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History of settlements
Distillers (Biochemicals) Ltd marketed thalidomide in the United
Kingdom from 1958 to 1961 - less than 4 years. The drug seriously
affected the development of babies in the womb, but the process
of obtaining compensation for the damage caused has been far from
straightforward.
The first payments
The first settlement came in 1968 and benefited 62 children for whom writs against Distillers had been issued. In exchange for withdrawing negligence claims against Distillers, each child was awarded a private settlement of 40% of the legal valuation of his or her disability. Distillers also announced their intention to eventually provide for all other children affected by their thalidomide products.
The Thalidomide Trust
Negotiations for an increasing number of children raised questions about the proof of thalidomide injury. This led to the creation of two separate lists. The 'X' list consisted of young people with proof of thalidomide injury; people on the 'Y' list were those who hadn't been able to provide adequate proof.
After a number of unacceptable offers from Distillers, an agreement
was reached in 1973 on behalf of about 440 young people, who withdrew
negligence claims against Distillers. In exchange, provided X list
status could be attained, these children would receive a private
settlement similar to the 1968 settlement of 40%, increased by a
third to offset inflation.
Additionally, all of the children who had received settlements became beneficiaries of a new charitable trust - The Thalidomide Trust - to which Distillers paid seven annual instalments of £2 million, increasing by up to 10% annually for inflation.
The tax problem
Parents had been told by their legal advisers that all benefits from the Thalidomide Trust would be tax-free, but this was not the case. This misunderstanding led to the Government adding £5 million to the Trust fund in January 1975 to offset all the tax likely to be due on Trust benefits.
The struggle for proof
After the 1973 settlement, 'Y' list families faced a serious problem. They still needed to provide proof of thalidomide injury. By early 1978 about 20 'Y' list young people had been accepted for 'X' list benefits. However, for the majority, the struggle for proof continued.
The Government asked Sir Alan Marre to consider this group and to recommend an acceptable solution. Sir Alan's report, published in August 1978 was accepted by Distillers and by the Government and included the following key recommendations:
- Acceptance of a further 20 youngsters for the 1973 X list
benefits.
- Payments of £10,000 each to 48 youngsters because of their prolonged anxiety, although they were not thought to be thalidomide-injured.
- Distillers to pay just over £3 million extra to the Thalidomide Trust (spread over 7 years)
- The Government to pay an additional £800,000 to the Trust to offset tax on benefits.
Into the future
Distillers (Biochemicals) Ltd was taken over by Guinness in the l980s. In 1995 Guinness promised a further £37.5 million payable over a period of 15 years, in order to enable the Trust to continue to make payments to beneficiaries for the whole of their lives, and the Government gave a further £7 million to offset tax on the corresponding benefits.
In June 2000, Diageo promised to extend the current payments of £2.5 million per year from 2009 to 2022, when the average age of thalidomide impaired people will be 60.
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