Pfizer 2005 Annual Report Download - page 65

64 2005 Financial Report
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
complaint against Warner-Lambert in the U.S. District Court for the
Southern District of New York purportedly on behalf of a class
consisting of all health benefit providers that paid for or reimbursed
patients for the purchase of Rezulin between February 1997 and
April 2001. The action seeks to recover amounts paid for Rezulin
by the health benefit providers on behalf of their plan participants
during the specified period. In September 2005, the court granted
Warner-Lambert’s motion for summary judgment and dismissed the
complaint. In November 2005, the plaintiffs appealed the decision.
In addition, in May 2005, an action was filed in the U.S. District Court
for the Eastern District of Louisiana purportedly on behalf of a
nationwide class of third-party payors that asserts claims and seeks
damages that are substantially similar to those in the New York suit.
An action also was filed in July 2005 by the Attorney General of the
State of Louisiana in the Civil District Court for Orleans Parish,
Louisiana, against Warner-Lambert and Pfizer seeking to recover
amounts paid by the Louisiana Medicaid program for Rezulin and
for medical services to treat persons allegedly injured by Rezulin.
In 2005, the actions filed in the Eastern District of Louisiana and the
Civil District Court for Orleans Parish, Louisiana, were transferred
for consolidated pre-trial proceedings to a Multi-District Litigation
(In re Rezulin Products Liability Litigation MDL-1348) in the U.S.
District Court for the Southern District of New York, where the
action filed in April 2001 by Louisiana Health and Eastern States
Health had been brought.
Asbestos
•Quigley
Quigley Company, Inc. (Quigley), a wholly owned subsidiary, was
acquired by Pfizer in 1968 and sold small amounts of products
containing asbestos until the early 1970s. In September 2004, Pfizer
and Quigley took steps which, if approved by the courts and
claimants, will resolve all pending and future claims against Pfizer
and Quigley in which the claimants allege personal injury from
exposure to Quigley products containing asbestos, silica or mixed
dust. We took a charge of $369 million before-tax ($229 million after-
tax) to third quarter 2004 earnings in connection with these matters.
In September 2004, Quigley filed a petition in the U.S. Bankruptcy
Court for the Southern District of New York seeking reorganization
under Chapter 11 of the U.S. Bankruptcy Code. In March 2005,
Quigley filed a reorganization plan in the Bankruptcy Court that
must be approved by both the Bankruptcy Court and the U.S.
District Court for the Southern District of New York after receipt
of the vote of 75 percent of the claimants. In connection with that
filing, Pfizer entered into settlement agreements with lawyers
representing more than 80 percent of the individuals with claims
related to Quigley products against Quigley and Pfizer. The
agreements provide for a total of $430 million in payments, of
which $215 million became due in December 2005 and is being
paid to claimants upon receipt by the Company of certain required
documentation from each of the claimants. The reorganization
plan, the approval of which is considered probable, will establish
a Trust for the payment of all remaining pending claims as well
as any future claims alleging injury from exposure to Quigley
products. Pfizer will contribute $405 million to the Trust through
a note, which has a present value of $172 million, as well as
approximately $100 million in insurance, and will forgive a $30
million secured loan to Quigley. If approved by the courts and the
claimants, the reorganization plan will result in a permanent
injunction directing all future claims alleging personal injury
from exposure to Quigley products to the Trust.
In a separately negotiated transaction with an insurance company,
we agreed to a settlement related to certain insurance coverage
which provides for the payment to us over 10 years of an amount
with a present value of $263 million.
•Other Matters
Between 1967 and 1982, Warner-Lambert owned American
Optical Corporation, which manufactured and sold respiratory
protective devices and asbestos safety clothing. In connection
with the sale of American Optical in 1982, Warner-Lambert agreed
to indemnify the purchaser for certain liabilities, including certain
asbestos-related and other claims. As of December 31, 2005,
approximately 145,400 claims naming American Optical and
numerous other defendants were pending in various federal and
state courts seeking damages for alleged personal injury from
exposure to asbestos and other allegedly hazardous materials. We
are actively engaged in the defense of, and will continue to
explore various means to resolve, these claims. Several of the
insurance carriers that provided coverage for the American Optical
asbestos and other claims have denied coverage. We believe that
these carriers’ position is without merit and are pursuing legal
proceedings against such carriers. Separately, there is a small
number of lawsuits pending against Pfizer in various federal and
state courts seeking damages for alleged personal injury from
exposure to products containing asbestos and other allegedly
hazardous materials sold by Gibsonburg Lime Products Company,
which was acquired by Pfizer in the 1960s and which sold small
amounts of products containing asbestos until the early 1970s.
There also is a small number of lawsuits pending in various federal
and state courts seeking damages for alleged exposure to asbestos
in facilities owned or formerly owned by Pfizer or its subsidiaries.
Hormone-Replacement Therapy
Pfizer Inc.; Pharmacia Corporation (a direct, wholly owned
subsidiary of Pfizer Inc.); Pharmacia & Upjohn LLC and Warner-
Lambert Company LLC (limited liability companies wholly owned
by Pfizer Inc.); and Greenstone Ltd. (an indirect, wholly owned
subsidiary of Pfizer Inc.), along with several other pharmaceutical
manufacturers, have been named as defendants in a number of
lawsuits in various federal and state courts alleging personal
injury resulting from the use of certain estrogen and progestin
medications prescribed for women to treat the symptoms of
menopause. Plaintiffs in these suits allege a variety of personal
injuries, including breast cancer, stroke and heart disease. Certain
co-defendants in some of these actions have asserted
indemnification rights against Pfizer and its affiliated companies.
The cases against Pfizer and its affiliated companies involve the
products femhrt (which Pfizer divested in 2003), Activella and
Vagifem (which are Novo Nordisk products that were marketed
by a Pfizer affiliate from 2000 to 2004), and Provera, Ogen, Depo-
Estradiol, Estring and generic MPA, all of which remain approved
by the FDA for use in the treatment of menopause. The federal
court cases have been transferred for consolidated pre-trial
proceedings to a Multi-District Litigation (In re Prempro Products
Liability Litigation MDL-1507) in the U.S. District Court for the
Eastern District of Arkansas.
This litigation originally included both individual actions as well
as various purported nationwide and statewide class actions.
However, each of the purported class actions, except one
purported statewide class action filed in the Supreme Court of the
State of New York, County of New York, either has been
voluntarily dismissed in its entirety or has had its class action
allegations stricken by the plaintiffs.