Pfizer 2011 Annual Report Download - page 108

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
In connection with its spin-off that was completed in 2002, New Monsanto assumed, and agreed to indemnify Pharmacia for, any
liabilities related to Pharmacia’s former agricultural business. New Monsanto is defending and indemnifying Pharmacia in
connection with various claims and litigation arising out of, or related to, the agricultural business.
In connection with its spin-off in 1997, Solutia assumed, and agreed to indemnify Pharmacia for, liabilities related to Former
Monsanto’s chemical businesses. As the result of its reorganization under Chapter 11 of the U.S. Bankruptcy Code, Solutia’s
indemnification obligations related to Former Monsanto’s chemical businesses are limited to sites that Solutia has owned or
operated. In addition, in connection with its spinoff that was completed in 2002, New Monsanto assumed, and agreed to indemnify
Pharmacia for, any liabilities primarily related to Former Monsanto’s chemical businesses, including, but not limited to, any such
liabilities that Solutia assumed. Solutia’s and New Monsanto’s assumption of and agreement to indemnify Pharmacia for these
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. Solutia and New Monsanto are defending and indemnifying Pharmacia in connection with various claims
and litigation arising out of, or related to, Former Monsanto’s chemical businesses.
Trade Secrets Action in California
In 2004, Ischemia Research and Education Foundation (IREF) and its chief executive officer brought an action in California Superior
Court, Santa Clara County, against a former IREF employee and Pfizer. Plaintiffs allege that defendants conspired to misappropriate
certain information from IREF’s allegedly proprietary database in order to assist Pfizer in designing and executing a clinical study of
a Pfizer drug. In 2008, the jury returned a verdict for compensatory damages of approximately $38.7 million. In March 2009, the
court awarded prejudgment interest, but declined to award punitive damages. In July 2009, the court granted our motion for a new
trial and vacated the jury verdict.
Trimegestone
Aventis filed a breach of contract action against Wyeth in the Commercial Court of Nanterre in France arising out of the December
2003 termination by Wyeth of an October 2000 agreement between Wyeth and Aventis relating to the development of hormone-
therapy drugs utilizing Aventis’s trimegestone (TMG) progestin. Aventis alleges that the termination was improper and seeks
monetary damages. In 2009, a three-judge tribunal rendered its decision in favor of Wyeth. In May 2010, the Versailles Court of
Appeals reversed the Commercial Court’s decision and appointed experts to hear evidence and make a recommendation to the
Court of Appeals concerning damages. In November 2011, the Supreme Court of France affirmed the decision of the Court of
Appeals. The damage proceeding by the experts appointed by the Court of Appeals is continuing.
Environmental Matters
In 2009, we submitted to the U.S. Environmental Protection Agency (EPA) a corrective measures study report with regard to
Pharmacia Corporation’s discontinued industrial chemical facility in North Haven, Connecticut and a revised site-wide feasibility
study with regard to Wyeth’s discontinued industrial chemical facility in Bound Brook, New Jersey. In September 2010, our
corrective measures study report with regard to the North Haven facility was approved by the EPA, and we commenced construction
of the site remedy in late 2011 under an Updated Administrative Order on Consent with the EPA. In July 2011, we finalized an
Administrative Settlement Agreement and Order on Consent for Removal Action with the EPA with regard to the Bound Brook facility
and commenced construction of an interim remedy to address the discharge of impacted groundwater from that facility to the Raritan
River. In February 2012, the EPA issued a proposed remediation plan for the Bound Brook facility. The proposed plan, which is
subject to public comment, is generally in accordance with one of the remedies evaluated in the Company’s revised site-wide
feasibility study. The estimated costs of the site remedy for the North Haven facility and the proposed remediation plan for the
Bound Brook facility are covered by accruals previously taken by the Company.
We are a party to a number of other proceedings brought under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (CERCLA or Superfund), and other state, local or foreign laws in which the primary relief sought is
the cost of past and/or future remediation.
In February 2011, King received notice from the U.S. Department of Justice (DOJ) advising that the EPA has requested that DOJ
initiate enforcement action seeking injunctive relief and penalties against King for alleged non-compliance with certain provisions of
the federal Clean Air Act at its Bristol, Tennessee manufacturing facility. King has executed a tolling agreement with the DOJ in
order to facilitate the possible resolution of this matter.
In October 2011, we voluntarily disclosed to the EPA potential non-compliance with certain provisions of the federal Clean Air Act at
our Barceloneta, Puerto Rico manufacturing facility. We do not expect that any penalties that may result from this matter will be
material to the Company.
D. Government Investigations
Like other pharmaceutical companies, we are subject to extensive regulation by national, state and local government agencies in the
U.S. and in the other countries in which we operate. As a result, we have interactions with government agencies on an ongoing
basis. Among the investigations by government agencies are those discussed below. It is possible that criminal charges and
substantial fines and/or civil penalties could result from government investigations, including but not limited to those discussed
below.
The Company has voluntarily provided the DOJ and the U.S. Securities and Exchange Commission (SEC) with information
concerning potentially improper payments made by certain Pfizer and Wyeth subsidiaries in connection with certain sales activities
outside the U.S. In recent discussions, we have reached agreements-in-principle with the SEC staff and with the DOJ, and we are in
the process of finalizing a resolution of these matters. In addition, certain potentially improper payments and other matters are the
2011 Financial Report 107