High Court Allows Suit Against Vioxx Manufacturer To Proceed

The Supreme Court handed down a decision Tuesday allowing investors to continue their securities fraud case against the pharmaceutical giant Merck. The investors allege that Merck had known that the painkiller Vioxx increased the risk of heart attacks but had continued to tell investors and the public otherwise.

A 2000 study had found a higher incidence of heart attacks in users of Naproxen, another painkiller, as compared to Vioxx, but Merck had explained the difference by saying Naproxen reduced the risk of heart attacks.

The suit by Merck shareholders was put on hold when Merck raised the argument that shareholders had exceeded the two-year statute of limitations on securities fraud. In a unanimous decision, the Court found that that two-year limit does not begin until the person bringing the suit knows of the criminal intent of the accused.

While the investors should have known about the harmful effects of Vioxx as early as October 2001, about two years and one month before they filed their lawsuit, there was no evidence they knew anything about Merck's criminal intent, a necessary component of a securities fraud case.

Because knowledge of that criminal intent is a needed before the two-year statute of limitations begins to run, the lawsuit will now return to the lower courts, where the case will go forward.