Big Pharma balks at lawsuit rule

Fighting lawsuits is bad enough. After all, the pharma business is full of them: patent fights, product liability cases, regulatory disputes. Now, the Financial Accounting Standards Board--the accounting organization that sets the rules for companies' numbers-reporting--wants businesses to regularly disclose how much various lawsuits will cost them. Six Big Pharma companies--Johnson & Johnson, Novartis, Pfizer, Merck, Eli Lilly, and Wyeth--weighed in with a protest.

Estimating those costs is well nigh impossible, not to mention expensive, the companies contended in a letter to FASB. Examples? Take the fight over Merck's painkiller Vioxx. First, a Texas jury awarded one survivor more than $250 million, then a court struck the ruling down completely. Wyeth's fen-phen troubles are also an example. The company thought it might settle those claims for $3.75 billion, but instead has set aside or paid out more than $21 billion in legal fees, judgments and settlements. With numbers all over the map like that, how could estimates be valuable to investors, they argue. A former FASB chairman agrees; he told the Wall Street Journal, "I think the board has gone too far."

- read the WSJ story

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