3rd Circuit Reinstates Celebrex Class Action

(CN) - The 3rd Circuit allowed investors to pursue a class action accusing Pharmacia Corp. of falsely touting Celebrex as having a better safety profile than traditional anti-inflammatory drugs.

Pharmacia won its motion for summary judgment in district court. The judge ruled that the two-year statute of limitations had expired, because the first class action was filed in April 2003, two years and two months after the 2001 publication of Food & Drug Administration staff reports.

Judge Barry of the Philadelphia-based federal appeals court reversed the decision, saying investors had not been put on constructive notice of the alleged fraud.

Pharmacia's stock price dropped in 2001 as a result of a possible label change on the drug, but that did not constitute warnings of alleged fraud, the court concluded.

Similarly, the FDA staff reports did not suggest fraud, according to the ruling. "Defendants rely on a handful of words in those reports ... But the staff reports span over 250 pages of highly complex scientific and statistical analysis," Judge Barry wrote. "These few words and phrases, lacking in accusatory intent and buried like needles in a haystack, could not give rise to storm warnings of fraud.

"We conclude that investors are not put on inquiry notice of fraud when an apparently legitimate scientific dispute arises between the FDA and a pharmaceutical company," Barry added.

Because there was no indication of potential malfeasance, Barry vacated the district's court's summary judgment for Pharmacia and co-defendant Pfizer.

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