Pfizer 2010 Annual Report Download - page 110

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
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
Massachusetts. Certain of the state and private suits have been remanded to their respective state courts. In 2006, the claims
against Pfizer in the Multi-District Litigation were dismissed with prejudice; the claims against Pharmacia are still pending.
In 2008, the court in the Multi-District Litigation granted preliminary approval with respect to the fairness of a proposed settlement of
the claims against 11 defendants, including Pharmacia, for a total of $125 million. It is expected that the court will consider final
approval of the settlement later this year. If the settlement is approved, Pharmacia’s contribution would not be material.
In addition, Wyeth is a defendant in AWP actions brought by certain states, which are not included in the Multi-District Litigation, as
well as AWP actions brought by most counties in New York, almost all of which are included in the Multi-District Litigation. Wyeth
also is a defendant in a purported class action in state court in New Jersey brought by two union health and welfare plans on behalf
of a putative class consisting of third-party payers, certain consumers and Medicare beneficiaries. These actions against Wyeth
would not be included in the proposed settlement referred to in the previous paragraph.
Monsanto-Related Matters
In 1997, Monsanto Company (Former Monsanto) contributed certain chemical manufacturing operations and facilities to a newly
formed corporation, Solutia Inc. (Solutia), and spun off the shares of Solutia. In 2000, Former Monsanto merged with Pharmacia &
Upjohn Company to form Pharmacia Corporation (Pharmacia). Pharmacia then transferred its agricultural operations to a newly
created subsidiary, named Monsanto Company (New Monsanto), which it spun off in a two-stage process that was completed in
2002. Pharmacia was acquired by Pfizer in 2003 and is now a wholly owned subsidiary of Pfizer.
In connection with its spin-off that was completed in 2002, New Monsanto assumed, and agreed to indemnify Pharmacia for, any
liabilities related to Pharmacia’s former agricultural business. New Monsanto is defending and indemnifying Pharmacia for various
claims and litigation arising out of, or related to, the agricultural business.
In connection with its spin-off in 1997, Solutia assumed, and agreed to indemnify Pharmacia for, liabilities related to Former
Monsanto's chemical businesses. As the result of its reorganization under Chapter 11 of the U.S. Bankruptcy Code, Solutia’s
indemnification obligations related to Former Monsanto’s chemical businesses are limited to sites that Solutia has owned or
operated. In addition, in connection with its spinoff that was completed in 2002, New Monsanto assumed, and agreed to indemnify
Pharmacia for, any liabilities primarily related to Former Monsanto's chemical businesses, including, but not limited to, any such
liabilities that Solutia assumed. Solutia's and New Monsanto's assumption of and agreement to indemnify Pharmacia for these
liabilities apply to pending actions and any future actions related to Former Monsanto's chemical businesses in which Pharmacia is
named as a defendant, including, without limitation, actions asserting environmental claims, including alleged exposure to
polychlorinated biphenyls.
Pharmacia Cash Balance Pension Plan
In 2006, several current and former employees of Pharmacia Corporation filed a purported class action in the U.S. District Court for
the Southern District of Illinois against the Pharmacia Cash Balance Pension Plan (the Plan), Pharmacia Corporation, Pharmacia &
Upjohn Company and Pfizer Inc. Plaintiffs seek monetary and injunctive relief on behalf of a class consisting of certain current and
former participants in the Plan who accrued a benefit in the Monsanto Company Pension Plan prior to its conversion to a cash
balance plan in 1997. In 2002, after various corporate reorganizations, certain of the assets and liabilities of the Monsanto Company
Pension Plan were transferred to the Plan. Plaintiffs claim that the Plan violates the age-discrimination provisions of ERISA by
providing certain credits to such participants only to age 55. This action has been consolidated in the U.S. District Court for the
Southern District of Illinois (Walker, et al., v. The Monsanto Company Pension Plan et al.) with purported class actions pending in
that court that make largely similar claims against substantially similar cash balance plans sponsored by Monsanto Company and
Solutia Inc., each of which was spun off by Pharmacia Corporation or a predecessor of Pharmacia Corporation. In 2008, at the
request of the parties, the court issued an order permitting the case to proceed as a class action. In June 2009, the court granted our
motion for summary judgment and dismissed the claims against the Plan, Pfizer Inc. and the two Pfizer subsidiaries. In October
2009, the plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Seventh Circuit. In July 2010, the Seventh Circuit
affirmed the District Court’s dismissal of the claims against the Plan, Pfizer Inc. and the two Pfizer subsidiaries. In December 2010,
the plaintiffs filed a petition for certiorari with the U.S. Supreme Court seeking reversal of the Seventh Circuit’s decision.
Trade Secrets Action in California
In 2004, Ischemia Research and Education Foundation (IREF) and its chief executive officer brought an action in California Superior
Court, Santa Clara County, against a former IREF employee and Pfizer. Plaintiffs allege that defendants conspired to misappropriate
certain information from IREF’s allegedly proprietary database in order to assist Pfizer in designing and executing a clinical study of
a Pfizer drug. In 2008, the jury returned a verdict for compensatory damages of approximately $38.7 million. In March 2009, the
court awarded prejudgment interest, but declined to award punitive damages. In July 2009, the court granted our motion for a new
trial and vacated the jury verdict.
108 2010 Financial Report