US - Pfizer directors should be held liable for the drugmaker's repeated violations of federal laws governing drug-marketing practices that resulted in the company having to pay a US$2.3bn settlement, a union pension fund said in a lawsuit.
Pfizer directors should be held liable for the drugmaker's repeated violations of federal laws governing drug-marketing practices that resulted in the company having to pay a US$2.3bn settlement, a union pension fund said in a lawsuit.
New York-based Pfizer's board turned a blind eye to criminal guilty pleas the company entered over marketing practices for medicines such its Bextra pain-killing drug and its Neurontin epilepsy pill, the Bricklayers Local 8 & Plasters Local 233 Pension Fund, a Pfizer shareholder, said in the suit.
Directors' inaction has hurt the value of investors' stakes in the company, the fund's lawyers contend.
"The board and senior management made a calculated bet that the negative consequences of getting caught would never become significant," the fund's attorneys said today in the Delaware Chancery Court complaint. "Defendants lost that bet."
The $2.3bn settlement to resolve government probes into Pfizer's marketing practices was the largest accord in history to address such sales techniques. Proceeds from the accord went to government health agencies including Medicare, Medicaid and the military's Tricare health plan.
"The fact that Pfizer has been operated with a systematic disregard for the laws governing its fundamental business was not hidden from the board, which repeatedly and knowingly disregarded red flags that clearly demonstrated the company's wrongdoing," the fund's lawyers said in the suit.
The fund wants directors held liable for the company's improper acts and seek to recoup "all profits, benefits and other compensation" they reaped as board members.
Chris Loder, a Pfizer spokesman, didn't return calls and an e-mail for comment on the suit. Pfizer is the world's biggest drugmaker.
Pfizer has paid at least $2.7bn to settle claims over its marketing practices pressed by government regulators or by consumers suing over its products, according to data compiled by Bloomberg News.
In addition to the $2.3bn it paid over Bextra and other drugs, the company paid $430m to resolve prosecutors' claims that it illegally marketed Neurontin.
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