Pfizer Strikes $400 Million Deal to Avert Investor Class Action Trial
January 28, 2015
By Mark Terry, BioSpace.com Breaking News Staff
New York-based Pfizer Inc. announced yesterday that it has agreed to pay $400 million to settle a class-action securities lawsuit. This is in response to a lawsuit alleging that the company marketed several drugs on an off-label basis between January 2006 and January 2009.
The lawsuit stated that Pfizer had committed “unlawful off-label marketing of Pfizer’s pharmaceutical products, including Bextra, Geodon, Lyrica and Zyvox, and the illegal payment of kickbacks to physicians to promote the sale of these drugs.”
The $400 million payment will be made to avoid a jury trial set for Feb. 10, 2015.
“This resolution reflects a desire by the company,” said Christine Regan Lindenbloom, a Pfizer spokeswoman in a statement, “to avoid the distraction of continued litigation and focus on the needs of patients and physicians.”
The lawsuit claimed that Pfizer promoted Bextra for relief of acute pain despite no support by clinical data for that indication. It also promoted off-label uses of Geodon for depression, mood disorder, anxiety, aggression, dementia and attention deficit hyperactivity disorder. The drug is approved for use for schizophrenia, manic bipolar episodes and schizophrenia-related intramuscular pain.
The lead plaintiff, named by U.S. District Judge Alvin Hellerstein, was Stichting Philips Pension Funds. During pre-trial activity, Pfizer worked to block jurors from hearing the plaintiff’s damages expert. The expert claims that Pfizer stock was artificially inflated by $1.26 per share over the period of the lawsuit as a result of the off-label marketing. The judge, however, denied the motions and set the trial date.
In yesterday’s fourth quarter and 2014 annual report, Pfizer cited the lawsuit as one of several unfavorable impacts, including a “charge associated with a collaborative arrangement with Merck KgaA , announced in November 2014, to jointly develop and commercialize an investigational anti-PD-L1 antibody currently in development as a potential treatment for multiple types of cancer.
The charges includes an $850 million upfront cash payment as well as an additional amount of approximately $300 million reflecting the fair value for certain co-promotion rights for Xalkori granted to Merck KgaA.”
Those are only part of what is proving to be a tough year already for Pfizer. The company’s 2015 guidance cited an expected $3.5 billion loss due to patent expirations and generic competition, as well as another $2.9 billion loss because of foreign exchange rates relative to the U.S. dollar. As a result, some analysts are speculating the company may need a major acquisition or potentially break up into two or three smaller companies.
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