In re Pfizer Inc. Securities Litigation

• Court: U.S. District Court — Southern District of New York
• Writing for the Court: Laura Taylor Swain
• Citation: In re Pfizer Inc. Securities Litigation, 584 F.Supp.2d 621 (S.D. N.Y. 2008)
• Decision Date: 01 July 2008
• Docket Number: No. 04 Civ. 9866(LTS)(DCF).,04 Civ. 9866(LTS)(DCF).
• Parties: In re PFIZER INC. SECURITIES LITIGATION.

584 F.Supp.2d 621

In re PFIZER INC. SECURITIES LITIGATION.

No. 04 Civ. 9866(LTS)(DCF).

United States District Court, S.D. New York.

July 1, 2008.

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Grant & Eisenhofer P.A. by Jay W. Eisenhofer, Esq., Geoffrey C. Jarvis, Esq., James R. Banko, Esq., New York, NY, by Stephen G. Grygiel, Esq., Brian M. Rostocki, Esq., Wilmington, DE, for Lead Plaintiff.

Cadwalader, Wickersham & Taft LLP by Gregory A. Markel, Esq., Ronit Setton, Esq., New York, NY, for Defendants.

OPINION AND ORDER¹

LAURA TAYLOR SWAIN, District Judge.

Lead Plaintiff Teachers' Retirement System of Louisiana ("TRSL") brings this action on behalf of a putative class of investors ("Plaintiffs") who purchased or acquired Pfizer Inc. ("Pfizer") stock between October 31, 2000 and October 19, 2005 (the "Class Period") against Pfizer and corporate officers Henry McKinnell, John LaMattina, Karen Katen, Joseph Feczko, and Gail Cawkwell (together, the "Individual Defendants") (together with Pfizer, "Defendants"). Plaintiffs allege that Defendants violated federal and state laws by concealing the results of three medical studies concerning two Pfizer drugs, Celebrex and Bextra, and by making misstatements and omissions in their public filings and statements.

Defendants have moved to dismiss the complaint. Plaintiffs have moved to strike certain exhibits attached to and portions of Defendants' memorandum of law in support of their motion to dismiss. The Court has reviewed thoroughly all of the parties' submissions and arguments in connection with these motions. For the reasons that follow, Defendants' motion to dismiss is granted in part and denied in part. In light of the resolution of the motion to dismiss, Plaintiffs' motion to strike is moot.

BACKGROUND

For the purposes of this motion, the Court takes the following facts drawn from the Consolidated Class Action Complaint ("CCAC") as true.

I. Defendants

Pfizer is a research-based, global pharmaceutical company that develops, manufactures, and markets prescription medicines for humans and animals, as well as consumer healthcare products. (CCAC ¶ 17.) As of November 4, 2005, Pfizer had approximately 7.37 billion shares outstanding trading on the New York Stock Exchange. (Id.) Pfizer is the successor-ininterest of Pharmacia, having acquired Pharmacia—and Pharmacia's interest in Celebrex and Bextra—on or about April 16, 2003, in a transaction valued at $60 billion. (Id.)

The Individual Defendants were executive officers of Pfizer during the relevant period. Since 2001, Henry McKinnell has been Pfizer's Chief Executive Officer and Chairman of the Board of Directors. (Id. ¶ 18.) John LaMattina has been Senior Vice President and President of Pfizer Global Research and Development since 2003. (Id. ¶ 23.) Karen Katen was Executive Vice President and President of Pfizer Pharmaceuticals from April 2001 to March 2005. Thereafter, she became Vice Chairman and President of Pfizer Human Health. (Id. ¶ 27.) During the Class Period, Joseph M. Feczko was the President of Worldwide Development, and Gail Cawkwell was Pfizer's medical team leader for Celebrex. (Id. ¶¶ 31, 33.)

During the Class Period, McKinnell, La-Mattina, and Katen all made strategic decisions for the company. (Id. ¶¶ 19, 24, 28.) Furthermore, all of the Individual Defendants made numerous public statements concerning Celebrex and Bextra during the Class Period. (Id. ¶¶ 21, 25, 29, 32, 34.) By virtue of their high-level positions and direct involvement in the day-to-day activities of the company, the Individual Defendants were privy to confidential non-public information concerning the operations of Pfizer. (Id. ¶ 36.) In addition, the Individual Defendants were involved in drafting, reviewing, approving, ratifying, and/or disseminating the financial statements disclosed by Pfizer. (Id.)

II. Development of Celebrex and Bextra

Celebrex and Bextra, like the wellknown drug Vioxx, are non-steroidal antiinflammatory drugs ("NSAIDs") belonging to a class of drugs known as Cyclooxygenase 2 ("COX-2") inhibitors. (Id. ¶ 48.) Celebrex (celecoxib) and Bextra (valdecoxib) were developed to treat chronic pain. (Id. ¶¶ 1, 43.) Traditional NSAIDs, such as aspirin, ibuprofen, and naproxen, inhibit both the COX-1 and COX-2 enzymes, and tend to cause harmful gastrointestinal side effects. (Id. ¶¶ 42-43.) The COX-1 enzyme promotes the production of the stomach's natural protective mucus lining. (Id. ¶ 43.) The COX-2 enzyme is responsible for promoting inflammation. (Id.) The possibility of suppressing only the COX-2 enzyme—responsible for inflammation and pain—without inhibiting the COX-1 enzyme meant that COX-2 inhibitors had the potential to harness the beneficial attributes of NSAIDs without the harmful gastrointestinal side effects. (Id. ¶ 44.)

Celebrex was the first COX-2 inhibitor to obtain FDA approval, which it received in December 1998. (Id. ¶ 48.) The FDA first approved Celebrex for use by prescription for treating pain and inflammation caused by osteoarthritis and adult rheumatoid arthritis. (Id. ¶ 50.) Later, Celebrex was approved for the treatment of acute adult pain or pain after surgery, as well as for the treatment of primary dysmenorrhea—painful menstrual cramps. (Id.) The FDA approved Bextra in November 2001 for use by prescription for treating osteoarthritis, rheumatoid arthritis, and primary dysmenorrhea, but not for acute pain. (Id. ¶ 61.)

Plaintiffs allege that Pfizer's financial success and future prospects depended on Celebrex and Bextra becoming "blockbuster" drugs because of looming patent expiration dates for several of its best-selling drugs. (Id. ¶¶ 66.) Pfizer's patents on Ambien (2006), Zithromax (2005), and Zoloft (2006) were set to expire within five years after Celebrex and Bextra's expected market arrival. (Id.) Indeed, initially Celebrex and Bextra were extremely successful. (Id. ¶ 69.) By 2004, for example, Celebrex and Bextra accounted for almost nine percent of Pfizer's revenue, totaling over $4.5 billion. (Id. ¶ 71.)

Defendants made numerous representations about the safety of Celebrex and Bextra, including that they were safer than Merck & Co. Inc.'s ("Merck") competing drug, Vioxx. (Id. ¶ 72.) For example, in an October 18, 2002 press release, Pfizer touted Bextra as an effective and safe form of pain reliever: "Analyses of pooled study results for the COX-2 specific inhibitor BEXTRA .. . underscored its improved upper gastrointestinal (GI) safety as well as its cardiovascular safety profile." (Id. ¶¶ 88, 187.) On November 13, 2002, Pfizer stated in its 10-Q that "the FDA approved revised labeling for Celebrex. The new prescribing information includes additional gastrointestinal safety data and data indicating that there was no increased risk for serious cardiovascular adverse events observed, including heart attack, stroke and unstable angina." (Id. ¶ 188.) On July 25, 2003, on a quarterly conference call, Katten stated that "[a]n independent analysis that included our entire Celebrex arthritis clinical trial database, found no evidence in increased cardiovascular risk for Celebrex, relative to both conventional, non-steroidal anti-inflammatory drugs and placebo." (Id. ¶ 194.) The CCAC alleges that Pfizer and its representatives made numerous similar statements throughout the class period. (Id. ¶¶ 170-231.)

III. The Studies

Plaintiffs allege that senior officials at Pfizer, including the Individual Defendants, knew from a very early date that Celebrex and Bextra had adverse cardio-vascular effects. (Id. ¶¶ 74-82, 248-67.) Specifically, Plaintiffs contend that Defendants were aware of three studies which revealed these adverse effects.

The first, the Alzheimer's Study, completed in 1999, revealed that patients taking Celebrex were more likely to experience negative cardiovascular effects such as stroke or cardiac failure than patients taking a placebo. (Id. ¶ 93.) The Alzheimer's Study included 425 patients and, as the name suggests, focused on the effect of Celebrex on patients with Alzheimer's Disease. (Id. ¶ 94.) In the study, 285 patients were given Celebrex and 140 were given a placebo. Twenty-two of the patients taking Celebrex and three of the patients taking the placebo suffered adverse cardiovascular effects. (Id.) Adverse cardiovascular events were observed in patients taking Celebrex at a rate 3.6 times greater than observed in patients taking the placebo. (Id. ¶ 93.) The study's authors concluded that "[a] statistically significant difference favoring placebo in adverse events was observed." (Id. ¶ 94.) The study was never published (id. ¶ 95), and the results only became public in early January 2005, when Pfizer surreptitiously posted the results on the pharmaceutical industry's main trade group's website. (Id. ¶ 97.)

In the second study, the Celecoxib Long-Term Arthritis Safety Study (the "CLASS Study"), Pfizer sought to demonstrate Celebrex's superior gastrointestinal safety profile. (Id. ¶ 98.) When the study was completed in March 2000, Pfizer sent the Food and Drug Administration ("FDA") the portion of the study showing the gastrointestinal results. (Id. ¶ 99.) Pfizer did not send the FDA another portion of the study, which showed increased risk of cardiovascular problems. (Id.) The results of the CLASS Study were published on September 13, 2000, in an article in the Journal of the American Medical Association ("JAMA"). (Id. ¶ 101.) However, the published study and the accompanying JAMA article omitted key information about the study, namely that it covered a twelve-month period, not a six-month period, and revealed that Celebrex posed serious cardiovascular risks. (Id. ¶ 102.) Indeed, the full twelve-month data set revealed that the rate of adverse cardiovascular events in the population taking Celebrex was 1.4%, as opposed to rate of 1.0% for the other NSAID...