Statistically Insignificant Deaths: Disclosing Drug Harms to Investors (and Patients) Under SEC Rule 10b-5

Abstract

This Article using statistical tools and theory in conjunction with more standard legal approaches argues that pharmaceutical manufacturers should disclose all cases of illness or injury associated with their products because this data is material to patients and their doctors and therefore to Securities and Exchange Commission Rule 10b5\u27s ÔÇ£reasonable investorÔÇØ Patient and investor interests complement each other in this context so each will benefit from disclosures that interest the other Because individuals process more information than traditional statistical tests convey they act reasonably in expanding their treatment and investment criteria beyond statistical data Moreover two sets of expert intermediaries \u27 doctors and professional investors \u27 will be involved Their expertise will contribute to a more accurate assessment of the risks that adverseevent reports may suggest a drug presents and of the significance of these risks to shareholders The Supreme Court\u27s reasons for not requiring full disclosure are out of place in the context of adverseevent reporting given Rule 10b5\u27s prodisclosure mandate and the fact that even seemingly singular and unconnected facts can substantially move investors\u27 and patients\u27 opinions about a drug\u27s safety and thus its maker\u27s viability A fulldisclosure rule would place the determination of which facts are important into the hands of parties with ÔÇ£skin in the gameÔÇØ rather than regulators or selfinterested drug maker