High court to hear Vioxx case
— -- The U.S. Supreme Court will decide whether shareholders can sue Merck over whether the drugmaker properly warned about the risks of its former blockbuster painkiller Vioxx before it was pulled from the market.
The case could have implications for many securities lawsuits by examining the legal standards for determining exactly when the clock starts running for the two-year window to sue a company accused of defrauding investors.
On Tuesday, the high court agreed to review Merck's challenge to a federal appeals court's reinstatement of a class-action securities lawsuit related to the tens of billions of dollars in shareholder value lost overnight after Merck pulled Vioxx off the market because it doubled risks of heart attack, stroke and death.
Investors had accused Merck of providing misleading information or omitting information about the risks of Vioxx. A U.S. district judge dismissed the November 2003 lawsuit, ruling it was filed after the two-year statute of limitations expired, because the Food and Drug Administration had issued warnings to Merck about Vioxx risks late in September 2001.
But the 3rd U.S. Circuit Court of Appeals then decided to allow the many shareholder lawsuits, now consolidated in federal court, to proceed. Merck appealed to the Supreme Court.
The Whitehouse Station, N.J.-based company did not withdraw the drug from the market until Sept. 30, 2004.
Sean Coffey, co-lead counsel for tens of thousands of Merck shareholders, said Tuesday the legal clock didn't start running until late October 2003, when investors saw the first published evidence that Merck's public reassurances to investors and the media that Vioxx was safe ran counter to what company executives and scientists were saying internally.
"It's the earliest that investors had a reason to suspect there was the possibility that Merck was lying," Coffey said about what came to be known as the "naproxen hypothesis."
After a widely publicized study comparing Vioxx to naproxen, another pain reliever, found about five times more heart attacks in the patient group taking Vioxx, Merck officials argued repeatedly that was because naproxen protected the heart. Experts have since dismissed that.
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