White House Sides With Investors Against Merck
9 CommentsBy Ed Silverman // October 27th, 2009 // 7:07 am
The Obama administration is siding with investors in a US Supreme Court case that examines whether Merck shareholders waited too long to file securities lawsuits alleging the drug maker misrepresented the safety of its Vioxx painkiller drug, which was yanked in 2004, Dow Jones reports.
US Solicitor General Elena Kagan, the federal government’s lawyer at the Supreme Court, argued in a friend-of-the court brief that the lawsuits weren’t filed too late. The brief is the latest sign that the solicitor general’s office under the Obama administration is taking a friendlier approach to investor lawsuits, the news service notes. (Here is the brief, and here is Merck’s filing, the investors’ brief, an amicus brief from PhRMA and a brief filed by the securities industry.
Investors want billions of dollars in damages from Merck. They filed the first of several securities lawsuits against the drug maker in November 2003, alleging it misled them by downplaying the significance of clinical-trial results that appeared to show patients taking Vioxx faced an increased risk of heart attacks. The alleged deception caused them to pay inflated prices for Merck stock.
The issue the court will decide is when investors should have known that there was a possible Vioxx fraud, the news service reminds us. Merck argued that investors should have filed their lawsuits earlier because there was an overwhelming amount of public information available by late 2001 that suggested the possibility Merck made misstatements about Vioxx safety.
But Merck also argues it properly informed the FDA and the medical community about Vioxx-related data as it emerged, Dow Jones writes, adding that investors say the alleged deception caused them to pay inflated prices. A loss for Merck could eliminate one line of defense that companies use to fend off shareholder lawsuits. The case will be argued on Nov. 30, and a decision expected by the end of June.
Chris
Imagine that…a lawyer in the White House is pro-lawsuit…..
There is no business looking for a healthcare overhaul until there is an overhaul in tort
Justice in Michigan
What are your specific proposals, Chris? What would you “overhaul” in tort?
SP Vet
Good! I hope that they’ll do the same with investors going after Schering-plough for the ENHANCE fiasco! Merck and Schering-Plough appear to be meant for each other.
Marilyn Mann
Ed
Do you have a link to the brief?
Thx
Marilyn
Justice in Michigan
Too bad no specific proposals came up. There’s a lot that could be discussed–MTL, punitive damages, what torts actually cost, the relative number of suits with and without merit, etc. etc.
Invoking trial lawyers as a generic problem is equivalent to invoking pharma in the same way.
Condor
This is actually a very narrow question, as presented to the SCOTUS: It is a statute of limitations question — how long before, and in what ways, might an investor be put on “inquiry notice” of problems with his or her investment.
That said, I have the brief, and will likely blog on at least part of it in a few moments.
It is unfair to paint the interest of the United States in the amicus brief as simply “pro-lawsuits”.
These comenters are more able, and agile than that, we know it from their other posts.
Namaste
Condor
Here is my promised post, on the narrow question actually argued by the United States of America, in its amicus before the SCOTUS.
Namaste
Justice in Michigan
re: White House Lawyers…
Cass Sustein, who is Fox News’s current pinko du jour, is the chief or regulatory issues in the current administration. His actual views might surprise some here. For example:
–He has been a consistent critic of irrationality in lay jury decision-making and an advocate for significant reform in the arena of punitive damages.
–His views are particular popular among top people in the UK’s conservative party.
–He publicaly supported G.W. Bush’s nominations to the Supreme Court, and John Roberts’ with particular enthusiasm.
Big Pharma Guy
This is a very good thing. The Big pharma companies have been hiding the bad news for years and getting away with it. Then, by the time they’ve sold their stock, they roll it out and the private investors get hammered!