Pfizer 2006 Annual Report Download - page 73

72 2006 Financial Report
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
liabilities apply to pending actions and any future actions related
to Former Monsanto’s chemical businesses in which Pharmacia is
named as a defendant, including, without limitation, actions
asserting environmental claims, including alleged exposure to
polychlorinated biphenyls.
In December 2003, Solutia filed a petition in the U.S. Bankruptcy
Court for the Southern District of New York seeking reorganization
under Chapter 11 of the U.S. Bankruptcy Code. Solutia asked the
Bankruptcy Court to relieve it from liabilities related to Former
Monsanto’s chemical businesses that were assumed by Solutia in
1997. In addition, motions were filed by Solutia in the Chapter 11
proceeding and other actions were filed in the Bankruptcy Court
by Solutia and by a committee representing the interests of
Solutia’s shareholders that seek to avoid all or a portion of
Solutia’s obligations to Pharmacia. Should the Bankruptcy Court
grant such relief, New Monsanto would be responsible for such
liabilities under its indemnification agreement with Pharmacia.
In December 2003, Solutia filed an action, also in the U.S. Bankruptcy
Court for the Southern District of New York, seeking a
determination that Pharmacia rather than Solutia is responsible for
an estimated $475 million in healthcare benefits for certain Solutia
retirees. A similar action was filed in May 2004 in the same
Bankruptcy Court against Pharmacia and New Monsanto by a
committee appointed to represent Solutia retirees in the Bankruptcy
Court proceedings. The parties have agreed to a standstill of these
actions. In the event that the standstill terminates, Pharmacia and
New Monsanto will vigorously defend these actions. Under its
indemnification agreement with Pharmacia, New Monsanto will be
responsible for the costs and expenses and any judgment or
settlement amounts in these actions.
On February 14, 2006, Solutia filed its plan of reorganization in the
Bankruptcy Court. The plan, which must be approved by the
Bankruptcy Court, provides that all lawsuits filed against Pharmacia
in the Bankruptcy Court by Solutia, the committee representing
Solutia retirees and the committee representing Solutia’s
shareholders will be dismissed or withdrawn with prejudice.
The plan provides that Solutia’s indemnity obligations to
Pharmacia that arose in connection with Solutia’s 1997 spin-off
will be shared between Solutia and New Monsanto. New
Monsanto will be financially responsible for all environmental
remediation costs at certain sites that Solutia never owned or
operated. Solutia will continue to be financially responsible for
all environmental remediation costs at sites that Solutia has
owned or operated. New Monsanto and Solutia will share the
environmental remediation costs of certain other sites. The plan
also provides that Solutia will indemnify Pharmacia for any
environmental remediation costs that Solutia continues to be
liable for under the plan. In addition, the plan provides that
New Monsanto will be financially responsible for all current and
future personal injury tort claims related to Former Monsanto’s
chemical businesses that Solutia assumed in connection with the
1997 spin-off.
The plan also will implement a settlement entered into between
Solutia and the committee representing Solutia retirees. Under the
settlement, the retirees will agree to certain modifications to
their benefit plan. The settlement also provides that New Monsanto
will contribute $175 million to help Solutia fund certain legacy
healthcare, life and disability insurance benefits. The retirees will
provide Pharmacia with a release of all retiree benefit claims.
Solutia will continue to be liable for retiree benefits, as modified.
The plan does not in any way affect the obligations undertaken
by New Monsanto to indemnify Pharmacia for all liabilities that
Solutia originally assumed in connection with the 1997 spin-off.
Importation Cases
In 2004, a number of purported class actions were filed in the U.S.
District Court for the District of Minnesota alleging that Pfizer and
several other pharmaceutical manufacturers violated federal and
state civil antitrust laws by conspiring to prevent the importation
of brand-name prescription drugs from Canada. These suits were
consolidated into a single action in the District of Minnesota (In
re Canadian Import Antitrust Litigation), which seeks to represent
a nationwide class consisting of all persons who purchased or
reimbursed patients for the purchase of prescription drugs
manufactured and marketed by defendants that also are available
in Canada. Plaintiffs claim that, as a result of the alleged conspiracy,
U.S. prices for defendants’ prescription drugs are higher than
they otherwise would be. Plaintiffs seek monetary relief, including
treble damages and a refund of the allegedly unlawful profits
received by defendants, and injunctive relief. In August 2005, the
court granted the defendants’ motion to dismiss this action, and
the plaintiffs appealed the decision. In November 2006, the U.S.
Court of Appeals for the Eighth Circuit affirmed the District
Court’s decision. The ruling by the appeals court is subject to
possible appeal to the U.S. Supreme Court by the plaintiffs.
Also in 2004, a number of independent pharmacists in California filed
an action in California Superior Court, Alameda County, against
Pfizer and several other pharmaceutical manufacturers. The
complaint, as amended, asserts that the defendants conspired to fix
the prices of their prescription drugs in California, using the prices
at which such drugs are sold in Canada as the minimum prices, in
violation of California antitrust and unfair business practices laws.
In December 2006, the court granted the defendants’ motion for
summary judgment. In January 2007, the plaintiffs appealed the
decision to the Court of Appeal of the State of California.
Securities Litigation
In December 2006, a purported class action was filed in the U.S.
District Court for the Southern District of New York against Pfizer
and certain current officers and one former officer of Pfizer. The
plaintiff alleges that the defendants violated federal securities
laws by misrepresenting the safety and efficacy of Torcetrapib, a
product candidate whose development program was terminated
on December 2, 2006. The plaintiff seeks to represent a class
consisting of all persons who purchased Pfizer securities between
July 20, 2006 and December 2, 2006 and were damaged as a result
of the decline in the price of Pfizer’s stock, allegedly attributable
to the misrepresentations, that followed the announcement of the
termination of the Torcetrapib development program. The action
seeks compensatory damages in an unspecified amount.
Environmental Matters
We will be required to submit a corrective measures study report
to the U.S. Environmental Protection Agency with regard to
Pharmacia’s discontinued industrial chemical facility in North
Haven, Connecticut.