Pfizer is the latest drugmaker to disclose a new reserve for legal settlements. The company said in an SEC filing that it has set aside a total of $772 million to cover litigation over its Prempro menopause treatment. Thousands of women have sued over the drug, alleging it caused their breast cancer.
Pfizer has settled or agreed to settle one-third of the pending lawsuits, and has so far booked related charges of $472 million, including a $172 million charge against first-quarter earnings, Dow Jones reports. It now has set aside another $300 million, the SEC filing states. Pfizer expects that the new legal reserve will cover "the minimum expected costs to resolve all of the other outstanding" cases, the filing said (as quoted by Bloomberg).
Pfizer inherited most of the litigation through its merger with Wyeth, which made and sold a variety of hormone therapies, including Prempro. The menopause drugs grew controversial as studies suggested that they carried increased risk of breast cancer, among other risks.
As that word "minimum" in the SEC disclosure suggests, the cost of Prempro litigation could still rise. Spokesman Chris Loder told Dow Jones that the charges taken so far are "estimates," and, "given the uncertainties inherent in product liability litigation, additional charges may be required." As one plaintiff's lawyer noted, "That leaves a lot of room for interpretation."
But Miller Tabak analyst Les Funtleyder told Bloomberg that the settlements are probably good for Pfizer shares. "I see this as an effort to clean up a long-standing litigation so they can go forward with their business plan," he said.
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