Disagreement with clinical trial methodology insufficient to claim fraud

9th Circuit offers protection to companies using judgment that could extend beyond the pharmaceutical industry

A recent 9th Circuit decision offers protection to pharmaceutical companies using their judgment in clinical trials—protection that could extend to other industries.

In In re: Rigel Pharmaceuticals, Inc. Securities Litigation, Rigel developed an arthritis drug and did a clinical trial on 189 patients in the U.S. and Mexico. Plaintiff Inter-Local Pension Fund GCC/ IBT bought stock in Rigel after reading a press release that revealed the “statistically significant” results of the trial.

However, the court did insert a word of caution into its opinion. Fraud claims might have some teeth, it wrote, if a company committed to one statistical methodology and then changed to another after seeing the data from the clinical trial, because “someone can manipulate the unblinded data to obtain a favorable result.”

“You should feel comfortable in devising a methodology,” says Morrison & Foerster Partner Sean Prosser. “Courts won’t second-guess it so long as you’ve devised that methodology in good faith. But once you create the methodology and get your data, you should not be changing the method of interpreting the data without very substantial disclosures about the changes.”

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