Merck has settled a shareholder class action concerning the alleged suppression of negative clinical test results for the blockbuster anti-cholesterol drug Vytorin. U.S. District Judge Thomas J. Cavanaugh has given final approval to the settlement. The settlement addressed a shareholder derivative class action filed in 2008 by the Plymouth County Contributory Retirement System against Schering-Plough, which became part of Merck in 2009.
It was alleged in the Complaint that a study completed for Schering in April 2006 showed that Vytorin, rather than lowering the accumulation of fatty plaques in the arteries, actually caused fatty plaques to accumulate nearly twice as fast, thus increasing the patient’s chances of suffering a heart attack and/or stroke. The results of the study weren’t made public until nearly two years later. It was alleged in the suit that investors saw the value of their Schering-Plough shares drop 23% in the week following the disclosure. The key term of the settlement addresses this problem by requiring Merck to institute a particular corporate governance reform.
The reform requires Merck Research Laboratories to make an annual report to a committee of the company’s board of directors concerning delays in the release of certain clinical trial results, the reason for those delays, and any corrective action taken. Interestingly, the settlement does not provide for damages. In approving the Plaintiff’s request for $5.1 million in attorneys’ fees, Judge Cavanaugh noted that “Plaintiff’s counsel has actually requested an award of fees in an amount less than their actual lodestar and expenses.”
The settlement, which requires Merck to institute a number of corporate reforms, puts an end to just one of a number of lawsuits that accuse Merck and Schering-Plough of making exaggerated claims about and overpricing their Vytorin and Zetia cholesterol medications. In 2009, Merck and Schering-Plough paid $41.5 million to settle lawsuits alleging that they violated state consumer protection laws by delaying unfavorable Vytorin study results.
Source: Lawyers USA Online
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