Pfizer 2011 Annual Report Download - page 107

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
Rebif
We have an exclusive collaboration agreement with EMD Serono, Inc. (Serono) to co-promote Rebif, a treatment for multiple
sclerosis, in the U.S. In August 2011, Serono filed a complaint in the Philadelphia Court of Common Pleas seeking a declaratory
judgment that we are not entitled to a 24-month extension of the Rebif co-promotion agreement, which otherwise would terminate at
the end of 2013. We disagree with Serono’s interpretation of the agreement and believe that we have the right to extend the
agreement to the end of 2015. In October 2011, the court sustained our preliminary objections and dismissed Serono’s complaint,
and Serono has appealed the decision to the Superior Court of Pennsylvania.
C. Commercial and Other Matters
Acquisition of Wyeth
In 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 alleged, among other things, that our acquisition of Wyeth violated various federal
antitrust laws by creating a monopoly in the manufacture, distribution and sale of prescription drugs in the U.S. In April 2010, the
District Court granted our motion to dismiss the second amended complaint. In May 2011, the U.S. Court of Appeals for the Ninth
Circuit affirmed the dismissal by the District Court and, in June 2011, it denied plaintiffs’ petition for a rehearing. In December 2011,
the U.S. Supreme Court denied the plaintiffs’ petition for certiorari seeking reversal of the Ninth Circuit’s decision.
Acquisition of King Pharmaceuticals, Inc.
In October 2010, several purported class action complaints were filed in state court in Tennessee by shareholders of King
challenging Pfizer’s acquisition of King. King and the individuals who served as the members of King’s Board of Directors at the time
of the execution of the merger agreement are named as defendants in all of these actions. Pfizer and Parker Tennessee Corp., a
subsidiary of Pfizer, also are named as defendants in most of these actions.
In November 2010, all of these actions were consolidated in the Chancery Court for Sullivan County, Tennessee Second Judicial
District, at Bristol. The parties to the consolidated action have reached an agreement-in-principle to resolve that action as a result of
certain disclosures regarding the transaction made by King in its amended Schedule 14D-9 recommendation statement for the
tender offer dated January 21, 2011. The proposed settlement is subject to, among other things, court approval.
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
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.
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. In December 2011, the court granted final
approval of the settlement. Pharmacia’s contribution to the settlement was not material to Pfizer.
In addition, Wyeth is a defendant in AWP actions brought by certain states, which are not included in the Multi-District Litigation.
Wyeth also is a defendant in a purported class action in state court in New Jersey brought by a union health and welfare plan on
behalf of a putative class consisting of third-party payers in New Jersey. In addition, King and/or certain of its subsidiaries are
defendants in AWP actions brought by certain states, which are not included in the Multi-District Litigation.
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.
106 2011 Financial Report