Pfizer May No Longer be Able to Delay Paying Its Asbestos Claims of Nearly $1 Billion

Pfizer, which claims to be the "world's largest research-based pharmaceutical company," is one step closer to paying a nearly one billion dollar settlement of legal claims of harms due to the asbestos products it used to manufacture.

Pfizer Settles - More or Less - Some of its Asbestos Liability

Most people would not think of Pfizer as a producer of asbestos.  However, the back-story, as reported in the Philadelphia Inquirer, and as we discussed here in 2011, is that

Pfizer used to have a minerals, pigments and metals division and, in 1968, it bought Quigley Company Inc., which made insulation for heavy industry.

Quigley's Insulag contained asbestos.

So,

Quigley stopped production at its facility in Old Bridge, N.J., in 1992.  When it filed for bankruptcy in 2004, Quigley faced more than 160,000 lawsuits, most related to asbestos product liability.

By apparently holding out the legal fiction that Quigley was an independent entity, Pfizer seemed to use to use the bankruptcy filing to delay making any payment of these claims, most of which likely involved illnesses due to asbestos exposure.  As the Inquirer article said,

Pfizer has spent the nine years since arguing that bankruptcy law protects it from such lawsuits.

notwithstanding the fact that Pfizer itself is hardly bankrupt.

But now, as Bloomberg reported (via the New London [CT] Day),

 Pfizer Inc.'s non-operating Quigley Co. won permission to end almost nine years in bankruptcy under a plan that resolves most asbestos claims against the former insulation maker and its parent, the world's largest drugmaker.

U.S. Bankruptcy Judge Stuart Bernstein in Manhattan Wednesday approved a Chapter 11 plan under which Pfizer will contribute assets worth $964 million. He rejected a prior plan almost three years ago, saying Pfizer was improperly using Quigley's bankruptcy to shield itself from asbestos claims.

Note that Pfizer has consistently argued that it should bear no responsibility for the effects of the asbestos made by its subsidiary:

'Pfizer has never been found derivatively or directly liable for injuries allegedly caused by Quigley's asbestos- containing products,' [Pfizer spokesman Christopher] Loder said.

Pfizer used to have a minerals, pigments and metals division and, in 1968, it bought Quigley Company Inc., which made insulation for heavy industry. Quigley's Insulag contained asbestos.
Read more at http://www.philly.com/philly/business/20130627_Drug-maker_Pfizer_fails_to_escape_costly_asbestos_case.html#AltGBB8oXa8YPkAC.99

Furthermore,

Pfizer has said throughout the case that it never made or sold Quigley's products and it doesn't have liability for them. Asbestos, once widely used as an insulator, was later shown to cause cancer.

Convenient Fictions

This case received little notice in 2011 and is receiving little notice now, and mainly for its business implications.  Yet the reporting does suggest  dots to connect to reveal some larger hypocrisies.

Dedicated to improving health and well being?

Pfizer asserts on its website that it

has remained dedicated to discovering and developing new, and better, ways to prevent and treat disease and improve health and well being for people around the world.[italics added]

Yet despite this supposed dedication to health and well-being, it has long delayed any possible compensation to people who may have acquired severe, if not fatal disease from contact with one of its products.

As per Bloomberg, note the examples of

people like Brenda Hagerich, 62, of Hot Springs, Ark., may get payments on their claims. Hagerich, whose father died in 1999 of mesothelioma, said she has been waiting for a second distribution of a $125,000 payment.

Ownership without responsibility

According to current media reports,  Pfizer attorneys repeatedly contended that because Quigley was a subsidiary of Pfizer, Pfizer could not be held accountable for its actions.  Yet Pfizer owned, and presumably thus gained all revenue from and chose the leadership of Quigley.  At best, maintaining this fiction seems heartless given Pfizer's stated interest in peoples' "health and well being."

Who knew asbestos was dangerous?

The current reports seem to imply that Pfizer's accountability should be mitigated because at the time it acquired Quigley, no one knew that asbestos was hazardous.  The Bloomberg report stated,

Quigley made asbestos-containing products from the 1940s to the 1970s, including Insulag, a powdered insulation. Pfizer, based in New York, bought the company in 1968.

But,

Pfizer has said throughout the case that it never made or sold Quigley's products and it doesn't have liability for them. Asbestos, once widely used as an insulator, was later shown to cause cancer.

The last sentence implies that asbestos was only shown to cause cancer after Pfizer acquired Quigley in 1968.  However, this suggests a lack of knowledge of medical history.

In fact, evidence that asbestos was dangerous would have been readily available in 1968. Pulmonary asbestosis was recognized in 1927.(1, noted in 2).  Furthermore, by 1952, as per Dr Richard Doll(3),

The majority of workers (cited by Hueper, 1952) consider that a causal relationship between asbestosis and lung cancer is either proved or is highly probable and the reality of the relationship was agreed at the recent International Symposium on the Epidemiology of Lung Cancer.

Doll reported further data in 1954 and concluded,

lung cancer was a specific industrial hazard of certain asbestos workers....

Summary

So while Pfizer officials ought to have known that in 1968 it was acquiring a company that made products that likely caused lung cancer, for more than 40 years, they have managed to stall payments to now mainly the heirs of people who acquired severe disease due to those products.  This clearly suggests that in this matter the company leadership has consistently put its revenue ahead of its ostensible dedication to peoples' health and well being.  Then again, this is hardly the first example of dubious ethical conduct by Pfizer.  See this post for a list of the 14 legal settlements of allegations of misconduct made by Pfizer since 2000, only one of which was related to the current case.

Furthermore, dedication to short-term revenue over everything else has resulted in huge wealth for Pfizer's hired managers.  Per the Wall Street Journal, only the latest example is,

The total 2012 compensation for Pfizer Inc. (PFE) Chief Executive Ian C. Read was valued at $25.6 million, up 2.5% from 2011, as the drug maker hit two out of three key financial objectives last year. 

Mr. Read's compensation was based partly on the company exceeding targets for total revenue and adjusted earnings-per-share, while missing its target for cash flow in 2012, Pfizer said in a proxy statement filed Thursday with the U.S. Securities and Exchange Commission.

Presumably, the total revenue target would have been a bit lower if Pfizer had managed to set aside assets to pay the asbestos related claims discussed above in 2012 rather than in 2013.

This relatively anechoic example shows how hollow ring most of the claims by leaders of big health care organizations that they value patients' and the public's health.  That may be convenient public relations puffery, but again and again the bottom line seems to matter more to them.  We have shown numerous examples of mission-hostile management, and of leaders compensated outrageously out of proportion to their contributions to patients' and the public's health.  Thus, why should health care professionals, or patients believe that anything they do puts patients ahead of money?

As we have said so often, health care professionals and society at large needs to hold large health care organizations' leadership accountable for their missions, and push out leaders who put their own pocketbooks and their organizations' revenue ahead of patients' and the public's health. 



References

1.  Cooke WE.  Pulmonary asbestosis.  Br Med J 1972; 2: 1024.
2.  Hasan FM, Nash G, Kazemi H. Asbestos exposure and related neoplasia: the 28 year experience of a major urban hospital.  Am J Med 1978, 65: 649-654. Link here.
3.  Doll R. Mortality from lung cancer in asbestos workers.  Br J Indust Med 1955; 12: 81-86.  Link here.