A New York federal judge has granted early approval to a $400 million settlement ending a class action lawsuit accusing Pfizer Inc. of misleading investors about illegal off-label drug marketing. This came after lawyers revised notices to class members clarifying details about the litigation. U.S. District Judge Alvin K. Hellerstein signaled his preliminary approval at a hearing in February, but ordered both sides to come up with a new opt-out notice that explains clearly how the case came to its current stage. A revised settlement notice filed in March included a new section on how to request exclusion from the settlement.
Judge Hellerstein had also cautioned that while the $400 million overall payout was quite large, that small investors might not recoup much given a recovery of 15 cents per share, less than the $1.26 per share estimated by the Plaintiffs. While Pfizer countered it calculated no damages, it noted that if fewer people claim, the recovery for claimants will grow. The revised settlement notice said:
At the court’s request, we note that attorneys experienced in the field estimate that as few as 20 percent of class members may claim and as many as 85 percent may claim.
Judge Hellerstein’s order granting preliminary approval set a final hearing for July 30. The case arose from a wide-ranging government investigation into Pfizer’s off-label marketing practices and alleged payment of kickbacks to physicians. The company pled guilty in September 2009 to illegally marketing the anti-inflammatory drug Bextra as part of a $2.3 billion settlement with U.S. authorities. Investors say that Pfizer made misleading disclosures in marketing four drugs: Bextra, which Pfizer voluntarily pulled off the market in 2005 amid safety concerns; anti-psychotic treatment Geodon; anti-epileptic treatment Lyrica; and antibiotic Zyvox. The investors claim that Pfizer also concealed kickbacks to physicians to promote sales.
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