High Court confirms lawsuits over Merck can proceed

The Supreme Court confirmed yesterday that investors, who lost millions when Merck pulled its blockbuster pain drug Vioxx off the market, can go ahead with a lawsuit against the pharmaceutical giant.

Merck confirmed in a statement that it is disappointed with the decision. The ruling means the case will return to the federal district court in New Jersey for further proceedings.

"Merck is disappointed in today's decision, but believes that the allegations in the complaint are unfounded and will continue to defend itself vigorously," said Bruce Kuhlik, Merck Executive Vice President and General Counsel. "The company has already made a motion to dismiss the operative complaint on numerous other grounds, and will renew that motion in the district court."

The high court agreed with a federal appeals court's decision to allow a class-action securities lawsuit. The suit was over whether Merck provided adequate information about the risks of its former blockbuster painkiller Vioxx before it was pulled from the market.

In 2003, a federal judge agreed with Merck's assessment that investors should have known from public information that there might be problems with Vioxx because the regulatory Food and Drug Administration (FDA) had issued warnings to Merck about the drug. However the original 2003 decision was reversed this week by the Philadelphia-based third U.S. Circuit Court of Appeals which will allow the many shareholder lawsuits to proceed against Merck.

In defence of the reverse of feeling, the appeals court said the investors could not have known more than two years ahead of time of the possible wrongdoing.

Merck & Co. (NYSE:MRK) is one of the largest pharmaceutical companies in the world with 2009 sales of $27.4 billion. While Merck produces a wide assortment of medications, a few blockbuster drugs bring in the bulk of its revenue. Currently Merck's four most profitable drugs account for more than half of total sales.

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