US: Pension Fund of New York Files Suit Against Merck

Publisher Name: 
The New York Times

The main pension fund of New York State filed a federal lawsuit
yesterday against
Merck &
Company, accusing it of misleading shareholders about the safety of
its arthritis pain drug Vioxx, which has since been withdrawn.

The suit, brought in United States District Court in Trenton, said
that the pension fund lost about $171 million on Sept. 30, when the
company, citing increased heart risks in tests of people who had used
Vioxx for more than 18 months, withdrew it from the market. On that
day, the price of a share of Merck stock plummeted 27 percent, and it
has since drifted lower. Merck shares are down almost 40 percent so
far this year, though they closed up 35 cents yesterday, at
$28.02.

The suit appears to be the first by a pension fund against Merck,
which is based in Whitehouse Station, N.J. A company spokeswoman, Joan
Wainwright, said that about 15 lawsuits had been filed, contending
that Merck misled shareholders. Several hundred personal injury
lawsuits have also been filed against Merck by people claiming to have
been injured by Vioxx.

The company has denied any wrongdoing.

In a statement issued yesterday, the New York State comptroller, Alan
G. Hevesi, who is also the pension fund's trustee, maintained that
Merck knew but failed to disclose that growing evidence indicated that
Vioxx users were at increased risk of heart attacks, strokes and
death.

"Merck must be held legally responsible for its actions,"
Mr. Hevesi said. "These actions have put lives at risk and cost
shareholders billions of dollars." Mr. Hevesi's suit is seeking
unspecified damages.

Besides the company, the suit names several individuals, including
Merck's chief executive, Raymond V. Gilmartin.

Merck executives have disputed suggestions that they acted improperly
and said they moved promptly to withdraw Vioxx after the patients in
the clinical trial - where the drug was being tested as a treatment
for colon polyps - experienced increased risks of cardiovascular
problems.

"Merck extensively studied Vioxx before seeking regulatory
approval to market it," the spokeswoman, Ms. Wainwright, said.
"We promptly disclosed the clinical data about Vioxx. When
questions arose, we took additional steps, including conducting
further prospective, controlled studies to gain more clinical
information."

She said that Merck had not seen Mr. Hevesi's lawsuit and so would not
comment.

In the suit, Mr. Hevesi cited recent newspaper and broadcast reports
and medical journal articles that raised questions about Merck's
handling of safety issues surrounding Vioxx.

Some people raised safety questions after Vioxx's approval in 1999 by
the Food and Drug Administration. In 2000, for instance, a major
clinical trial of the drug found that those taking it had a fivefold
greater risk of heart attacks compared with patients in the trial who
took another pain reliever, naproxen.

Until recently, Merck executives said that those results did not
reflect dangers posed by Vioxx but rather the protective effect of
naproxen for cardiac health.

A spokesman for Mr. Hevesi, John Chartier, said that at end of
September, the New York State pension fund owned about 9.4 million
shares of Merck.

In the lawsuit filed yesterday, Mr. Hevesi is asking the court to
consolidate all securities-related claims against Merck in connection
with Vioxx into a class action and to make him the lead plaintiff. He
also filed a separate but related lawsuit yesterday in United States
District Court in New Orleans.

The New York State Common Retirement Fund, as the pension fund is
formally known, is the second-largest public pension fund in the
country, after Calpers.

It has some $120.8 billion in assets and more than 970,000 retirees,
beneficiaries and members.



Copyright 2004 The New York Times Company

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