Amgen Loses U.S. Supreme Court Case on Class Actions

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The U.S. Supreme Court on Wednesday ruled against Amgen Inc. in a case that could make it easier for shareholders to bring class-action lawsuits against companies in the future.

The High Court’s 6-3 decision affirmed a 9th U.S. Circuit Court of Appeals ruling in 2011 that certified for class status a lawsuit brought by pension funds owning Amgen shares. Writing for the majority, Justice Ruth Bader Ginsburg said that while the plaintiffs eventually would have to prove the alleged misrepresentations by the company were “material”, such proof wasn’t necessary in the early stages of a class action.

“Essentially, Amgen…would have us put the cart before the horse,” Ginsburg wrote.

In a statement, Amgen said it would “vigorously defend itself” when the case comes back to U.S. District Court in Los Angeles.

The shareholders accused the Thousand Oaks biotech of inflating the company’s stock price by misleading the public about the safety of its anemia drug Aranesp between April 2004 and May 2007. The plaintiffs contend Amgen officials knew of safety concerns from clinical trials that the company had hoped to use to expand the drug’s market.

The U.S. Food and Drug Administration eventually forced Amgen to beef up warnings on Aranesp’s label and take other actions that led to a steep decline in sales. An older anemia drug, Epogen, also was hurt by controversy.

Business groups such as the U.S. Chamber of Commerce backed Amgen’s appeal of class status for the lawsuit, fearing the decision would encourage “premature” class-action certifications and encourage companies to settle even “frivolous” cases rather than go to trial.

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