The hits just keep on coming for Pfizer.
The New York law firm Schoengold Sporn Laitman & Lometti has announced a class action lawsuit against the drug kingpin for making materially false and misleading statements to inflate the value of Pfizer stock. Summarized by Pharmagossip:
The complaint was filed on behalf of the Uniformed Sanitationmen’s Association Local 831 Pension Fund in federal court in Manhattan.
It is alleged that beginning in July 2006, Pfizer repeatedly touted the safety and effectiveness of a newly-developed drug, torcetrapib, that, in combination with Pfizer’s cholesterol-reducing Lipitor, purportedly would increase a patient’s “good” cholesterol, or HDL.
However, unbeknownst to Pfizer shareholders, the product performed much worse than touted. These statements were false and misleading when made because the defendants failed to disclose or indicate that they knew that the torcetrapib was having adverse affects on patients’ health, including knowledge that in clinical testing of 15,000 patients, 82 patients died taking torcetrapib/Lipitor combination as compared to only 51 patients taking Lipitor alone, and patients taking torcetrapib showed an increase in angina, congestive heart failure and procedures to clear clogged arteries.
A comment on the Wall Street Journal Law Blog presumes the suit to be without merit:
It’s amazing that these types of suits can just keep on going. Where’s the fraud here? Did Pfizer publicly guarantee that it’s stock would be monotonically increasing (i.e. never drop – for any reason)? Did they know, some time ago, that the drug was a and just kept spending into the billions on R&D? anyway? Doubtful. How about loser pays (i.e. plaintiffs pay Pfizer’s legal fees) as a good way to protect shareholder interests?
While this is a reasonable argument, I suspect that Pfizer knew about the volatility of the drug but kept grasping at straws in hopes that all their money and research would not be in vain. An article posted on Forbes.com states,
some researchers had always doubted torcetrapib, some savagely. Even doctors who tested the drug said it was a big gamble. Years before Pfizer’s drug went into large-scale trials, some research suggested that drugs like it might actually do more harm than good. In particular, at least three published studies of people with gene mutations that the drug mimicked found unexpectedly higher rates of heart disease.
“I kept saying at meetings that this is going to have the opposite effect as intended and ten years from now people would die from it,” says Anne Tybjaerg-Hansen of the University of Copenhagen, a heart geneticist who published one of the studies in 2000. “But nobody believed me.”
We’re guessing Pfizer has nothing much to worry about from Schoengold et al — except the additional attorneys’ fees for putting this lawsuit to bed.