Pfizer Inc has failed to persuade a federal judge to dismiss a shareholder lawsuit accusing the company of fraudulently misrepresenting the safety of its Celebrex and Bextra pain-relieving drugs.
While dismissing some of the claims, U.S. District Judge Laura Taylor Swain in Manhattan said a reasonable jury could find that Pfizer and several top executives intended to mislead shareholders about the drugs' cardiovascular risks.
"The record is replete with evidence that defendants recognized that Celebrex and Bextra had associated cardiovascular risks, that such risks would be considered material by investors, and that defendants nonetheless misrepresented and actively concealed these risks," she wrote.
The plaintiffs are led by the Teachers' Retirement System of Louisiana and a class was certified on July 5, 2012.
Swain scheduled a final pre-trial conference for July 12 and directed both sides to meet with a federal magistrate judge or an outside mediator to work on a settlement before then.
Pfizer said in a statement: "We appreciate the court's decision narrowing the claims, and look forward to presenting our case at trial."
A lawyer for the plaintiffs did not immediately respond to a request for comment.
Concerns about the safety of Celebrex and Bextra began to mount following the release of medical studies in late 2004, when rival Merck & Co withdrew its own Vioxx drug from the market because of associated cardiovascular risks.
Celebrex sales totaled $3.3 billion and Bextra sales totaled $1.29 billion in 2004.
But Pfizer pulled Bextra from the U.S. market in April 2005 at the recommendation of the U.S. Food and Drug Administration, and sales of Celebrex fell by nearly half that year.
Then in 2009, Pfizer agreed to pay $2.3 billion to settle a U.S. Department of Justice probe into the marketing of Bextra and other drugs.
The New York-based company still sells Celebrex, which is intended to treat arthritis pain and inflammation, as well as acute pain, and whose sales totaled $2.72 billion last year.
Earlier this month, Pfizer won a patent extension giving it marketing exclusivity over the drug, whose chemical name is celecoxib, until December 2015.
The lawsuit covers investors who bought Pfizer stock between October 31, 2000 and October 19, 2005, a period in which the company's share price fell by roughly half and its market value tumbled by well over $100 billion.
Several big investors, including the California pension funds CalPERS and Calstrs, "opted out" of the class last year, enabling them to sue on their own.
Pfizer bought Pharmacia Corp, which originally developed Celebrex and Bextra, in April 2003.
Pfizer shares closed up 22 cents at $28.86 on the New York Stock Exchange. Swain released her opinion after U.S. markets closed.
The case is In re: Pfizer Inc Securities Litigation, U.S. District Court, Southern District of New York, No. 05-md-01688.
(Reporting by Jonathan Stempel in New York; Editing by Carol Bishopric and Andre Grenon)