New York, NYPfizer will pay $486 million to settle a class action securities lawsuit alleging the drug maker misled investors about the safety of its drugs Celebrex and Bextra. Pfizer did not admit to wrongdoing in the securities fraud allegations, stating it agreed to the settlement to avoid the distraction of litigation. The securities fraud lawsuit had been dismissed by a US District Court judge but was revived by a federal appeals court in April 2016.
According to documents filed in support of the securities lawsuit, plaintiffs alleged that between October 31, 2000 and October 19, 2005, Pfizer "made fraudulent misrepresentations and fraudulently omitted to disclose information regarding the safety of two of its drugs, Celebrex (celexocib) and Bextra (valdecoxib)." When the risk of cardiovascular side effects came to light, plaintiffs argued, the value of Pfizer's shares fell, causing financial harm to Pfizer shareholders.
At issue was when Pfizer knew about the cardiovascular risks associated with Celebrex and Bextra. Plaintiffs argued that Pfizer and Searle (initial maker of Celebrex) knew as early as 1998 about studies that linked COX-2 inhibitors to cardiovascular patients but continued to market the drugs as safe. The marketing of the drugs as safe and having no cardiovascular risks, plaintiffs allege, maintained the public's perception of the drugs as safe, which in turn kept the value of Pfizer shares up.
Later, when Merck withdrew Vioxx from the market due to cardiovascular concerns, Pfizer allegedly marketed Celebrex as having not shown any increased cardiovascular risk. Shortly thereafter, however, studies contradicting those statements were made public and the price of Pfizer's shares began to fall.
The class action lawsuit was filed in New York in 2004, alleging Pfizer hid the safety risks of Celebrex and Bextra. Pfizer filed a motion to dismiss the complaint, which was initially denied.
After a decade of fighting in court, a lower court judge decided to exclude an expert for the plaintiffs, Daniel R. Fischel, from testifying. That decision left the plaintiffs with no expert testimony and the lawsuit was dismissed. Plaintiffs appealed the lower court's decision arguing that the district court abused its discretion and erred in its conclusions.
A federal court of appeals agreed with the plaintiffs in their argument that the expert's testimony should have been allowed and reinstated the class action lawsuit.
Now, Reuters reports (8/2/16), Pfizer has agreed to pay $486 million to settle the lawsuit, although the company denied wrongdoing.
The lawsuit is In Re Pfizer Inc. Securities Litigation, case number 14-2853-cv.
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