Merck, seeking closure on a disaster that once threatened its survival, has agreed to pay $4.85 billion to settle 27,000 lawsuits over its painkiller Vioxx, according to several reports.

The settlement is one of the largest ever in civil litigation, says Alex Berenson in the New York Times. The agreement is expected to be announced this morning in a federal court in New Orleans.

Merck has already largely recovered from Vioxx: It has a number of promising new drugs and its stock has climbed sharply in the last two years. But things seemed much darker four years ago. Vioxx, a popular arthritis medicine with $2.5 billion in sales in 2003, was found to double the risk of heart attacks in users. When Merck pulled it off the market on September 30, 2003, the company's stock plummeted, losing nearly a third of its market value. Some analysts thought the legal liability might sink the company.

But Merck chose to fight in court rather than try to settle claims immediately. And that strategy appears to be working: The company has won most of the Vioxx liability lawsuits that have gone to trial.

Still, with a new flood of cases set to go to trial next year, judges in Louisiana, New Jersey, and California had pressed both sides for a settlement, the Times reports.

"They've done the calculations and found that buying certainty on these claims for $5 billion is the best way to go,'' Michael Kelly, a lawyer who has represented other drugmakers in product-liability cases, told Bloomberg News.

The average plaintiff will receive just over $100,000 before legal fees and expenses, according to the Times, which also notes that the settlement amount represents less than one year's profit for the company.

Pointing to Merck's success in the courtroom, Douglas A. McIntyre in the blog 24/7 Wall St. says the settlement "may not be a good one for Merck shareholders."

The settlement cost is eight times Merck's annual legal cost for Vioxx cases, he notes.

"The company had won several landmark cases, which made it appear that it had the upper had over plaintiffs. Much like the Big Tobacco suits of the '80s, a strategy of winning and waiting the suits out would probably have prevailed," McIntyre says.