In a unanimous decision, the US Supreme Court ruled yesterday that a pharmaceutical company may be required to notify investors of safety reports regarding its products, even if those reports do not rise to the level of statistical significance.
The ruling allows a case against over-the-counter healthcare firm Matrixx Initiatives to move forward. Investors sued the company, based in Scottsdale, Arizona, arguing that it should have notified them earlier about reports that some of its popular zinc gluconate cold medications may have robbed some users of their sense of smell.
When news of the possible link finally became public, Matrixx stock plummeted. The company no longer makes the formulations of Zicam linked to the inability to smell (anosmia), but other formulations of the drug remain on the market.
Matrixx tried to shoot down the lawsuit by arguing that the adverse event reports it received about Zicam were not statistically significant. But Judge Sonia Sotomayor, writing for the court, said that test would be too stringent. “Both medical experts and the Food and Drug Administration (FDA) rely on evidence other than statistically significant data to establish an inference of causation,” she wrote. “It thus stands to reason that reasonable investors would act on such evidence.”
That decision essentially maintains the status quo, and is unlikely to affect drug safety lawsuits brought by consumers, says J. Robert Brown, a law professor at the University of Denver Sturm College of Law.
Sotomayor cited the FDA’s own guidelines to back up her point. According to those guidelines, the FDA takes in a range of evidence when determining whether there is a link between a drug and an adverse event. This evidence ranges from the biological plausibility of a link to the evidence of a dose response. In an amicus brief to the court, the United States said the FDA “does not apply any single metric for determining when additional inquiry or action is necessary, and it certainly does not insist upon ‘statistical significance’”.
Indeed, the justices seemed critical of the proposed statistical significance requirement right from the start. During arguments heard on 10 January, 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.”
That, argued Matrixx’s attorneys, was precisely the problem: companies receive many such reports, and they vary widely in their quality. Making all of them public could unnecessarily frighten consumers, Matrixx argued.
In the decision handed down yesterday, Judge Sotomayor agreed that “something more than the mere existence of adverse event reports is needed”, but said the bar should not be raised all the way to the level of statistical significance. That, says Brown, is how the system already evaluates adverse event reports. “These reports are never looked at in isolation,” he says. “You always look at how many reported the condition, or who reported it. You always are looking at reports plus context.”