Philip Morris International Inc. is facing class-action lawsuits on behalf of the company's investors after a Reuters Dec. 20 report flagged irregularities involving clinical trials that underpin the tobacco giant's application to the U.S. Food and Drug Administration for a smoking device.
The device, labeled iQOS, heats plugs of tobacco and releases nicotine-laced aerosol, without burning tobacco or producing smoke. The company reportedly claims that the product emits far lower levels of carcinogens than regular cigarettes.
The company is trying to negotiate a lower tax rate and restrictions for the device than cigarettes, according to Reuters.
However, former Philip Morris employees and contractors uncovered several irregularities involving clinical trials that back the FDA application, Reuters reported. Meanwhile, Tamara Koval, who helped coordinate clinical trials for the device, said she was excluded from meetings after she questioned the quality of some of the researchers and sites contracted to carry out experiments.
The class-action lawsuits, filed by Bronstein Gewirtz & Grossman, Bragar Eagel & Squire PC and Rosen Law Firm, are on behalf of purchasers of Philip Morris International's securities from July 26, 2016, through Dec. 20, 2017.
Other law firms, namely Glancy Prongay & Murray LLP and Levi & Korsinsky, also announced investigations on behalf of investors.
The shares of Philip Morris tumbled $3.75, or about 3.5%, following the Reuters report, to close at $104.37 on Dec. 20, Bragar Eagel & Squire and Glancy Prongay & Murray noted in their press releases.
Philip Morris said that all studies were carried out by qualified and trained principal investigators, Reuters reported. The company said FDA inspectors have audited some facilities involved in the trials, adding that it has already taken measures to address "any reported irregularity in our studies."
"Our policies encourage speaking up about suspected violations of law or our policies and we do not tolerate retaliation against those who speak up," the company reportedly said.