According to a press release dated December 20, 2005, the 3rd U.S. Circuit Court of Appeals has now ruled that the investors' suit was properly dismissed because Merck had disclosed the nature of its subsidiary's improper accounting practices in an April 2001 filing with the Securities & Exchange Commission, and that the Journal reporter "simply did the math." Although the court was critical of Merck's failure to disclose the actual figures in its SEC filing, it nonetheless found that the essential facts had been disclosed to investors and analysts.

The original complaint allege that Merck overstated revenues from its subsidiary Merck-Medco Managed Care, L.L.C. by billions of dollars by including consumer co-payments for prescription drugs in its revenues. During the Class Period, Merk-Medco's revenues made up over 50% of Merck's total revenues. The lawsuit claims that Merck violated Generally Accepted Accounting Practices (GAAP) because neither company bills for the co-payments, gets billed for them, or otherwise comes into contact with co-payment money. Patients make co-payments directly to pharmacies when they purchase medicine.

On June 21, 2002, The Wall Street Journal issued a report regarding Merck's accounting practices and estimated that Merck and Merck-Medco may have pumped up their 2001 revenues by as much as $4.6 billion. Similar overstatements may have occurred for 1999 and 2000, the complaint says. That same day, according to the complaint, a Merck spokesman admitted that the company had been recording prescription drug co-payments as revenue since it acquired Merck-Medco in 1993.

In the wake of these revelations, Merck's stock immediately dropped 4.25% from its closing price of $52.20 on June 20, 2002 to a closing price of $49.98 on June 21, 2002, its lowest closing price since late 1997.

Through August 30, 2002, various plaintiff firms' motions for consolidation of all related actions and for the appointment of Lead Plaintiff and Lead Counsel were filed with the Court. The cases were consolidated on September 19, 2002. Lead Plaintiff, and their selection of Lead Counsel, was appointed on November 27, 2002. Lead Plaintiffs filed an Amended Complaint on March 17, 2003, which Defendants moved to dismiss on May 14, 2003. To date, the docket reflects no further significant activity.