Bextra recall hurts Pfizer's financial performance
Bextra recall and black box warning on Celebrex has put Pfizer into deep financial trouble. Net income dropped to just $270 million in the first quarter of this year from $2.3 billion last year, a drop of 88%. The company says that $766 million of charges taken this quarter attributable to the suspension of sales of Bextra.
It is important to point out that legal liabilities resulting from Bextra class action lawsuits are not included in these financials. Although small, Pfizer also faces a number of Celebrex lawsuits, apart from securities related lawsuits. That is why it is interesting that Hank McKinnell, chairman and chief executive officer is still saying, “Pfizer continues to deliver steady performance.”
Revenues also have been, and will continue to be, impacted by publicity and regulatory actions regarding COX-2-selective inhibitor drugs. Since the Bextra recall announcement, there have been repeated calls for Celebrex recall as well. The suspension of sales of Bextra in the U.S., E.U., and other markets in early April, Pfizer said, "...is expected to reduce our previously announced targeted full-year 2005 adjusted and reported diluted EPS by approximately $.05 per share. Bextra asset write-offs are expected to reduce our previously announced targeted full-year 2005 reported diluted EPS by an additional $.10 per share."
Analysts estimate that Vioxx liabilities could be as high as $55 billion though $38 billion is a more commonly used number. Some lawyers are using a more conserative number of $18 billion. At this time, no good estimate for liabilities resulting from Bextra and Celebrex lawsuits is available, though it is expected that Pfizer may have to pay billions to settle charges that it marketed two dangerous drugs.
Pfizer's response to COX-2 Developments
"Following the FDA decision to require boxed warnings of potential cardiovascular and gastrointestinal risk for all COX-2-specific pain relievers and all non-steroidal anti-inflammatory drugs (NSAIDs), including older non-specific drugs such as ibuprofen and naproxen, Pfizer will work with the FDA to add expanded risk information in the Celebrex label. Pfizer has accumulated extensive Celebrex clinical data over the past 10 years involving more than 40,000 patients, and we remain committed to conducting additional long-term clinical studies evaluating the benefits and risks of Celebrex. Pfizer will also work closely with the FDA to develop a guide to assist patients and their healthcare professionals in making the best decisions for treating their arthritis pain.
Regarding Bextra, Pfizer has suspended its sales in the U.S. in accordance with the FDA’s request. The FDA view is that Bextra’s cardiovascular risk could not be differentiated from other NSAIDs. However, the agency has concluded that the additional, increased risk of rare but serious skin reactions associated with Bextra, already described in its label, warrants its withdrawal from the market. Pfizer respectfully disagrees with the FDA position regarding the overall risk/benefit profile of Bextra. However, in deference to the regulatory agency’s views, the company has suspended sales of the medicine pending further discussions with the FDA. For now, patients should stop taking Bextra and contact their physicians about appropriate treatment options. In addition, at the request of European and other regulators, Pfizer has also suspended sales of Bextra in the European Union, Canada, Hong Kong, Singapore, Malaysia, South Africa, the Philippines, and Mexico. We will explore options with the regulatory agencies under which the company might be permitted to resume making Bextra available to physicians and patients. The company is in contact with other regulatory agencies around the world and will take appropriate measures based on those discussions." (Related article: Pfizer's detailed response on Bextra and Celebrex)
In a question asked to Pfizer about its position on Celebrex, the company said in a statement that "In keeping with the FDA’s position, Pfizer is advising physicians to consider the evolving information in evaluating the risks and benefits of all NSAIDs, including its COX-2-selective medicine Celebrex. While awaiting final labeling from the FDA, physicians should consider the available data on all these medicines when assessing individual patients to be treated for osteoarthritis, rheumatoid arthritis, or acute pain. Factors to be considered include information concerning the existing body of data, the risks of alternative treatments, and the individual patient’s underlying cardiovascular and gastrointestinal risk status. As with all prescription NSAIDs, Celebrex should be used at the lowest effective dose for the shortest duration, consistent with individual patient treatment goals."
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