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Drug Companies Offer $600 Million to Settle U.S. Hemophilia AIDS Suits

April 19, 1996

NEW YORK (AP) _ Four drug companies accused of selling AIDS-tainted blood products to thousands of U.S. hemophiliacs will offer a $600 million settlement Friday in an attempt to end a decade of litigation.

The offer was revealed Thursday night by Bayer AG, one of the defendants on behalf of the other three, Baxter International Inc., Rhone-Poulenc Rorer Inc. and Alpha Therapeutics Inc. It will be made in letters to be mailed Friday to lawyers for AIDS patients and their families around the country.

If accepted, it could provide payments of roughly $100,000 to every American hemophiliac who contracted the AIDS virus by taking tainted blood-clotting products manufactured by the companies during the early 1980s.

Also covered would be the families of deceased patients and spouses or children who acquired AIDS from an infected hemophiliac.

``This gives us an opportunity to bring an end to all this litigation now and it also offers the opportunity for persons who are HIV infected as a result of this tragedy to receive some quick and certain financial relief,″ said Thomas Kerr, assistant general counsel for Bayer, who noted that the offer calls for the companies to make no admission of wrongdoing.

The offer comes after five months of negotiations between groups representing HIV-positive hemophiliacs and the companies, said Corey Dubin of Goleta, Calif., a national leader of HIV-positive hemophiliacs.

Dubin said the offer had some potential, but he stopped well short of an endorsement.

``I think they’re coming in low and I have told them their coming in too low,″ he said.

The offer is less than one quarter the amount that some of the same companies agreed to pay Japanese hemophiliacs last month. ``Are Japanese lives worth more than our lives?,″ said Dubin, 41, an ex-reporter who is the father of three daughters.

In addition, Dubin said the offer contains coercive provisions forcing nearly every hemophiliac to accept it _ or it will be withdrawn.

``We see that has hardball and we don’t want to play hardball,″ he said.

Since the mid-1980s, hemophiliacs have accused the companies of putting their profits over safety by knowingly selling AIDS-infected clotting products made from donated blood.

Roughly 800 AIDS patients and their families have sued the companies, saying they should have treated the clotting factors with heat to kill the AIDS virus.

The companies have denied they intentionally put people at risk. They insist that they declined to use the heating process during the crucial early years of the AIDS epidemic because they were unsure it was medically sound. The process was later proved effective, but not before thousands were infected.

So far, the companies have fended off the suits. Kerr said there have been no jury verdicts in favor of plaintiffs.

Last year, courts threw out a class action lawsuit filed by hemophiliacs attempting to consolidate all cases into one court in Chicago.

However, Dubin said new evidence has emerged that strengthens the plaintiffs’ case.

Dubin said the companies intentionally took blood from people more likely to have AIDS.

``We can prove they were collecting from I.V. drug users and prison populations,″ he said. ``They were getting plenty of cheap plasma because it served their economic interests and kept their costs down...That’s why they’re at the table. They’re frightened for the first time.″

Kerr said the companies continue to maintain they are innocent and simply want to end the litigation.

However, the terms allow the companies to back out of the deal if several milestones aren’t met by plaintiffs.

First, 95 percent of the people who have already sued the four companies must accept it by May 20.

If that happens, then the offer would be extended to HIV positive hemophiliacs nationwide. Each would be given the option to accept or reject it and sue individually.

If more than 100 people reject the offer, it would be withdrawn.

Dubin said the provisions drive a wedge between hemophiliacs because nearly every victim must agree for anybody to get any money.

``I think the settlement is not commensurate with the reality of the community,″ he said.

Bayer estimates the number of people covered by the settlement in the United States at 6,000. In addition to the $600 million, the companies are offering to set up a $40 million fund that would pay the plaintiffs’ lawyers fees and expenses.

If all 6,000 were to file claims, that would mean a payment of $100,000 to each claimant.

Plaintiffs have claimed the number of hemophiliac AIDS victims is closer to 10,000.

Even if the lower figure is true, the payment is a far cry from the amount Bayer, Baxter and other blood products companies agreed to pay Japanese hemophiliacs last month.

In a court-imposed settlement in that country, the companies will pay each victim $420,000. Japanese victims who developed full blown AIDS will, in addition, receive $1,400 per month for life.

Kerr said there are a number of reasons for the difference.

``The burden of proof is different in Japan. It was much easier for the plaintiffs and a much greater burden was imposed on defendants in Japan, in my view unfairly,″ he said.

In addition, he said, the cost of living in Japan is significantly higher than in the United States. And, the Japanese government, which was accused of preventing the sale of heat-treated blood products, contributed to the settlement.

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