Last year, Pfizer ($PFE) got a federal judge to toss an investor lawsuit tied to its now-withdrawn pain drug Bextra. But that wasn't the only investor suit raising similar issues--namely that Pfizer's board had not been forthright about marketing allegations involving Bextra and other drugs. When they were made public those allegations sank Pfizer's shares. Another of those shareholder suits was just days away from trial last quarter when the drugmaker agreed to settle it for $400 million.
The New York drug company disclosed the settlement in a subparagraph on page 6 of its earnings report Tuesday. It said that among unfavorable impacts to its less-than-stellar earnings in the last quarter were "higher charges for certain legal matters, primarily reflecting a $400 million charge for an agreement in principle to resolve a securities class action pending against the company in New York federal court." The trial was set to begin Feb. 10.
Spokeswoman Christine Regan Lindenbloom told Reuters that the settlement "reflects a desire by the company to avoid the distraction of continued litigation and focus on the needs of patients and physicians."
The lawsuit was filed in 2010 and accused executives and the board of misleading investors in connection with probes into off-label marketing of a number of drugs, including Bextra, which was withdrawn from the market in 2005 because of heart attack risks. In 2009, Pfizer settled with the Justice Department for $2.3. billion over the issues.
In a similar suit, investors initially sued Pfizer over statements made about the "safety and marketability" of the drugs, claiming Pfizer kept quiet about both drugs' safety risks. That case escalated from there and in 2012 broke out into a fight over whether the drug giant hid and destroyed records to keep the plaintiffs from seeing them, allegations that Pfizer denied. That case was tossed in July by a federal judge who found that the plaintiffs' key expert had an unacceptable method of determining damages.
The settlement disclosure came Tuesday when Pfizer reported Q4 and 2014 earnings, with revenues down 3% and 4% respectively and earnings per share off 51% in Q4. It also provided 2015 guidance in which it said sales would be $44.5 billion to $46.5 billion, down from $49.6 billion in 2014, as generics continue to whittle away at drugs like Celebrex, Lipitor and Viagra. CEO Ian Read told investors the company hoped that products like blood thinner Eliquis could make up some of the lost revenue.
- read Pfizer's earnings statement (PDF)
- read the Reuters story