How Did Pfizer Find Itself in This Legal Mess?
U.S. District Judge Richard Sullivan of Manhattan granted class-action status to former shareholders of pharmaceutical manufacturer Wyeth, now part of Pfizer (NYSE:PFE), who have accused the company of misrepresenting the risks associated the antidepressant Pristiq.
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Led by the Pipefitters Union Local 537 Pension Fund of Boston, the shareholders accused the largest U.S. drug manufacturer of failing to reveal the adverse effects associated with Pristiq sooner. According to the shareholders, by not doing so, the company allowed its stock price to become inflated between June 26, 2006 and July 24, 2007, the class action period.
Pfizer spokesman Christopher Loder said the company will continue to defend itself in the case.
Problems began in 2007, when the U.S. Food and Drug Administration refused to approve the antidepressant Pristiq to treat “hot flashes” in post-menopausal women until the potentially serious heart and liver problems associated with the drug’s use were solved. Until that time, analysts had believed the drug could generate more than $2 billion in annual sales. After the FDA’s decision, on July 24, 2007, Wyeth shares lost more than $7.6 billion of their market value.
After Pfizer bought its rival Wyeth in 2009 for $68 billion, Pristiq sales brought in $309 million from January to June of 2010.
Sullivan granted class-action status because he said shareholders had relied on Wyeth’s alleged misrepresentations of the company’s most important product.
In his opinion Sullivan wrote, “Under the facts currently before it, including Wyeth’s drug pipeline and the looming expiration of patents concerning other Wyeth drugs, the court concludes that the plaintiffs have sufficiently demonstrated the materiality of the allegedly omitted information.”
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