Pfizer 2008 Annual Report Download - page 87

Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
B. Product Litigation
Like other pharmaceutical companies, we are defendants in numerous product liability cases, including but not limited to those
discussed below, in which the plaintiffs seek relief for personal injuries and other purported damages allegedly caused by our drugs
and other products.
Asbestos
•Quigley
Quigley Company, Inc. (Quigley), a wholly owned subsidiary, was acquired by Pfizer in 1968 and sold small amounts of products
containing asbestos until the early 1970s. In September 2004, Pfizer and Quigley took steps that were intended to resolve all
pending and future claims against Pfizer and Quigley in which the claimants allege personal injury from exposure to Quigley
products containing asbestos, silica or mixed dust. We recorded a charge of $369 million before-tax ($229 million after-tax) in the
third quarter of 2004 in connection with these matters.
In September 2004, Quigley 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. In March 2005, Quigley filed a reorganization plan in the Bankruptcy
Court that needed the approval of both the Bankruptcy Court and the U.S. District Court for the Southern District of New York after
receipt of the vote of 75% of the claimants. In connection with that filing, Pfizer entered into settlement agreements with lawyers
representing more than 80% of the individuals with claims related to Quigley products against Quigley and Pfizer. The agreements
provide for a total of $430 million in payments, of which $215 million became due in December 2005 and is being paid to claimants
upon receipt by the Company of certain required documentation from each of the claimants. The reorganization plan provided for the
establishment of a Trust (the Trust) for the payment of all remaining pending claims as well as any future claims alleging injury from
exposure to Quigley products.
As certified by the balloting agent in May 2006, more than 75% of Quigley’s claimants holding claims that represented more than
two-thirds in value of claims against Quigley voted to accept Quigley’s plan of reorganization. In August 2006, in reviewing the voting
tabulation methodology, the Bankruptcy Court ruled that certain votes that accepted the plan were not predicated upon the actual
value of the claim. As a result, the reorganization plan was not accepted.
In June 2007, Quigley filed an amended plan of reorganization that is intended to address the Bankruptcy Court’s concerns
regarding the voting tabulation methodology. In February 2008, the Bankruptcy Court authorized Quigley to solicit its amended
reorganization plan for acceptance by claimants. According to the official report filed with the court by the balloting agent in July
2008, the requisite number of votes was cast in favor of the amended plan of reorganization. The Bankruptcy Court has scheduled a
confirmation hearing to be held sometime after March 16, 2009 at which it will consider any objections to the plan’s confirmation and
determine whether to approve the plan. If approved by the claimants and the courts, the amended reorganization plan will result in a
permanent injunction directing all pending and future claims alleging personal injury from exposure to Quigley products to the Trust.
Under the amended reorganization plan (as under the original reorganization plan), Pfizer will contribute to the Trust $405 million
through a note as well as approximately $100 million in cash and insurance, and will forgive a $30 million secured loan to Quigley. In
addition, Pfizer entered into an agreement with the representative of future claimants that provides for the contribution to the Trust of
an additional amount with a present value of $88.4 million.
In a separately negotiated transaction with an insurance company in August 2004, we agreed to a settlement related to certain
insurance coverage which provides for payments to us over a ten-year period of amounts totaling $405 million.
•Other Matters
Between 1967 and 1982, Warner-Lambert owned American Optical Corporation, which manufactured and sold respiratory protective
devices and asbestos safety clothing. In connection with the sale of American Optical in 1982, Warner-Lambert agreed to indemnify
the purchaser for certain liabilities, including certain asbestos-related and other claims. As of December 31, 2008, approximately
104,000 claims naming American Optical and numerous other defendants were pending in various federal and state courts seeking
damages for alleged personal injury from exposure to asbestos and other allegedly hazardous materials. We are actively engaged in
the defense of, and will continue to explore various means to resolve, these claims. Several of the insurance carriers that provided
coverage for the American Optical asbestos and other allegedly hazardous materials claims have denied coverage. We believe that
these carriers’ position is without merit and are pursuing legal proceedings against such carriers.
Numerous lawsuits are pending against Pfizer in various federal and state courts seeking damages for alleged personal injury from
exposure to products containing asbestos and other allegedly hazardous materials sold by Gibsonburg Lime Products Company
(Gibsonburg). Gibsonburg was acquired by Pfizer in the 1960s and sold small amounts of products containing asbestos until the
early 1970s.
There also is a small number of lawsuits pending in various federal and state courts seeking damages for alleged exposure to
asbestos in facilities owned or formerly owned by Pfizer or its subsidiaries.
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