It is costing Pfizer nearly half a billion dollars to settle a decade-old shareholder lawsuit tied to two controversial pain drugs, Bextra, which it no longer makes, and Celebrex, sales of which have been dropping as generics eat away its market share.
Pfizer ($PFE) agreed to the settlement last week but initially declined to say for how much, pending court approval of the deal. But buried deep in the footnotes of Pfizer’s earnings report on Tuesday was the sum: $486 million.
Pfizer said it has already accrued the money “to resolve a Multi-District Litigation relating to Celebrex and Bextra pending against the Company in New York federal court.” Pfizer spokeswoman Neha Wadhwa today confirmed that was the settlement sum.
In a statement, the company said: “This resolution reflects a desire by the company to avoid the distraction of continued litigation and focus on the needs of patients and prescribers.” The company and the execs involved in it did not acknowledge any wrongdoing.
The litigation dates back to 2004 when a number of separate shareholder suits were filed claiming that Pfizer’s share price took a dive after it was learned that Pfizer had allegedly hidden information about the cardiovascular risks of the two drugs. The company faced mounting safety concerns for the drugs after Merck ($MRK) 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.
The litigation dragged on for many years and then in 2014, a federal judge dismissed it after rejecting the testimony from the expert hired by the plaintiffs to figure the level of damage shareholders incurred. But then in April, a federal circuit court of appeals in New York reinstated the case on appeal.
The pain drugs made Pfizer a lot of money, at one time being among the company’s best-selling meds. Pfizer has continued to sell Celebrex since Bextra was pulled from market. In fact, Celebrex generated $183 million in Q2, although that was down 18% in the face of sales of generics that began in 2014.
But Pfizer has tallied up big payouts because of the controversy over their risks. In 2009, the New York company agreed to hand over $2.3 billion to settle a U.S. Department of Justice probe into its marketing of Bextra and other drugs. And last year, the drugmaker settled another related investor suit for $400 million.
- here’s the earnings release
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