Score one for the shareholders. The US Supreme Court ruled today that a long-running securities fraud lawsuit can proceed against the big drugmaker concerning its Vioxx painkiller, which was withdrawn in 2004 over links to heart attacks and strokes following a few years of debate and controversy (here'sthe court ruling by the supremes).
The justices unanimously upheld a ruling by a federal appeals court that found the two-year statute of limitations hadn't run out on the shareholder suits, which were filed in November 2003 alleging Merck misled investors by downplaying studies suggesting Vioxx caused increased cardiovascular risks. In a statement, Merck expressed disappointment.
The time difference is crucial. At issue has been when investors should have known there was possible securities fraud. Merck argued the statute expired by the time lawsuits were filed, so shareholders are out of luck. As an example, they cited an FDA warning letter sent in September 2001 alleging Merck misrepresented Vioxx by minimizing the potential to increase heart attack risks (background). The securities lawsuit is unrelated to the $4.85 billion settlement in 2007 with people who filed personal injury suits.