The US Supreme Court ruled this week that investors may sue drugmakers for securities fraud based on failure to disclose reports of adverse events, even if those events do not meet the standard of statistical significance. The case involves scattered reports that some users of the now-discontinued over-the-counter cold medicine Zicam lost their sense of smell. The company did not disclose what it called “anecdotal hearsay reports about alleged adverse health events,” but when media reports surfaced, the company’s stock price dropped and investors sued. All nine justices sided with the investors. “Given that medical professionals and regulators act on the basis of evidence of causation that is not statistically significant,” wrote Justice Sonia Sotomayor of behalf of the court, “it stands to reason that in certain cases reasonable investors would as well.”
Supreme Court Rules Against Zicam Maker (New York Times)
Supreme Court: Investors can sue firm for not disclosing drug side effect (Christian Science Monitor)
Drugmaker Can Be Sued Over Tardy Disclosure Of Adverse Reactions (NPR Health Blog)
Supreme Court OKs biotech lawsuits based on adverse events (FierceBiotech)