Pfizer Inc. will pay $486 million to settle long-running multidistrict litigation (MDL) accusing the drug company of misleading investors about the risks of its pain treatments Celebrex and Bextra. The lawsuit, filed in 2004, accused Pfizer and its top executives of repeatedly misleading investors regarding the safety of Celebrex and Bextra. The settlement is subject to the negotiation of a final settlement agreement and court approval.
The underlying suit alleged that Pfizer and top executives, including former CEO Henry McKinnell, knew that drug safety studies conducted between 1998 and 2004 showed Celebrex and Bextra posed serious cardiovascular risks, but that they concealed the information from the public.
A consolidated class action complaint was filed in February 2006. U.S. District Judge Laura Taylor Swain in July 2012 certified a class led by the Teachers Retirement System of Louisiana. But in May 2014, Judge Swain excluded University of Chicago law professor Daniel Fischel from testifying on behalf of the shareholders. She then dismissed the case in July. Pfizer had argued that the investors could no longer sustain key elements of their claim.
The Second Circuit Court of Appeals found that the district court judge had abused her discretion and had incorrectly excluded Professor Fischel. The Second Circuit found Judge Swain was within reason to find that the expert’s adjustments to the price study were unreliable, but said that she should have allowed him to present his findings on loss causation and damages. The appeals court said Professor Fischel was properly barred from testifying about his adjustment, but could testify in the two designated cases.
The $486 million settlement is likely among the last major payments Pfizer will have to make over its Celebrex and Bextra problems. The company previously paid $894 million to settle product liability and consumer fraud suits brought by Celebrex and Bextra users and state attorneys general. Pfizer also paid $1 billion to settle civil cases alleging it fraudulently promoted and marketed Bextra. The company also pay a $1.3 billion criminal fine – at the time the largest criminal fine ever imposed in the U.S. – for the same fraudulent misbranding.
The investors are represented by Gregory P. Joseph, Douglas J. Pepe and Sandra M. Lipsman of Joseph Hage Aaronson LLC, Jay W. Eisenhofer, Richard S. Schiffrin, James J. Sabella, Charles T. Caliendo, Brenda F. Szydlo, Geoffrey C. Jarvis and Mary S. Thomas of Grant & Eisenhofer PA, Jonathan S. Massey of Massey & Gail LLP and David Kessler, Andrew L. Zivitz, Matthew L. Mustokoff and Michelle M. Newcomer of Kessler Topaz Meltzer & Check LLP. The case is In Re: Pfizer Securities Litigation in the U.S. District Court for the Southern District of New York.