Besides expiring patents, the biggest problem with investing in pharmaceutical companies is that they often come with a lot of legal baggage.
The latest saga to rear its ugly head is Wyeth's
Last week, a jury ordered Wyeth and co-defendant Upjohn, a division of Pfizer, to pay $2.75 million in compensatory damages to a woman who claims that the companies didn't warn her sufficiently that their hormone replacement drugs come with an increased risk of breast cancer. Wyeth sells Premarin and Prempro, and Pfizer sells Provera.
On Thursday, things got worse for the duo because the jury added punitive damages of more than $19 million for Wyeth and more than $7.7 million for Pfizer. Of course, Wyeth is appealing the decision, and it's unlikely that the case will be resolved anytime soon.
I definitely wouldn't put these cases on the same scale as Merck's
Wyeth now has a record of four wins, one loss, and one redo. A few other cases have been thrown out before making it to trial, and plaintiffs voluntarily pulled a dozen more. With more than 5,000 lawsuits still pending, Wyeth may end up settling the claims just to get the cloud of uncertainty behind it, but I doubt it will be of the same magnitude as the Vioxx settlement.
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