Adding to the firestorm of litigation surrounding the recall of the pain drug Vioxx, several securities class actions have been now filed against pharmaceutical giant Merck & Co. (NYSE: MRK) and certain of its officers and directors by stockholders who purchased the company’s common stock between October 30, 2003 and September 30, 2004. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company’s securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.

The complaint alleges that Merck and its officers and directors knew, well before the September 30, 2004 worldwide Vioxx recall, that the drug was unsafe and carried a significantly increased risk of cardiac disorders. This information was known, the plaintiff’s say, as early as 2001, when the Journal of American Medicine published the findings of a Cleveland Clinic study showing that takers of Vioxx had a higher incidence heart attacks. The plaintiffs claim that despite overwhelming evidence that the drug was unsafe, Merck engaged in a massive and deliberate public relations campaign to present the drug to the public as safe and effective. In fact, during the time when evidence of Vioxx risks was coming to light, Merck actually sought to expand the market for the drug by seeking FDA approvals for new uses of Vioxx.

On September 30, 2004 the truth could no longer be hidden when Merck announced its voluntary worldwide recall of the drug due to serious health risks. The recall came only one month after a strongly worded press release refuting claims of the drug’s risks and asserting it’s safety.

When news of the recall broke, Merck stock fell, in a single day of trading, by 25%, for a collective shareholder loss of over 26 billion dollars.