Peter,
Do you feel that the patent expiration issue still has been insufficiently discounted by the market?
What prices do you think BMY and SGP might fetch in a takeover?
I think that the changes required by the American legal system go well beyond mere tort reform. I hope your law school experience was a bit different from mine, but my professors' eyes routinely glazed over whenever I mentioned the phrase "cost-benefit analysis".
You are right in suggesting that the thimerosal issue may have bled Lilly dry. The amazing thing is that unlike other companies who have been named defendants in thimerosal-related litigation, Lilly has not even acknowledged the existence of any such lawsuits in any of their 10Qs or other SEC documents. Put "thimerosal" into the search box at investor.lilly.com if you wish to determine the accuracy of this statement for yourself.
Now contrast Lilly's complete lack of disclosure of potential thimerosal legal liability with the following:
* * *
WYETH 10Q 11.13.02
In the litigation involving allegations that the cumulative effect of
thimerosal, a preservative used in certain vaccines manufactured and
distributed by the Company as well as by other vaccine manufacturers,
causes severe neurological damage, including autism in children, one
additional class action has been filed. Ashton, et al. v. Aventis
Pasteur, Inc., et al., No. 004026, Ct. Comm. Pleas, Philadelphia Cty.,
PA, is a putative nationwide class action seeking medical monitoring,
a court-supervised research program
34
and compensatory and punitive damages. The Company has now been named
as a defendant in more than 140 lawsuits involving approximately 550
named plaintiffs. Of these lawsuits, eleven are purported class
actions. The Company expects that additional thimerosal cases may be
filed in the future against it and the other companies that marketed
thimerosal-containing products.
The Company is unable at the present time to estimate a range of
potential exposure, if any, with respect to the PREMPRO, PPA and
thimerosal litigations but expects to incur costs in connection with
the defense of these matters.
AVENTIS 6-K 10.30.02
Aventis Pasteur U.S. Thimerosal Litigation
Aventis Pasteur is a defendant in 66 lawsuits in several U.S. federal and state
courts alleging that serious personal injuries resulted from the presence of
mercury in the preservative thimerosal, trace amounts of which are contained in
vaccines allegedly manufactured by Aventis Pasteur. Several of the cases seek
certification to proceed as class actions. Currently, all of the cases are
either in the preliminary response stage or the early stages of the discovery
process. Aventis Pasteur believes that all of these claims must be adjudicated
first by the U. S. Federal Claims Court under the U.S. National Childhood
Vaccine Injury Act and the National Vaccine Injury Compensation Program before
the claimants may bring direct actions against the company.
Aventis Pasteur Canadian Thimerosal Litigation
In May 2002, a class action lawsuit was filed against Aventis Pasteur in the
Ontario Superior Court of Justice alleging that personal injuries resulted from
the presence of mercury in the preservative thimerosal contained in vaccines
allegedly manufactured by Aventis Pasteur. The proposed class includes persons
who were vaccinated with DTP, DT or Td vaccines before reaching two years of
age. The court has not ruled on whether to certify the class action. The total
amount claimed for compensatory and punitive damages exceeds CAD 1.25 billion (Ž
833 million).
BAXTER 10Q 11.12.02
As of September 30, 2002, Baxter International Inc. and certain of its
subsidiaries have been served as defendants, along with others, in 71 lawsuits
filed in various state and U.S. federal courts, eight of which are purported
class actions, seeking damages, injunctive relief and medical monitoring for
claimants alleged to have contracted autism or other attention deficit disorders
as a result of exposure to vaccines for childhood diseases containing
Thimerosal. In June 2002, the U.S.D.C. for the Southern District of Texas
dismissed with prejudice one suit brought against Baxter and others based on the
application of the National Vaccine Injury Compensation Act. Additional
Thimerosal cases may be filed in the future against Baxter and other companies
that marketed Thimerosal-containing products.
KING PHARMA 10Q 11/14
Thimerosal/ Vaccine Related Litigation
King and its wholly-owned subsidiary, Parkedale Pharmaceuticals, Inc.
(ParkedaleŒ), have been named as defendants in California, Illinois and
Mississippi, along with Abbott Laboratories, Wyeth, Aventis Pharmaceuticals, and
other pharmaceutical companies, which have manufactured or sold vaccine products
containing the mercury-based preservative, thimerosal.
In these cases, the plaintiffs attempt to link the receipt of the
mercury-based vaccinations to neurological defects. The plaintiffs in these
cases claim that the vaccines in question would have had their beneficial
effects with or without thimerosal, and that thimerosal was a tool for
undercutting other products on the market, thereby increasing defendants¡ sales
and profits. The plaintiffs also claim unfair business practices, fraudulent
misrepresentations, negligent misrepresentations, and breach of implied
warranty, which are all arguments premised on the idea that the defendants
promoted vaccines without any reference to the toxic hazards and potential
public health ramifications resulting from the mercury-containing preservative.
The plaintiffs also allege that the defendants knew of the dangerous
propensities of thimerosal in their products.
The only vaccine that the Company has manufactured, distributed, marketed
and/or sold was the Fluogen’ vaccine, which did contain the mercury-based
preservative, thimerosal. Fluogen’ was only distributed by the Company for two
flu seasons. The Company¡s product liability insurance carrier, has been
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Table of Contents
KING PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ¢ (Continued)
given proper notice of all of these matters, and defense counsel are vigorously
defending the Company¡s interests. The Company is moving to be dismissed from
the litigation due to lack of product identity in the plaintiffs¡ complaints. In
2001, the Company was dismissed on this basis in a similar case.
AMERICAN HOME PROD 11.14.01 10Q
The Company has been served with seven lawsuits, five of which are
putative class actions, alleging that the cumulative effect of
thimerosal, a preservative used in certain vaccines manufactured and
distributed by the Company as well as by other vaccine manufacturers,
causes severe neurological damage, including autism in children. The
class actions are Doherty, et al. v. Aventis Pasteur, et al., No.
325082, Super. Ct., San Francisco Cty., CA (nationwide class for
medical monitoring, personal injuries and injunctive relief); Demos,
et al. v. Aventis Pasteur, et al., No. 01-22544CA15, Cir. Ct., Dade
Cty., FL (nationwide class for medical monitoring, personal injuries
and injunctive relief against future sales); Cyr, et al. v. Aventis
Pasteur, Inc., et al., No. 01-C-663, Super. Ct., Hillsborough Cty., NH
(statewide class for personal injuries and injunctive relief); King,
et al. v. Aventis Pasteur, Inc., No. 01-CV-1305, U.S.D.C., D. Ore.
(nationwide class for personal injuries and injunctive relief); and
Mead v. Aventis Pasteur, Inc., et al., No. 01-CV-1402, U.S.D.C., D.
Ore. (nationwide class for medical monitoring). The Company expects
that additional thimerosal cases may be filed in the future against it
and the other companies that marketed thimerosal-containing products.
The Company intends to defend all such cases vigorously.
Pfizer 11.13.01 10Q
Thimerosal
Since August 2001 the Company has been served with two purported class actions
in Oregon state court and one purported class action in Florida state court. The
Company has also been served with one individual lawsuit in Oregon state court.
The Company is aware of additional purported class action lawsuits that have
been filed, but not served, in state courts in Massachusetts, Missouri, and
California.
The suits generally allege that children received toxic levels of mercury
through a preservative, Thimerosal, that was used in multi-dose vials of
pediatric vaccines, that allegedly caused the recipients to develop or to be
placed at a higher risk of developing autism or other neurological disorders.
The relief sought includes medical monitoring and/or money damages for children
with diagnosed injuries. The Company is identified as one of several vaccine
manufactures named in the suits. Other defendants include Thimerosal
manufacturers and physicians.
During the 1990s the Parke-Davis Division of Warner-Lambert manufactured and
sold an influenza vaccine called Fluogen. Although the Fluogen vaccine was often
given to adults, it was also indicated for use in children. Multi-dose vials of
Fluogen contained the preservative Thimerosal. Warner-Lambert sold the Fluogen
vaccine business to King Pharmaceuticals in 1998. Pfizer Inc. has made no
vaccine since the mid-1970s. The litigation is in its earliest stages. The
Company is defending the litigation and, considering its reserves and insurance,
is of the opinion that the litigation will not have a material adverse effect on
its financial position or results.
North American Vaccine 10Q 11.13.99
As a result of a recent assessment of potential health risks related to
mercury contained in food and drugs conducted by the FDA, in cooperation with
the Environmental Protection Agency, the continued use of thimerosal in vaccines
has been questioned. Thimerosal is a mercury-containing preservative commonly
used in vaccines packaged in multi-dose vials. Thimerosal is approved for use by
the FDA and is currently included in more than 30 licensed vaccines in the
United States. Vaccines containing this preservative have been administered to
hundreds of millions of children and adults worldwide, with no scientific or
medical data to suggest that it poses a public health risk. In July 1999, the
Company decided to follow the developing recommendations of these agencies and
move toward the discontinued use of thimerosal in Certiva(REGISTERED). The
Company intends to submit data to the FDA on the European formulation of
Certiva(REGISTERED), which does not contain thimerosal, to facilitate the
approval and introduction in the United States of a thimerosal-free formulation
of the product in single-dose syringes. The Company is currently evaluating the
impact of this decision on the per unit cost to produce Certiva(REGISTERED), as
well as the impact on the current selling price. The Company expects to submit
data to the FDA on a thimerosal-free formulation of Certiva(REGISTERED) before
the end of the fourth quarter of 1999 or shortly thereafter, and the Company
will work expeditiously with the FDA to obtain approval. The American Academy of
Pediatrics has called for the FDA to expedite the review of manufacturers'
supplemental applications to eliminate or reduce the mercury content of vaccine
products. The U.S. Public Health Service, the Centers for Disease Control and
Prevention, and the American Academy of Pediatrics continue to recommend that
all children should be immunized against the diseases indicated in the
recommended immunization schedule. The Company will in the interim continue to
sell previously produced thimerosal containing Certiva(REGISTERED) that it has
in inventory to government purchasers and possibly through distributors to
private physicians and has begun to manufacture thimerosal-free
Certiva(REGISTERED) in anticipation of regulatory approval.
As a function of the two-step enhancement program for acellular
pertussis production and testing processes, the regulatory work for a
thimerosal-free Certiva(REGISTERED), and the market opportunities for a launch
of the group C meningococcal conjugate vaccine in 2000, the Company, beginning
in late fourth quarter 1999, will produce its group C meningococcal conjugate
vaccine for sale in the U.K. in the facility that had been producing
Certiva(REGISTERED). All costs associated with this production effort will be
expensed until regulatory approval is obtained. Because of the planned
production of group C meningococcal conjugate vaccine in this facility, neither
acellular pertussis vaccine nor Certiva(REGISTERED) will be manufactured until
at the earliest, the beginning of the second quarter of 2000. Thus, sales of
acellular pertussis containing products will be limited and may result in
reduced sales in the second half of 1999 through the second or third quarter of
22
2000 due to limited product inventory. Sales could be limited in the second half
of 2000 if the enhanced production and testing processes do not work properly
upon startup of acellular pertussis production and/or the Company is unable to
reach agreements with suitable distributors for these products in the U.S. and,
if necessary, in Germany and Austria.
* * *
I thought that the manner in which Congress, under the direction of the White House, attempted to immunize Lilly from having to compensate putative victims of thimerosal was sneaky and shameful. Why should we lock the courtroom door on this particular class of plaintiffs when we have not done so for so many other putative classes of injured parties? I am a bit leery of some of the actions that are being taken in the name of "National Security" and think they deserve much greater scrutiny than are being presently afforded.
Sam |
