Unofficially Dangerous? Drug Side Effects Title: Supreme Court Rules against Zicam Maker Adam Liptak Author: Source: New York Times, March 23, 2011, http://www.nytimes.com/2011/03/23/ health/23bizcourt.html The Supreme Court unanimously ruled on Tuesday that investors suing a drug company for securities fraud may rely on its failure to disclose scattered reports of adverse affects [sic] from an over-the- counter cold remedy that fell short of statistical significance. The following is an extract from a New York Times article on Zicam: The case involved Zicam, a nasal spray and gel made by Matrixx Initiatives and sold as a homeopathic medicine. From 1999 to 2004, the plaintiffs said, the company received reports that the products very strong momentum" though, by the plaintiffs' calculations, Zicam accounted for about 70% of its sales. ght have caused some users to lose their sense of smell, a condition called anosmia. Matrixx did not disclose the reports and in 2003, the company said it was "poised for growth" and had In the case before the justices, Matrixx Initiatives Inc. v. Siracusano, No. 09-1156, lawyers for Matrixx argued that it should not have been required to disclose small numbers of unreliable reports, which were the only ones available in 2004, they said. They added that the company should face liability for securities fraud only if the reports had been collectively statistically significant. ... Questions 1. This is an unusual situation. Clearly identify (in your own well-chosen words) the two outcomes that are being compared when the words "statistically significant" are used. 2. What is Matrixx claiming? How is their claim related to a Type I Error Rate (false positive rate)?

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