By Christie Smythe, Bloomberg News
Pfizer Inc. must face a shareholders’ lawsuit accusing the company of misrepresenting risks associated with the arthritis drugs Celebrex and Bextra, according to a federal appeals court.
The class action alleged Pfizer officials hid information about studies that suggested use of the drugs may result in increased risks of heart attacks and strokes. After being litigated for about a decade, the case might go before a jury now that it has been sent back to a lower court.
U.S. District Judge Laura Taylor Swain in Manhattan had thrown out testimony from the investors’ expert on the cause of their losses and the amount of damages. With no testimony on the issues, the investors couldn’t prove the key elements of their claim and the judge dismissed the lawsuit.
In a decision Tuesday, a three-judge panel of the U.S. Court of Appeals in New York found that Swain’s “rationales for excluding the testimony were inadequate to justify excluding it in its entirety.” The appeals court said that the lower-court judge also erred in finding that “no reasonable jury could find Pfizer liable for certain statements made by companies that owned the drugs before Pfizer.”
At high doses, Celebrex was linked to heart risks in research released in November 2004, sending shares down as much as 7.6 percent. Bextra was among the drugs that a U.S. Food and Drug Administration reviewer identified as unsafe that same month.
In 2009, Pfizer agreed to pay $2.3 billion to settle a U.S. probe of claims the drugmaker improperly marketed Bextra and other drugs. The total consisted of a $1.3 billion criminal penalty over Bextra marketing and $1 billion in civil fines in connection with improper sales of other medicines.
Shareholders alleged that company executives were improperly touting Celebrex and Bextra as safer than competing drugs and that those statements artificially inflated the company’s stock price. A spokeswoman for New York-based Pfizer, Neha Wadhwa, said the company is “disappointed” by Tuesday’s ruling, while noting that the appeals court didn’t reject all of Swain’s decisions.
The appeals panel upheld some findings that the expert “provided unreliable and inadmissible opinions that had the effect of improperly inflating plaintiffs’ damages,” Wadhwa said in an e-mailed statement.
Pfizer “appropriately communicated accurate and science- based information about its medicines to investors and the public at all times,” she said. The company will continue to fight the case, she said.
The case is In Re Pfizer Inc. Securities Litigation, 14-2853, U.S. Court of Appeals for the Second Circuit (Manhattan).
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