Thursday, February 14, 2013
Merck agreed to pay $688 million to settle securities fraud class actions claiming that it misled investors by delaying the release of an unfavorable study over the efficacy of its cholesterol drug Vytorin. Plaintiffs alleged that Merck and Schering-Plough knew of the study for nearly two years, but did not release it until 2008. After it was made public, the stock prices of both companies dropped, as did the sales of the drug.
A jury trial was scheduled to begin in March. In the settlement Merck does not admit to any wrongdoing. Its press release states that:
“This agreement avoids the uncertainties of a jury trial and will resolve all of the remaining litigation in connection with the ENHANCE study,” said Bruce N. Kuhlik, executive vice president and general counsel of Merck. “We believe it is in the best interests of the company and its shareholders to put this matter behind us, and to continue our focus on scientific innovations that improve health worldwide.”
The size of the settlement is impressive because, unlike many securities fraud class actions, there were no parallel government actions.