Merck, the American pharmaceutical group, has agreed to pay $4.85 billion (£2.31 billion) to settle lawsuits related to its Vioxx pain treatment drug in the United States.

The drug maker said it had reached a deal to resolve state and federal claims already filed that Vioxx caused heart attacks and strokes in thousands of users. It will pay $4.85 billion into a settlement fund for claims.

The company said that the agreement was open only to cases filed before Thursday, noting that this was not a class action settlement and that it planned to evaluate claims on an individual basis.

Merck also has not admitted causation or fault as part of the deal.

Richard Clark, Merck’s chairman, president and chief executive, said: “This is a good and responsible agreement that will allow the company to concentrate even more fully on its mission of discovering, developing and delivering novel medicines and vaccines.”

He added: “The agreement is structured to provide a significant degree of certainty toward resolving the majority of the outstanding Vioxx product liability claims in the United States for a fixed amount.”

Merck will take a charge in the fourth quarter to cover the payout.

Merck recalled the popular pain-killer, which had $2.5 billion in annual sales, in September 2004 after a study showed it doubled the risk of heart attack and stroke in patients taking it for more than 18 months.

Company officials estimated that the deal, if accepted, would end 45,000 to 50,000 personal injury lawsuits involving US Vioxx users who suffered a heart attack or ischemic stroke, the type in which blood flow to the brain is blocked.

Kenneth Frazier, Merck’s executive vice-president, said: “Without this settlement, the litigation might very well stretch on for years.”

He said the agreement would allow Merck to better quantify its liability, once estimated as high as $50 billion. The deal does not include people in foreign countries.

Negotiating teams met more than 50 times in eight states and spoke hundreds of times by telephone over many months to hammer out the deal, lawyers said.

To qualify for a settlement, claims must be filedby November 15 and meet several criteria, including medical proof that the individual suffered a heart attack or stroke, that they took at least 30 Vioxx pills and that they received enough pills to support a presumption that they were ingested within two weeks before injury.

That was a major concession by Merck, which has long said that Vioxx caused harm only after 18 months of use. Those claims were dismissed by independent scientists and claimants’ lawyers.

Steve Brozak, an analyst with WBB Securities, called Merck’s handling of the litigation “a Harvard casebook study of how to deal with a problematic product”.

Investors also reacted favourably, as shares in the company rose by nearly 5 per cent, or $2.67, to $57.44 in morning trading, close to their 52-week high of $58.36.

Merck’s lawyers said that they had closely scrutinised past cases to find ways to ensure that its settlement did not exceed the $4.85 billion, of which $4 billion will go to heart attack claimants and the rest to stroke claimants.

The deal will become binding only if 85 per cent of the claimants agree to the terms. Payments could start as early as August 2008.

Lawyers for both sides presented the deal yesterday morning to US District Judge Eldon E. Fallon in New Orleans. He said he believed that safeguards built into the agreement would prevent new plaintiffs from coming forward in an attempt to make claims.

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