Pfizer to settle Bextra and Celebrex lawsuits for $894 million
NEW YORK—In a move that mirrors Merck's model for settlingit's Vioxx lawsuits, Pfizer Inc. announced late last week it reached anagreement that would settle, for $894 million, nearly 92 percent of the currentclaims against the company surrounding the use of its products Bextra andCelebrex. The settlement deal will resolve a host of legal claims against thecompany ranging from personal injury and class action lawsuits, as well asclaims brought against the company by attorneys general from 33 states and theDistrict of Columbia, according to Pfizer.
Like Vioxx, both Bextra and Celebrex are Cox-2 inhibitorsthat were targeted for personal injury lawsuits which claimed the drugs causedheart attacks and strokes. Bextra was pulled from the market in 2005 at thebehest of the FDA, which cited its assertion that Bextra had no advantages overother products, while expressing concern it could have life threateningside-effects. Celebrex, however, is still actively marketed.
"We are pleased by the favorable rulings we have achieved inthis litigation and believe that now is the right time to resolve thesematters," says Amy W. Schulman, senior vice president and general counsel ofPfizer, in a statement announcing the settlements. "Inevitably, litigation canbe distracting and putting these matters behind us helps our shareholders and,most importantly, patients and doctors."
The settlement also comes on the heels of both federal andNew York State court rulings which held plaintiffs' lawyers failed to provideviable scientific evidence of increased risk of heart attacks or strokes forCelebrex at its most commonly prescribed dose. These findings are in line withfindings by the FDA in 2005 that showed the benefits of Celebrex outweigh itsrisks for patients at approved doses.
"Pfizer stands by the safety and efficacy profile ofCelebrex. It is one of the most rigorously and continuously-studied drugs inthe world, as evidenced by its approval and use in 111 countries during thepast 10 years across several different pain indications," says Joseph M.Feczko, chief medical officer for Pfizer, in a press release.
The $894 million in settlements are in three pieces. Thebulk of the money, $745 million, is set aside to settle the 7,000 personalinjury claims against the company. An additional $60 million will be paid tosettle claims brought by the attorneys general, with the remaining $89 millionearmarked for the class action claims of consumer fraud.
This settlement was termed a win for consumers by HagensBerman, a Seattle-based law firm pursuing the class action and other personalinjury claims.
"This is a victory for purchasers, including third-partypayers and consumers across the country, who will receive monetary relief fromthe settlement," says Steve Berman, managing partner at Hagens Berman. "It isalso an example of the critical role private litigation plays in holdingpharmaceutical companies accountable in an era when the FDA can't or won't actas a watchdog."
Market analysts were somewhat dismayed by the settlement.
Credit Suisse analyst Catherine Arnold said in a Wall Street Journal article that "It'sstrategically disappointing they're writing a check for $900 million for alegal settlement [rather] than for buying up assets, which is what they needfor future growth."
Further, Arnold noted it would be important for the companyto reassure the market that it was committed to trimming top-line expenses inorder to counteract declining sales of its drugs Lipitor and itssmoking-cessation drug Chantix, which also has suffered from safety concerns.
Arnold may have gotten her wish Monday, when Pfizerreported strong earnings, as well as plans to reduce its costs by $1.7 billioncompared with its 2006 budget.