Pfizer Agrees to Settle Suit Over Diabetes Drug Rezulin

Pfizer Inc. agreed Friday to settle a lawsuit over the diabetes drug Rezulin after a jury earlier in the day awarded $43 million to a Texas woman who said it destroyed her liver. The settlement was the first of what could become a series of payouts involving the drug that has been blamed for 63 deaths and dozens of other serious liver failures worldwide.

People familiar with the settlement said the company would pay more than $30 million to Margarita Sanchez, 63, who has been on a transplant waiting list since her liver failed after she took Rezulin for two months in 1999. The payment is expected to influence the course of thousands of other lawsuits over the drug, which was pulled from the market in March 2000.

The Rezulin controversy also cast a shadow on the Food and Drug Administration, which, a Los Angeles Times investigation showed, gave the drug fast-track approval despite concerns within the agency over its safety.

The first Rezulin lawsuit to go to a verdict acquitted the company earlier this week of liability in the death of a 58-year-old woman. A third case went to a jury in Missouri earlier this week, and deliberations are set to continue next week.

The Rezulin suits come on the heels of American Home Products Corp.’s legal drubbing for its “fen-phen” weight-loss cocktail, which was recalled in 1997 after hundreds of thousands of Americans took the diet drugs. In one of the largest verdicts to date, a Texas jury in April awarded $56.5 million to a woman who claimed her heart damage was caused by the drug combination.

In the Sanchez case, New York-based Pfizer had argued that hepatitis caused her liver problems. Following the jury’s $43-million award on compensatory damages, Pfizer said it would appeal. But, while the jury was deliberating the assessment of punitive damages against Pfizer, the company agreed to settle the case.

“Despite the fact that Pfizer . . . complained bitterly that they were not afforded a fair trial, it took them only four hours to settle this case after the verdict came in,” said Michael Papantonio, an attorney for Sanchez.

Papantonio said he could not disclose the settlement amount. A spokesman for Pfizer said he also was bound by a confidentiality agreement but said it was “substantially less” than the $43-million compensatory award.

Seriously ill plaintiffs often accept payment of less than the jury awards to avoid lengthy and indeterminate appeals.

Pfizer general counsel Paul S. Miller said that “errors during this trial gave Pfizer the strongest grounds for reversal on appeal.” But settling for less than the compensatory award “was an attractive alternative to the additional expenses of continued litigation.” Pfizer admitted no liability.

In a Securities and Exchange Commission filing in November, Pfizer said that as of Oct. 10, it was facing 105 class-action suits in state and federal courts seeking either medical monitoring of people who had taken Rezulin or damages or restitution for those patients.

It also said it faced individual lawsuits on behalf of 4,500 Rezulin patients and about 8,400 claims for compensation that Pfizer has received or is expecting to receive from Rezulin patients.

Pfizer spokesman Bob Fauteux said Pfizer is confident about the future course of litigation because FDA figures show that, of an estimated 1.9 million diabetes patients who were prescribed Rezulin, there have been fewer than 100 reports of liver failure leading to death or transplant at the time the drug was withdrawn. He said that there were a relatively few other patients with side effects, most of which were not permanent.

Rezulin was manufactured by Warner-Lambert and began appearing in pharmacies in March 1997. The FDA had approved it for the treatment of diabetes in January that year on the basis of a “fast-track” review of six months. It marked the agency’s most rapid approval to that date of a diabetes pill.

In its nearly three years on the U.S. market, Rezulin generated sales of $2.1 billion.

Pfizer acquired Warner-Lambert for $120 billion in June 2000. With global revenues of $29.6 billion in 2000, Pfizer is the world’s largest pharmaceutical company.

Rezulin’s withdrawal from the U.S. market on March 21, 2000, followed negotiations between the drug’s manufacturer and the FDA. Senior FDA officials had long stood behind the drug despite a mounting death toll and Rezulin’s absence of proven lifesaving benefits.

The position of the FDA officials stood in contrast to their counterparts in Britain, where Rezulin was removed effective Dec. 1, 1997.

At the time Rezulin was withdrawn in the U.S., the FDA said it was aware of 90 liver failures, including 63 deaths, that “possibly or probably” were caused by the drug.

Lawyers involved with the Corpus Christi, Texas, case said that the judge allowed the plaintiff to introduce as evidence information regarding Rezulin published by the Los Angeles Times. Beginning in December 1998 and continuing through March 2001, The Times reported that FDA officials disregarded warnings of danger while approving Rezulin and in keeping it on the market in the face of more liver failures and deaths.

The Times first reported that a veteran FDA medical officer who reviewed Rezulin recommended against approval of the drug in October 1996, citing in part its potential to cause liver damage. The FDA stripped the medical officer, Dr. John L. Gueriguian, of any further involvement with Rezulin after Warner-Lambert complained that he had used intemperate language while discussing the drug.

Senior FDA officials then quietly provided Warner-Lambert with a copy of Gueriguian’s review--but the officials kept the review away from an agency advisory committee that voted unanimously to support approval in December 1996.

A senior FDA epidemiologist, Dr. David J. Graham, warned at a public meeting in March 1999 that Rezulin was one of the most dangerous drugs on the market. He said he thought that Rezulin could cause liver failure in 1 in 1,800 patients. He estimated that the FDA was aware of only 10% of deaths and transplants linked to Rezulin.

An internal review by the FDA of its drug-approval process has led to recommended changes, and several federal investigations into alleged wrongdoing detailed in The Times’ stories have been launched.

Papantonio said the verdict should convince the company to begin to settle thousands of claims.

“The class action would be a vehicle by which this company could make their problem go away,” he said. “If they don’t, within a year it’s going to turn into a real ugly, almost asbestos scenario for [Pfizer] because people are going to continue going to trial on these cases.”

Pfizer shares fell 40 cents Friday, to $41.

Hemant K. Shah, who heads HKS & Co. and tracks pharmaceutical and health care stocks, called the case “just a minor setback for Pfizer in the scheme of things.”

According to Shah, one factor working in Pfizer’s favor is that Rezulin was used to treat a serious disease and “is not a drug that people used to look better.”

He said he believes most of the cases will be thrown out.

The verdict in Corpus Christi bolstered the confidence of plaintiffs’ lawyers who are preparing other Rezulin cases for trial.

“It’s got to give the company a lot of pause,” said Ramon R. Lopez, a Newport Beach lawyer who participated in the Sanchez case and is co-lead counsel for a collection of lawsuits in federal courts.

Lopez said Sanchez had suffered severe liver damage and hopes to undergo an organ transplant.

“This lady had an otherwise healthy liver before taking Rezulin,” Lopez said. “Now she is on a beeper, waiting for a new liver.”

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To read The Times series on FDA drug approvals, go to www.latimes.com/fda

Girion and Levin reported from Los Angeles, Willman from Washington.