Pfizer Goes Into the Asbestos Business (in 1968), Faced Hundreds of Thousands of Lawsuits (in the 1980s), Promised to Settle (in 2004)
Here is the background, per a 2004 report by the Associated Press, per Fox News:
Pfizer Inc. (PFE) Friday said it has agreed to pay $430 million to settle all lawsuits against it alleging injury from insulation products made by a subsidiary.That seems like the end of a long story, but it was not.
Pfizer and its Quigley Co. subsidiary were named, along with several other defendants, in 171,611 lawsuits claiming personal injury caused by exposure to asbestos, silica or mixed dust.
Pfizer acquired Quigley Co. in 1968. It sold some products containing asbestos until the early 1970s.
Pfizer will establish a trust for the payment of pending claims as well as any future claims. It will contribute $405 million to the trust over 40 years through a note, and about $100 million in insurance. Pfizer will also forgive a $30 million loan to Quigley.
Since 1982, Quigley's main business has been to manage the asbestos lawsuits.
As part of the settlement, Quigley will file for Chapter 11 bankruptcy. Its reorganization plan must be approved by the bankruptcy court and confirmed by a vote of 75 percent of the claimants.
Bankruptcy Proceedings Go On Through 2009, No Claims Paid
By 2009, nothing had really been settled. Apparently, the bankruptcy of Pfizer's subsidiary, which was set up as if Quigley was an independent corporation, had not resulted in any resolution to the multiple lawsuits and the large claims. As reported in December, 2009, by Bloomberg:
At issue in the trial is whether Quigley, a former maker of asbestos-containing products, can confirm a plan of reorganization, ending more than five years in bankruptcy. The trial pits the U.S. government and asbestos victims against Pfizer, the world’s biggest drugmaker, with claims that its $450 million contribution under a settlement isn’t enough to satisfy its liabilities.At the trial, the lawyer for the asbestos victims claimed that Pfizer was using the bankruptcy of its subsidiary to avoid liability:
Edward Weisfelner, a lawyer for an ad hoc group of so- called asbestos victims that represents 30,000 individuals, told Bernstein today that the plan can’t be confirmed because the purpose of the bankruptcy law being used to channel asbestos claims is to 'scrub' a viable company of liabilities.The US government also objected to what Pfizer was doing:
Under bankruptcy law, courts shouldn’t approve Chapter 11 reorganizations where the primary purpose is to shield a third party, such as Pfizer, Weisfelner said.
'Courts are instructed to avoid the possibility that parties use bankruptcy to protect a third party that’s not submitting itself to the jurisdiction of the court, and that’s exactly what’s going on in this case,' Weisfelner said.
Opposition to the plan also comes from the U.S. Trustee, an arm of the Justice Department that monitors bankruptcies, which has said was improperly orchestrated to shield the drugmaker from liability.t the time, Pfizer (through its Quigley subsidiary) also was attempting to keep the whole thing quiet, but not successfully:
The U.S. Trustee has fought to keep the trial open to the public, and said in court documents that some of Quigley’s requests to keep information confidential failed to meet legal standards for protecting 'commercial' information.Of course, at that time, the opinions of the plaintiffs' lawyer and the US Trustee were just that, opinions.
By 2010, Judge Found that Pfizer "Manipulated" the Bankruptcy
But by September, 2010, according to Bloomberg then:
Pfizer Inc.’s Quigley unit, a former asbestos maker, was denied permission to exit bankruptcy by a judge who found the world’s largest drug company manipulated the bankruptcy process to benefit itself.No Progress by the End of 2010
U.S. Bankruptcy Judge Stuart M. Bernstein in New York today rejected Quigley’s fourth reorganization plan and said parties should discuss dismissal of the case. He said the plan was filed in 'bad faith' by Pfizer and cited testimony that asbestos claims directed at Quigley could total $4.45 billion over the next 42 years.
Apparently despite the judge's opinion, the case still remained tied up in court. By December, 2010, no progress had been made. According to Bloomberg then:
Pfizer Inc., the world’s largest drug company, should have the bankruptcy of its Quigley unit which has protected it from asbestos-related health problems since 2004 dismissed, lawyers for the U.S. Trustee said.So Pfizer had stalled for so long that some of the plaintiffs had died off.
While the bankruptcy has been pending, creditors with alleged asbestos-related health problems have been unable to sue New York-based Pfizer, and many have died, wrote lawyers for the U.S. Trustee, an arm of the Justice Department that oversees bankruptcy. A hearing to decide the U.S. Trustee’s request is set for Jan. 13, according to court papers filed Dec. 23.
'The harm in delaying the inevitable dismissal of this case is to the individuals who have filed asbestos claims against the Debtor and Pfizer,' lawyers for acting U.S. Trustee Tracy Hope Davis wrote in court papers. 'For some of those individuals, time may be of the essence.'
So let us summarize. For reasons that are unclear, Pfizer Inc, primarily a pharmaceutical company, bought out a company that made asbestos products in 1968. The health hazards of asbestos were soon recognized, and many people filed lawsuits against Pfizer's subsidiary, alleging they had been harmed. Pfizer promised to settle the matter in 2004, about 30 years since the exposures occurred. Yet by setting up a bankruptcy of its subsidiary as if it were an independent company, Pfizer stalled any resolution of the case for at least another six years, using what a Judge termed "manipulation." Now it is 2011, and the cases are still unresolved.
So for a company that claims it is
committed to applying science and our global resources to improve health and well-being at every stage of life.and boasts
Pfizer Inc: Working Together for a Healthier WorldThis does not look good.
So question number one is should not the leaders of a company whose main business is ostensibly making people healthier be more sensitive to claims about the health effects of its products? Specifically, why did Pfizer's leaders not try to more speedily come up with a cleaner and more timely solution to this problem that would appear more sensitive to the health problems of the claimants?
It would be interesting if Pfizer's top leaders were to try to answer that question.
My policy observation is now familiar. As we have said before, far too often the leaders of not-for-profit health care institutions seem more interested in padding their own bottom lines than upholding the institutions' missions. They often seem entirely unaware of their duty to put those missions ahead of their own self-interest. Like the financial services sector in the era of "greed is good," health care too often seems run by "insiders hijacking established institutions for their personal benefit." True health care reform would encourage leadership of health care who understand health care and care about its mission, rather than those who see a quick way to make a small fortune.