PHILADELPHIA, Aug. 2, 2002 (PRIMEZONE) -- On July 10, 2002, the law firm of Berger & Montague, P.C. (http://www.bergermontague.com) filed a class action suit against Merck & Co. Inc. ("Merck") (NYSE:MRK) and certain of its principal officers and directors in the United States District Court for the District of New Jersey on behalf of all persons or entities who purchased Merck common stock between July 23, 1999 and July 3, 2002 (the "Class Period").
The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the Class Period that had the effect of artificially inflating the market price of Merck's common stock.
Merck's operations are comprised of two reportable segments: Merck Pharmaceutical and Merck's wholly owned subsidiary, Merck-Medco Managed Care, L.L.C. ("Merck-Medco"), which manages pharmacy benefits for employers, insurers and other plan sponsors. Consumers who are members of pharmacy benefits plans must make co-payments directly to the pharmacy when purchasing prescriptions.
Since Merck acquired Merck-Medco in 1993 and throughout the Class Period, Merck and Merck-Medco have falsely inflated their reported revenues by billions of dollars, by approximately $14 billion from 1999-2002, by including consumer co-payments for prescription drugs in revenue, contrary to the revenue recognition practices of two of Merck-Medco's biggest competitors and concealing these facts in violation of Generally Accepted Accounting Principles ("GAAP"). As a result, defendants concealed these facts, overstating Merck-Medco's total economic activity, making it appear more successful than it actually was.
On July 5, 2002, Merck filed with the SEC Amendment No. 4 to the Form S-1 Registration Statement for the initial public offering ("IPO") of shares of Medco Health Solutions, Inc., its former Merck-Medco unit. In that document, defendants disclosed for the first time the material amounts of the co-payments included in product net revenues, as follows:
Retail co-payments included in product net revenues amount to approximately $2,838 million in 1999, $4,036 million in 2000, $5,537 million in 2001, $1,378 million in the first quarter of 2001 and $1,640 million in the first quarter of 2002, each with a corresponding equivalent amount recorded in cost of product net revenues.
Therefore, between 1999 and 2001, co-payments represented nearly 10% of Merck's overall reported revenue. Medco's co-payments of $5.5 billion booked as revenue in 2001 represented approximately 11% of Merck's 2001 overall revenue of $50.69 billion. The co-payment revenue booked in 2000 was $4.04 billion, or approximately 9.4% of Merck's total reported revenue, while it was $2.84 billion in 1999, or approximately 8.1% of total revenue. Following defendants' July 5, 2002 disclosure of approximately $14 billion of co-payments included in product net revenues from 1999-2002, the price of Merck stock dropped approximately 14% to as low as $45 and Merrill Lynch dropped its "buy" rating on Merck stock. The Medco IPO has been delayed three times and Merck has reduced the expected price range to $20-$22 from $22-$24.
If you purchased Merck common stock during the period from July 23, 1999 through July 3, 2002, inclusive, you may, no later than August 20, 2002, move to be appointed as a Lead Plaintiff. A Lead Plaintiff is a representative party that acts on behalf of other class members in directing the litigation. The Private Securities Litigation Reform Act of 1995 directs courts to assume that the class member(s) with the "largest financial interest" in the outcome of the case will best serve the class in this capacity. Courts have discretion in determining which class member(s) have the "largest financial interest,'' and have appointed Lead Plaintiffs with substantial losses in both absolute terms and as a percentage of their net worth. If you have sustained substantial losses in Merck common stock during the Class Period, please contact Berger & Montague, P.C. at investorprotect@bm.net for a more thorough explanation of the Lead Plaintiff selection process.
The law firm of Berger & Montague, P.C. has over 50 attorneys, all of whom represent plaintiffs in complex litigation. The Berger firm has extensive experience representing plaintiffs in class action securities litigation and has played lead roles in major cases over the past 25 years which have resulted in recoveries of several billion dollars to investors. The firm has represented investors as lead counsel in actions against companies including Rite Aid, Sotheby's, Waste Management, Inc., Sunbeam, Boston Chicken and IKON Office Solutions, Inc. The standing of Berger & Montague, P.C. in successfully conducting major securities and antitrust litigation has been recognized by numerous courts. For example:
"Class counsel did a remarkable job in representing the class
interests." In Re: IKON Offices Solutions Securities Litigation.
Civil Action No. 98-4286(E.D.Pa.) (partial settlement for
$111 million approved May, 2000).
"...(Y)ou have acted the way lawyers at their best ought to act.
And I have had a lot of cases...in 15 years now as a judge and I
cannot recall a significant case where I felt people were better
represented than they are here ... I would say this has been the
best representation that I have seen." In Re: Waste Management,
Inc. Securities Litigation, Civil Action No. 97-C 7709 (N.D.
Ill.) (settled in 1999 for $220 million).
If you purchased Merck common stock during the Class Period, please visit our website at www.bergermontague.com to view the complaint and join the class action or if you have any questions concerning this notice or your rights with respect to this matter, please contact:
Sherrie R. Savett, Esquire Carole A. Broderick, Esquire Barbara A. Podell, Esquire Kimberly A. Walker, Investor Relations Manager Berger & Montague, P.C. 1622 Locust Street Philadelphia, PA 19103 Phone: 888-891-2289 or 215-875-3000 Fax: 215-875-5715 Website: http://www.bergermontague.com e-mail: InvestorProtect@bm.net
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.