It's bad news for Pfizer in litigation over its pain relievers Celebrex and Bextra: A federal appeals court is reviving a class-action lawsuit that accuses the company of hiding information about the drugs' cardiovascular risks and causing investors to lose a hefty chunk of change as a result.
The 2nd U.S. Circuit Court of Appeals in Manhattan voted 3-0 that U.S. District Judge Laura Taylor Swain should not have dismissed the case. Swain had decided to toss out the suit after rejecting testimony from Daniel Fischel, a University of Chicago Law School dean and expert witness for the plaintiffs who had information about shareholder damages for Celebrex and Bextra.
The plaintiffs claim that Pfizer inflated its stock price by hiding safety issues linked to Celebrex and Bextra.
Circuit Judge Debra Ann Livingston in a written opinion said that Swain "went astray" in excluding Fischel's testimony. Swain had said that Fischel did not "disaggregate" claims against Pfizer inflated from claims against the companies that used to make the drugs, Searle and Pharmacia, which later merged with Pfizer. Thus, Pfizer could not be found liable with his testimony, Swain said.
But the appeals court did not agree. "Fischel's testimony can be helpful to the jury" because it may show that "through its own fraudulent conduct, Pfizer concealed the same information as its predecessors," Livingston said. Now, the appeals court is handing the case back to Swain for consideration.
Unsurprisingly, Pfizer is not pleased with the appeals court's decision. The company has "appropriately communicated accurate and science-based information about its medicines to investors and the public at all times and will continue to defend this case vigorously," Pfizer told FiercePharma in a statement.
The latest court action brings up some old ghosts for Pfizer. This particular legal saga with Celebrex and Bextra began in 2004, when investors sued the company for allegedly concealing tests that pointed to health risks linked to Celebrex and Bextra.
The company faced mounting safety concerns for the drugs after Merck withdrew its rival pain drug Vioxx because of cardiovascular risks in late 2004. Pfizer ended up pulling Bextra from the U.S. market in 2005.
Since then, the company has dealt with pushback from the feds and shareholders. In 2009, Pfizer said it would pay $2.3 billion to settle a U.S. Department of Justice probe into its marketing of Bextra and other drugs.
In some investor cases, Pfizer is choosing to settle instead of battling it out in court. In January 2015, the company said it would pay $400 million to resolve an investor suit claiming that Pfizer's board misled investors about off-label marketing for Bextra.
- read the appeals court's opinion (PDF)