Today, lawyers for drug giant Merck, infamous maker of the blockbuster painkiller Vioxx, delivered oral arguments to the Supreme Court saying that their shareholders had waited too long to file securities lawsuits alleging that Merck had misrepresented the safety of Vioxx.
According to Merck’s attorneys, investors should have filed their suits earlier, since information suggesting Merck had committed securities fraud was widely available as early as 2001. (The suits were filed in 2003, just after the two-year statute of limitations had expired, attorneys claim.) Somewhat contradictorily, the attorneys also argue that investors never had enough information to make a case for securities fraud against the company.
At least some of the justices, thank goodness, were dubious.
"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. –Wall Street Journal
Vioxx was Merck’s biggest seller until it was withdrawn from the market in 2004 for causing thousands of strokes and heart attacks. Merck ended up settling with former Vioxx users for more than $4 billion.
Merck shareholders are now seeking billions in damages from the company for deliberately misleading them, by downplaying a clinically established connection between Vioxx and an increased risk of heart attack. This in turn caused shareholders to pay artificially high prices for Merck stock—a situation they want rectified.
The Supreme Court is expected to rule on this case by late June 2010. Merck deserves to go down; let’s all recognize these stalling tactics for what they are.