In a bid to settle thousands of lawsuits over its discontinued heartburn drug Zantac, Pfizer Inc. (NYSE:PFE) has agreed to pay up to $250 million.
What Happened: The settlement, disclosed in a Delaware court filing last week, is intended to significantly reduce Pfizer's potential liability, reported Financial Times, citing people familiar with the deal.
The New York-based pharmaceutical giant will pay plaintiffs between $200 million and $250 million to settle the cases.
More than 70,000 cases have been filed against various drugmakers in the Delaware state court, with smaller numbers in California, Illinois, and Philadelphia, Pennsylvania.
Pfizer, which sold Zantac between 1998 and 2006, stated that it continues to "vigorously defend against Zantac lawsuits, which we believe are not supported by reliable science". It added that it "has explored and will continue to explore opportunistic settlements of certain cases if appropriate, and has settled certain cases," according to the report.
"The company is confident that its Zantac products, which were reviewed and approved by the [US Food and Drug Administration], did not cause cancer when used as directed," Pfizer added.
In March 2024, French pharmaceutical company Sanofi resolved 4,000 cases outside of Delaware, settling all claims against it for an undisclosed sum.
The settlement is seen as a move to reassure investors and avoid prolonged and costly litigation, according to the report. In 2022, companies linked to the drug saw a collective $40 billion drop in value in a matter of days when an analyst note estimated potential liabilities of up to $45 billion.
Why It Matters: This settlement comes after Pfizer reached an agreement to settle over 10,000 lawsuits about cancer risks associated with Zantac, marking the largest resolution in the litigation.
Despite the downward revision of the liability threat, the prospect of expensive payouts continues to weigh on companies' share prices. The exact settlement amount is yet to be finalized, as it is calculated on a per-plaintiff basis and depends on data collected by law firms on the usage years of Zantac consumers, according to the report.
Meanwhile, Pfizer is looking to expand its offerings by introducing a direct-to-consumer medicines platform under the brand "Pfizer for All." This move aims to provide medical information, mail-order pharmacy, and telehealth services to U.S. patients.
Image Via Shutterstock