US Supreme Court Appears Skeptical Of Merck In Vioxx Case
By Brent Kendall, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The U.S. Supreme Court voiced skepticism Monday of
Merck & Co. Inc.'s (MRK) arguments that shareholders waited too long to file
securities lawsuits alleging the drug maker misrepresented the safety of
painkiller drug Vioxx, which it removed from the market in 2004.
During an hour-long oral argument, Merck was in the unusual position of
arguing that investors should have filed their lawsuits earlier because there
was an overwhelming amount of public information available by late-2001
suggesting the possibility the company committed securities fraud. Merck,
however, also argued that the investors don't have enough evidence to make a
case against the company.
"Companies can't have it both ways," Justice Anthony Kennedy told a lawyer for
Merck.
Justice Stephen Breyer said Merck's position in effect would require
plaintiffs to file lawsuits before they had enough evidence to back them up. "
That doesn't make sense to me," he said.
Investors are seeking billions of dollars in damages from Merck. They filed
the first of several securities lawsuits against the Whitehouse Station, N.J.-
based drug maker in November 2003, alleging it misled them by downplaying the
significance of clinical-trial results that appeared to show that patients
taking Vioxx faced an increased risk of heart attack.
The investors said this alleged deception caused them to pay inflated prices
for Merck's stock.
The central issue before the Supreme Court focuses on when investors should
have known that there was a possible Vioxx fraud. Investors must sue within two
years of the time they should have suspected a fraud.
A loss for Merck could eliminate one line of defense that companies use to
fend off shareholder lawsuits.
Merck argued that investors should have suspected a possible fraud by late
2001, after the U.S. Food and Drug Administration sent the company a warning
letter in September alleging that it misrepresented the safety profile of Vioxx
by minimizing the drug's potential to increase a patient's risk of heart attack.
A lawyer for the investors said the plaintiffs had no concrete basis to
suspect a possible fraud until a November 2004 Wall Street Journal article
disclosed internal Merck emails demonstrating that the company had long held
concerns about the safety of Vioxx.
The Obama administration is siding with investors in the case, arguing they
didn't wait too long to sue.
A decision in the case is expected by the end of June.
-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@
dowjones.com
(END) Dow Jones Newswires
11-30-091331ET
Copyright (c) 2009 Dow Jones & Company, Inc.
|