Nov. 9 (Bloomberg) -- Merck & Co., the third-largest U.S. drugmaker, may pay about $5 billion to settle claims that it hid the health risks of the withdrawn Vioxx painkiller, three lawyers with direct knowledge of the accord said.

Merck pulled Vioxx off the market in 2004 after a study showed the drug raised heart-attack risks. The Whitehouse Station, New Jersey-based company faces more than 26,500 lawsuits from patients claiming Vioxx caused strokes and heart attacks, and hasn't put aside any funds to cover its liability.

``They've done the calculations and found that buying certainty on these claims for $5 billion is the best way to go,'' said Michael Kelly, a Wilmington, Delaware-based lawyer who has represented other drugmakers in products-liability cases.

The agreement is aimed at resolving about 85 percent of the Vioxx cases that have been filed against Merck in the past three years, the people with direct knowledge about the settlement said. U.S. District Judge Eldon Fallon is scheduled to announce the accord today in New Orleans, the people said.

Merck officials confirmed early today they have been in talks with lawyers for former Vioxx users. They added that they haven't yet reached a ``finalized agreement'' on the settlement.

`Talk to the Plaintiffs'

``We have been asked by the judges to talk to the plaintiffs and that's what we've been doing,'' said Kent Jarrell, a Merck spokesman. He declined to comment on whether the settlement will be announced at a hearing in New Orleans later today.

Merck shares fell 4 cents to 37.17 euros ($54.63) at 10:03 a.m. in Frankfurt after closing at $54.77 in New York Stock Exchange composite trading yesterday. The stock has risen 26 percent in the U.S. this year.

Merck has already set aside about $1.8 billion to cover its Vioxx litigation costs while refusing to create a reserve for its potential liability.

The drug's sales reached $2.5 billion in 2003. Merck trails Pfizer Inc. and Johnson & Johnson, the largest and second-largest U.S. drug companies.

The accord would be the largest settlement in the U.S. so far this year, according to data compiled by Bloomberg. It also is among the largest settlements in U.S. legal history.

Rival drugmaker Wyeth has reserved more than $21 billion so far, for example, to resolve litigation over the withdrawn fen- phen diet combination.

Wyeth faced more than 150,000 claims over fen-phen, whose former users argued it damaged their hearts. Merck is facing less than 30,000 claims over Vioxx.

New Orleans Negotiations

Merck has won 11 of 16 cases that have gone to a jury and hasn't paid any money in the cases lost while it appeals those verdicts. Last month, a Florida jury said the company wasn't responsible for the heart attack of a former professional soccer player who took the painkiller.

Its latest loss came in March, when a New Jersey jury ordered the drugmaker to pay $47.5 million in damages to an Idaho postal carrier who had a heart attack while taking the drug.

Lawyers for the company and former Vioxx users have been negotiating for about three months, the people familiar with the settlement said. The talks involved Fallon, who is based in New Orleans, as well as Carol Higbee, a New Jersey state court judge who is supervising Vioxx litigation for her state.

The case is In re Vioxx Products Liability Litigation, MDL No. 1657, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Laurence Viele Davidson in Atlanta at lviele@bloomberg.netJef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net.

Last Updated: November 9, 2007 04:10 EST