Significance of Supreme Court Zicam Decision

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Mar 26, 2011, 9:40:15 AM3/26/11
Alliance for Human Research Protection
A Catalyst for Debate


In a unanimous decision, the Supreme Court ruled that investors have a right
to sue a company for its failure to disclose reports of adverse drug effects
to shareholders--even if those reports do not rise to the level of
"statistical significance."

The ruling allows the case, Matrixx Initiatives v. Siracusano, to move

The shareholder lawsuit alleged that the company knew that its over-the
counter cold remedy, Zicam was linked to adverse effects--the loss of sense
of smell and insomnia-- but failed to inform its investors--so that they
could take action to prevent them from losing their money.

Matrixx claimed the adverse effect reports did not reach "statistical
significance" and, therefore, did not have to be disclosed. The Court
explicitly shut down that argument in their decision.

During arguments in the case (Jan 10) Justice Roberts made it clear that the
issue before the court was not whether Zicam caused anosmia, but whether
investors should have been informed earlier about reports of anosmia
drifting in from physicians and patients.

"I'm an investor in Matrixx; I worry whether my stock price is going to go
down," he said. "You can have some psychic come out and say Zicam is going
to cause a disease, with no support whatsoever, but if it causes the stock
to go down 20 percent, it seems to me that's material."

If Justice Roberts has stock in Matrixx, does that not constitute a
financial conflict of interest??

We post two slightly different interpretations of the decision's
significance: one by NPR, the other by NATURE,

Contact: Vera Hassner Sharav

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