Industry voices concern over Matrixx Initiatives AER case

WASHINGTON —The pharmaceutical industry earlier this month weighed in on the case “Matrixx Initiatives vs. James Siracusano and NECA-IBEW Pension Fund.”

Both the Consumer Healthcare Products Association and the Council for Responsible Nutrition, and separately the Natural Products Association, filed supporting briefs to the U.S. Supreme Court arguing that the mere nondisclosure of adverse event reports to shareholders should not give rise to liability under federal securities laws without applying a statistical significance standard. The Supreme Court had agreed to place the case on its docket in June.

“The statistical significance standard recognized by most courts of appeals appropriately recognizes that adverse event reports, standing alone, are not ‘material’ for purposes of federal securities laws,” CHPA and CRN wrote in its amicus curiae. “The statistical significance standard addresses the quality of the evidence of a relationship between an adverse event and a product, and therefore it is not the kind of ‘bright-line’ rule that [the Supreme] Court rejected in Basic Inc. vs. Levinson, 485 U.S. 224 (1988).”

“The practical consequence of the Ninth Circuit’s decision, if it is not reversed, is that manufacturers…very likely will be forced to disclose all AERs, however insignificant, in order to avoid meritless—but expensive—strike suits against the supplement industry,” said Jonathan Cohn, who authored the NPA’s separate amicus curiae.

“Companies cannot possibly guess in advance what will be deemed adequate disclosure years later in collateral litigation,” said Scott Bass, a partner at Sidley Austin, which is counsel for the NPA. “The [Dietary Supplement and Nonprescription Drug Consumer Protection Act] explicitly states that AERs are not proof of causation.”

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