Empire State Sues Merck Over Vioxx Pension Losses

December 1, 2004 (PLANSPONSOR.com) - New York State Comptroller Alan Hevesi has filed a federal court lawsuit against Merck & Co., alleging that the Empire State's pension fund got hit with a $171-million loss when Merck withdrew its Vioxx arthritis drug from the market.

The suit, filed in US District Court for the District of New Jersey, alleged Merck violated federal securities laws by not making public information that a “growing body of evidence demonstrated that patients who used Vioxx were at an increased risk of adverse cardiovascular reactions, including heart attack, stroke and death,” Hevesi said in a Web statement

“Merck must be held legally responsible for its actions. Those actions have put lives at risk and cost shareholders billions of dollars,” Hevesi , the sole trustee of the $120-billion fund, said in the statement. Hevesi said the New Jersey suit requested that his office be appointed lead plaintiff in the shareholder class-action litigation.

Merck pulled the drug on September 30, 2004 in what Hevesi charged was an “abrupt decision” based on health concerns, which he said “contradicted its prior public announcements repeatedly touting the safety of Vioxx.” Following the withdrawal of Vioxx from the market, Merck’s stock price immediately plummeted by 26%.

The New York State Common Retirement Fund (NYSCRF) is the second largest public pension fund in the nation, both in terms of membership and assets, with more than 970,000 retirees, beneficiaries and members and approximately $120.8 billion in assets.