New Jersey Supreme Court Denies Class-Action Suit Against Merck

| About: Merck & (MRK)
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Pharmaceutical company Merck said Thursday the New Jersey Supreme Court had reversed a lower court ruling which allowed a nationwide class-action suit for insurers attempting to collect refunds for past spending its now withdrawn arthritis drug Vioxx. Vioxx was pulled off shelves in 2004 when it was found to double users' chances of heart attacks and strokes. The court said it reversed the ruling because it recognized that "each insurance company and HMO considered different types of information in deciding whether to reimburse patients for Vioxx, and they all went through varied processes with different experts in making those decisions," according to a member of Merck's legal counsel. Class-action suits usually give more clout to plaintiffs because they are able to use prominent, pricy lawyers and pool their expenses. Merck's strategy since it began being sued was to fight each battle one at a time. The strategy has worked; in the personal injury trials decided thus far, Merck has won ten out of fifteen. Morgan Stanley analyst Jami Rubin saw the decision as an "enormous victory for Merck," adding that the class action suit represented a huge amount of risk in "Vioxx liability." Investors were encouraged by the news as well; Merck traded up 2% to $50.38 in midday trading on Thursday.

Sources: Press Release, Reuters, AP
Commentary: Merck Raises and Beats on Strong Vaccine, Medicine SalesNew Study Suggests Vioxx's Ill-Effects Were Immediate -- WSJ
Stocks/ETFs to watch: MRK. Competitors: BMY, PFE. ETFs: PPH, RXL, IXJ
Earnings call transcript: Merck & Co. Q2 2007

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