Pfizer to settle remaining hormone therapy lawsuits for $300 million minimum
Thousands of women who say they developed breast cancer and other diseases after hormone-replacement therapy are poised for victory after Pfizer Inc. announced it expects to settle for at least $300 million this last round of lawsuits in the public-health controversy.
The New York-based pharmaceutical giant, which has research-and-development sites in Groton and New London, expects to pay at least $772 million to settle the more than 10,000 lawsuits that alleged that Wyeth Pharmaceutical's hormone-replacement therapy drug Prempro caused their health problems, according to a regulatory filing.
This includes the $300 million the company paid out in a previous round of settlements, according to the documents, and $172 million in reported settlements last quarter.
"Additional charges may be required in the future," Pfizer said.
Critics allege that Wyeth, bought by Pfizer two years ago for $67 billion, never properly studied the effects of hormone replacement before starting to market the treatment in 1995. The therapy is prescribed to ease menopausal symptoms.
It wasn't until 2002 - after the release of a Women's Health Initiative study that suggested a connection between hormone replacement and cancer, heart attacks and stroke - that the medical community started to revise its thinking about the by-then standard therapy.
The National Institutes of Health, which sponsored the study, said on its website that hormone therapy - also known as HRT - can still have benefits, including reducing the risk of bone breaks in older women.
"If you do decide to take HRT, it should be the lowest dose that helps and for the shortest time needed," the health organization said.
Pfizer said it stands by its hormone therapy medicines.
"The FDA has said that hormone therapy 'is the most effective FDA approved medicine for relief of hot flashes, night sweats or vaginal dryness,'" a company statement said.
Pfizer didn't reveal in its filing late Thursday with the U.S. Securities and Exchange Commission how many cases were being put to rest in the latest round of Prempro settlements. Bloomberg News Service estimated the number at more than 3,000, but Pfizer said only that the $300 million set-aside is expected to be the minimal amount required to cover a third of the pending cases.
"The decision to settle cases reflects a business decision by the company to avoid the cost and distraction of prolonged litigation," Pfizer spokesman Christopher Loder said in a statement Friday.
Analysts saw the settlements as good news for the company's stock price over the long haul, since it releases another cloud of doubt over Pfizer. The stock hit near its one-year high Friday, closing at $20.92 a share.
Pfizer's stock, under the leadership of new chief executive Ian Read, has been booming - up 25 percent since his December ascension - even as the company faces concerns over the loss of patent exclusivity for Lipitor, its blockbuster cholesterol pill.
Prempro is a combination of Wyeth's estrogen replacement Premarin and Pfizer's progestin hormone Provera. It is still on the market, bringing in only $161 million in annual sales two years ago, compared with more than $2 billion at its height when 6 million Americans were on hormone therapy.
Pfizer no longer pulls out Prempro sales separately, now referring to the "Premarin family" of medicines, whose $235 million in sales in the first quarter were an 8 percent decrease from the same period last year.
The most recent round of cases that Pfizer is settling was consolidated in U.S. District Court in Little Rock, Ark.
Last year, the U.S. Supreme Court refused to hear a Pfizer appeal that sought to have the hormone therapy cases heard in federal courts rather than in state jurisdictions.
The cost of downsizing
• Pfizer said it has incurred $10.1 billion in costs over the past 2½ years related to various downsizing initiatives, consolidations and acquisitions. Another $1.4 billion to $3.4 billion in costs for these initiatives, which have included hundreds of layoffs locally as well as the closing of Pfizer's Groton manufacturing plant and former R&D headquarters in New London, are expected by the end of 2012.
• Pfizer expects additional charges of $1.7 billion to $2.4 billion related to another initiative to reduce R&D expenses. The downsizing, which will result in the loss of 1,100 Pfizer jobs by next year, was announced in February. The charges "are related to employees, assets and activities that will not continue as part of the restructured organization," Pfizer said.
• Pfizer expects to set aside nearly $1.4 billion to settle asbestos claims related to its subsidiary Quigley Co., currently in bankruptcy. Direct payments will total $800 million in two stages, plus a $550 million trust for future claims and $17 million in legal fees.
• Pfizer's work force rose at the end of the first quarter, from 110,600 to 112,400. If the addition of 2,500 employees inherited with the acquisition of King Pharmaceuticals were ignored, the net loss of jobs would have been about 700, the company indicated.
• Charges related to the acquisitions of Wyeth and King amounted to $1.15 billion in the first quarter, including $667 million for benefits such as severance payouts related to layoffs. Integration costs were put at $179 million, while restructuring and depreciation costs added up to $243 million.
Source: SEC filing
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