Pfizer 2009 Annual Report Download - page 98

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
Pristiq
In late 2007 and early 2008, the following actions were filed in various federal courts and remain pending: (i) a purported class
action alleging that Wyeth and certain former officers of Wyeth violated federal securities laws by misrepresenting the safety of
Pristiq during the period before the FDA’s issuance on July 24, 2007 of an “approvable” letter for Pristiq for the treatment of
vasomotor symptoms, which allegedly caused a decline in the price of Wyeth stock; (ii) a shareholder derivative action alleging that
certain former officers of Wyeth and certain former directors of Wyeth, two of whom are now directors of Pfizer, breached fiduciary
duties and violated federal securities laws by virtue of the aforementioned alleged misrepresentation; and (iii) a purported class
action against Wyeth, the Wyeth Savings Plan Committee, the Wyeth Savings Plan-Puerto Rico Committee, the Wyeth Retirement
Committee and certain former Wyeth officers and committee members alleging that they violated certain provisions of ERISA by
maintaining Wyeth stock as an investment alternative under certain Wyeth plans notwithstanding their alleged knowledge of the
aforementioned alleged misrepresentation.
C. Commercial and Other Matters
Acquisition of Wyeth
Beginning in late January 2009, several purported class action complaints were filed by Wyeth shareholders challenging Wyeth’s
proposed merger with Pfizer. The actions were filed in federal court in New Jersey (the Federal Action) and in state courts in New
Jersey and Delaware. Subsequently, the actions filed in state court in New Jersey were consolidated (the New Jersey Action), and
the actions filed in state court in Delaware were consolidated (the Delaware Action). The complaints in all of the actions name as
defendants Wyeth and the individuals who served as the members of Wyeth’s Board of Directors prior to the consummation of the
merger, two of whom are now directors of Pfizer. The complaints in the Federal Action and the Delaware Action also name Pfizer as
a defendant. The plaintiffs allege that (i) each of the members of Wyeth’s pre-merger Board of Directors breached his or her
fiduciary duties to Wyeth and its shareholders by authorizing the sale of Wyeth to Pfizer for what plaintiffs deem “inadequate”
consideration; (ii) Wyeth directly breached and/or aided and abetted the other defendants’ alleged breaches of fiduciary duties; and
(iii) in the actions in which Pfizer is a defendant, Pfizer aided and abetted the alleged breaches of fiduciary duties by Wyeth and its
pre-merger directors. The plaintiffs sought, among other things, to enjoin the defendants from consummating the merger on the
agreed-upon terms.
On June 10, 2009, Wyeth, Wyeth’s directors and Pfizer entered into a memorandum of understanding with the plaintiffs in the
Delaware Action reflecting an agreement-in-principle to settle the Delaware Action based on their agreement to include in the Pfizer/
Wyeth registration statement/proxy statement on Form S-4 certain additional disclosures relating to the transaction. Wyeth, Wyeth’s
pre-merger directors and Pfizer each have denied that they committed or aided and abetted in the commission of any violation of
law or engaged in any of the wrongful acts alleged in the Delaware Action and expressly maintain that they diligently and
scrupulously complied with their fiduciary and other legal duties.
If the settlement is consummated, the Delaware Action will be dismissed with prejudice, and the defendants will receive—from or on
behalf of all persons who were Wyeth shareholders at any time between the announcement of the merger agreement on
January 26, 2009 and the closing of the merger—a release of all claims related to the merger, including the claims asserted in the
Federal Action and the New Jersey Action. Members of the purported plaintiff class will be sent notice of the proposed settlement,
and a hearing before the Delaware Court of Chancery will be scheduled regarding approval of the proposed settlement.
Separately, in August 2009, a number of retail pharmacies in California brought an action against Pfizer and Wyeth in the U.S.
District Court for the Northern District of California. The plaintiffs allege, among other things, that our acquisition of Wyeth violates
various federal antitrust laws by creating a monopoly in the manufacture, distribution and sale of prescription drugs in the U.S. The
plaintiffs’ request for a temporary restraining order preventing consummation of the acquisition was denied, and the court granted
our motion to dismiss the case, on October 14, 2009. On the day following the consummation of the acquisition, October 16, 2009,
the plaintiffs filed an amended complaint containing allegations substantially similar to those in the original complaint and renewing
the request for a temporary restraining order. In December 2009, the court granted our motion to dismiss the amended complaint
and denied the plaintiffs’ renewed request for a temporary restraining order. In January 2010, the plaintiffs filed a second amended
complaint containing allegations substantially similar to those in the original complaint.
Average Wholesale Price Litigation
A number of states, as well as most counties in New York, have sued Pharmacia, Pfizer and other pharmaceutical manufacturers
alleging that they provided average wholesale price (AWP) information for certain of their products that was higher than the actual
prices at which those products were sold. The AWP is used to determine reimbursement levels under Medicare Part B and Medicaid
and in many private-sector insurance policies and medical plans. The plaintiffs claim that the alleged spread between the AWPs at
which purchasers were reimbursed and the actual sale prices was promoted by the defendants as an incentive to purchase certain
of their products. In addition to suing on their own behalf, many of the plaintiff states seek to recover on behalf of individual Medicare
Part B co-payers and private-sector insurance companies and medical plans in their states. These various actions generally assert
fraud claims, as well as claims under state deceptive trade practice laws, and seek monetary and other relief, including civil
penalties and treble damages. Several of the suits also allege that Pharmacia and/or Pfizer did not report to the states their best
price for certain products under the Medicaid program.
In addition, Pharmacia, Pfizer and other pharmaceutical manufacturers are defendants in a number of purported class action suits in
various federal and state courts brought by employee benefit plans and other third-party payers that assert claims similar to those in
the state and county actions. These suits allege, among other things, fraud, unfair competition and unfair trade practices and seek
monetary and other relief, including civil penalties and treble damages.
All of these state, county and purported class action suits were transferred for consolidated pre-trial proceedings to a Multi-District
Litigation (In re Pharmaceutical Industry Average Wholesale Price Litigation MDL-1456) in the U.S. District Court for the District of
96 2009 Financial Report