N.Y. Is Suing Merck Over Pension Losses
New York filed a lawsuit Tuesday against Merck & Co. Inc., claiming the state’s pension fund lost $171 million from its investment in the drug maker after the company recalled its Vioxx painkiller.
New York State Comptroller Alan Hevesi said he was seeking to be the lead plaintiff in a shareholder class-action suit against Merck and aimed to have the shareholder cases against the company consolidated in U.S. District Court in New Jersey.
As state comptroller, Hevesi is the sole trustee for the $120-billion retirement fund that provides pensions to state and local government employees.
Merck spokesman Tony Plohoros said that the company did not comment on specific suits, but added that Merck “has strong, meritorious defenses against any Vioxx suit that may be brought against the company.”
Merck voluntarily recalled Vioxx on Sept. 30 after researchers found an increased risk of heart attack and stroke in patients who took the drug for more than 18 months. Vioxx was introduced in 1999 and had worldwide sales of $2.55 billion in 2003.
Merck’s stock has fallen 37.8% since Sept. 29, the day before the recall. Over the same period, the Standard & Poor’s healthcare index rose 4.3%. Merck shares Tuesday gained 35 cents to $28.02 on the New York Stock Exchange.
The drop in Merck’s share price knocked the company’s market value down to about $60 billion, a value that some analysts say could make Merck a takeover target.
Vioxx was offered as an alternative to aspirin and other pain relievers, which caused ulcers and other gastrointestinal problems.
Hevesi said in a statement that the lawsuit alleged violations of federal securities laws resulting from Merck’s failure to disclose material information concerning Vioxx’s safety profile.
Hevesi said he filed related motions to the case in the U.S. District Court for the Eastern District of Louisiana, where Merck and its directors were facing a shareholder lawsuit.
Lewis Kahn, liaison counsel in the Louisiana lawsuit and president of Kahn Gauthier Law Group in Metairie, La., said he was not sure how Hevesi’s action would affect the case that was originally filed in 2003.
“We will continue to prosecute our case, and we have an obligation to the class to prosecute,” he said, adding that his firm had filed a third amended and consolidated complaint.
