White House sides with investors in Vioxx lawsuit

Chris Rizo Nov. 2, 2009, 1:00am

WASHINGTON (Legal Newsline)-The Obama administration has taken the side of investors seeking to sue pharmaceutical giant Merck & Co. over its now-withdrawn blockbuster painkiller Vioxx.

In a friend of the court brief filed in the U.S. Supreme Court, President Barack Obama's administration argues that shareholders did not wait too long to file securities lawsuits against the Whitehouse Station, NJ- based drug maker.

The lawsuits allege that Merck intentionally misrepresented the safety of Vioxx, which was taken off the market in 2004 amid concerns that the Cox 2-inhibitor more than doubled the risks of heart attack and stroke.

Shareholders say that Merck's misstatements about Vioxx's safety artificially inflated the drug company's stock price.

The administration's argument was made in an amicus curiae brief filed last week by U.S. Solicitor General Elena Kagan.

For its part, Merck has said it properly informed the U.S. Food and Drug Administration and the scientific community about data related to the medication as it emerged.

In November, Merck agreed to pay $4.85 billion to settle thousands of lawsuits claiming that Vioxx caused heart attacks and strokes in some patients.

Oral arguments in the case are scheduled for Nov. 30.

In April 2007, a U.S. District Court in New Jersey granted Merck's motion to dismiss the consolidated class action against the company, based on the statute of limitations, finding that there was sufficient public information available before November 6, 2001, to trigger the plaintiffs' duty to investigate the alleged fraud.

Then in September 2008, the 3rd U.S. Circuit Court of Appeals reversed the district court, concluding that no "storm warnings" of the alleged fraud existed for more than two years prior to the original complaint's filing.

Merck then appealed to the U.S. Supreme Court. In its petition for certiorari, the drug maker said circuit courts have issued conflicting opinions on what is required to put a plaintiff on "inquiry notice" to trigger the running of the statute of limitations.

The case is Merck v. Reynolds, 08-905.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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