ABT pin action, MRK up

Abbott Laboratories (ABT) is up over 1% today, probably piggybacking on the Merck (MRK) news that a lot of lawsuits are going bye bye:

Shares of Merck & Co. soared to their highest price in three and a half years Friday after a federal judge dismissed an investor class action lawsuit against the company over Vioxx and reports that a state judge is about to try to dispose of thousands liability lawsuits in Texas.

Shares of the Whitehouse Station, N.J.-based drug maker surged $3.82, or 8.2 percent, to $50.18 in midday trading on the New York Stock Exchange at more than double their average volume. The price hit a high of $50.28 earlier in the session, a price not seen since October 2003.

Merck shares dropped 41 percent to the mid-$20 range in the month following the company's withdrawal of its arthritis pain reliever Vioxx from the market on Sept. 30, 2004, after the drug became associated with an increased heart attack risk.

In a ruling Thursday, Judge Stanley Chesler of the U.S. District Court in Newark dismissed investor claims against Merck because the claims were not made while statutes of limitations were in effect.

The lawsuit was dismissed with prejudice, meaning investors cannot file the suit again. Investors who had bought Merck stock between May 21, 1999, and Oct. 29, 2004, alleged the company had defrauded them by concealing information about the drug's safety risks. The earliest fraud complaint was filed in November 2003, according to court records.

In his opinion, the judge said that a Food and Drug Administration warning letter from Sept. 21, 2001, and attention from the media and financial analysts thereafter started the clock ticking on the two-year window that investors needed to file.

This is good and bad news - the good news is that Merck won't have to spend the legal fees and pay for any judgments, the bad news is that the lawsuits were thrown out on technicalities (and highlighting the need for tort reform in the US). For now, I'll take the news that is moving the Dow Jones average up today and helping out healthcare stocks.