Pfizer 2005 Annual Report Download - page 64

2005 Financial Report 63
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
and assumptions (see Note 1B, Significant Accounting Policies:
Estimates and Assumptions). Our assessments are based on
estimates and assumptions that have been deemed reasonable by
management. Litigation is inherently unpredictable, and excessive
verdicts do occur. Although we believe we have substantial
defenses in these matters, we could in the future incur judgments
or enter into settlements of claims that could have a material
adverse effect on our results of operations in any particular period.
Patent claims include challenges to the coverage and/or validity
of our patents on various products or processes. Although we
believe we have substantial defenses to these challenges with
respect to all our material patents, there can be no assurance as
to the outcome of these matters, and a loss in any of these cases
could result in a loss of patent protection for the drug at issue,
which could lead to a significant loss of sales of that drug and
could materially affect future results of operations.
Among the principal matters pending to which we are a party are
the following:
A. Patent Matters
We are involved in a number of patent suits, the majority of which
involve claims by generic drug manufacturers that patents covering
our products, processes or dosage forms are invalid and/or do not
cover the product of the generic manufacturer. Pending suits include
generic challenges to patents covering, among other products,
amlodipine (Norvasc), atorvastatin (Lipitor), tolterodine (Detrol)
and celecoxib (Celebrex). Also, counterclaims as well as various
independent actions have been filed claiming that our assertions
of, or attempts to enforce, our patent rights with respect to certain
products constitute unfair competition and/or violations of the
antitrust laws. In addition to the challenges to the U.S. patents on
a number of our products that are discussed below, we note that
the patent rights to certain of our products, including without
limitation Lipitor, are being challenged in various other countries.
Norvasc (amlodipine)
Between 2002 and 2005, we brought patent infringement suits in
various federal courts against several manufacturers that have
filed abbreviated new drug applications with the FDA seeking to
market a generic version of amlodipine besylate, which is the salt
form contained in Norvasc. Our patent for amlodipine besylate is
being challenged in all of the suits, and our basic patent for
amlodipine also is being challenged in certain of the suits. In the
first of these actions to go to trial, which involved only our
amlodipine besylate patent, in January 2006 the U.S. District Court
for the Northern District of Illinois held that our amlodipine besylate
patent is valid and infringed by the generic manufacturer Apotex
Inc.’s product. The court issued an injunction prohibiting Apotex
from marketing its generic amlodipine besylate product before the
expiration of our amlodipine besylate patent (including the
additional six-month pediatric exclusivity period) in September
2007. The decision is subject to possible appeal. The cases against
other manufacturers are expected to go to trial later this year.
Lipitor (atorvastatin)
The generic manufacturer Ranbaxy Laboratories Limited filed an
abbreviated new drug application with the FDA for atorvastatin
(Lipitor) in 2002 and amended the application in 2003 to allege
that its product would not infringe our basic product patent for
atorvastatin. Shortly thereafter, Ranbaxy also asserted that our
patent covering the active enantiomeric form of the drug is
invalid. Our basic patent for Lipitor, including the additional six-
month pediatric exclusivity period, expires in March 2010. Our
enantiomer patent, including the six-month pediatric exclusivity
period, expires in June 2011.
In 2003, we filed suits in the U.S. District Court for the District of
Delaware against Ranbaxy for infringement of both our basic
product patent and our patent covering the active enantiomeric form
of the drug. The trial of this matter was held in late 2004. In late 2005,
the court held that both patents are valid and infringed by Ranbaxy’s
generic atorvastastin product, and it issued an injunction prohibiting
Ranbaxy from marketing a generic version of atorvastatin before
June 2011. Ranbaxy appealed the decision in January 2006, and the
appeal is scheduled to be heard in May 2006.
As noted, our patent rights to Lipitor are being challenged in
various countries. On October 12, 2005, in an action brought by
Ranbaxy, the United Kingdom’s High Court of Justice upheld our
basic U.K. patent for Lipitor, which expires in November 2011, but
ruled that a second patent covering the calcium salt of
atorvastatin, which expires in July 2010, is invalid. Both sides
have appealed the decision, and the appeal is scheduled to be
heard in June 2006. If upheld on appeal, the decision will prohibit
Ranbaxy from marketing a generic version of atorvastatin in the
U.K. before the expiration of our basic patent in November 2011.
Detrol (tolterodine)
In February 2004, a generic manufacturer notified us that it had
filed an abbreviated new drug application with the FDA seeking
approval to market tolterodine (Detrol). We filed a patent
infringement suit against the generic manufacturer in the U.S.
District Court for the District of New Jersey in March 2004.
Celebrex (celecoxib)
In January 2004, a generic manufacturer notified us that it had
filed an abbreviated new drug application with the FDA seeking
approval to market a product containing celecoxib and asserting
the non-infringement and invalidity of our patents relating to
celecoxib. In February 2004, we filed suit against the generic
manufacturer in the U.S. District Court for the District of New
Jersey asserting infringement of our patents relating to celecoxib.
B. Product Liability Matters
Rezulin
Rezulin was a medication that treated insulin resistance and was
effective for many patients whose diabetes had not been
controlled with other medications. Rezulin was voluntarily
withdrawn by Warner-Lambert in March 2000 following approval
of two newer medications, which the FDA considered to have
similar efficacy and fewer side effects.
In 2003, we took a charge to earnings of $975 million, before tax
($955 million, after tax), in connection with all known personal
injury cases and claims relating to Rezulin, and we settled many of
those cases and claims. Warner-Lambert continues to defend
vigorously the remaining personal injury cases and claims.
Warner-Lambert is also a defendant in a number of suits, including
purported class actions, relating to Rezulin that seek relief other
than damages for alleged personal injury. These suits are not
covered by the charge to earnings that we took in 2003. Motions
to certify statewide classes of Rezulin users or purchasers who
allegedly incurred economic loss have been denied by state courts
in California and Texas and granted by state courts in Illinois and
West Virginia. The Illinois action was settled in 2004.
In April 2001, Louisiana Health Service Indemnity Company and
Eastern States Health and Welfare Fund filed a consolidated