Pondimin. Pondimin was part of a popular diet pill combination known as fen-phen.

At the recommendation of the U.S. Food and Drug Administration, both drugs were pulled off the market in September 1997 after doctors reported finding heart-valve damage in some users, and a wave of lawsuits followed.

American Home reportedly has offered about $4 billion to settle thousands of suits related to the diet drugs.

Arnold Levin, cochairman of a committee of plaintiffs’ attorneys that had negotiated the settlement, said Bechtle’s ruling was expected in light of the U.S. Supreme Court’s recent rejection of a $1.5 billion limited fund settlement in an asbestos case.

Bechtle noted in his ruling that Interneuron had additional assets that were not part of the settlement fund.

``This is a blow, but by no means a knockout blow,″ said Barbara Wruble, an attorney for Interneuron who said the company probably will appeal.

Interneuron had proposed to place $15 million in cash and $28 million in proceeds in the limited fund, which would also receive $55 million in royalties from future products if those products succeed. Bechtle called the reliance on future royalties ``fraught with risk.″

More than 25,000 people had filed claims to share in the settlement, some claiming heart-valve damage and some, unable to document current ailments, claiming fear of future health problems.

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