Pharmaceutical company Pfizer Inc. has reached an agreement in principle to pay $400 million to settle a class-action securities lawsuit. The district court needs to approve the settlement before it is finalized, but the agreement averts a jury trial that was scheduled to begin on February 10, 2015. See Jones v. Pfizer Inc., No. 10-03864 (S.D.N.Y. filed May 11, 2010).
Shareholders filed suit against Pfizer in 2010, alleging that the company and various executives made false statements to shareholders about its off-label marketing of drugs. The lawsuit contended that, between January 2006 and January 2009, Pfizer marketed several drugs on an off-label basis, including Bextra, a painkiller that had been withdrawn from the market in 2005 due to heart attack risks. The lawsuit also alleged that Pfizer made misleading statements about various government investigations of those practices.
The price of Pfizer stock dropped on January 26, 2009, after the company revealed plans to pay $2.3 billion to resolve the criminal and civil allegations that arose from the government investigations. Shareholders filed suit, and United States District Court Judge Alvin Hellerstein certified a class of investors who bought Pfizer stock from January 16, 2006 to January 23, 2009. Leading up to trial, Pfizer had sought to block testimony from the shareholders’ damages expert, who had calculated that the company’s stock had been artificially inflated by $1.26 a share over the class period due to misstatements or omissions.
Pfizer disclosed the settlement in its earnings report released on January 27, 2015. Pfizer reported decreases in its fourth-quarter and 2014 earnings, with revenues down 3% and 4%, respectively.