CINCINNATI -- Pfizer Inc. said Wednesday a federal judge has approved the previously announced agreement for settlement of claims to patients with the Bjork-Shiley Convexo-Concave heart valve.
New York-based Pfizer said the agreement will cost it between $165 million and $215 million, on a pretax basis, and will be offset by proceeds from the sale of most of its Shiley Inc. assets earlier this year as well as expected insurance reimbursements.
Pfizer's Shiley unit, based in Irvine, Calif., was previously assigned to continue to handle the liabilities from the failures of its Bjork-Shiley Convexo-Concave heart valve, which has been implanted in 86,000 patients. About 450 of the valves have fractured so far, leading to nearly 300 deaths.
Pfizer, which made the announcement after the stock market closed, said the the costs of the settlement should not result in any material impact on 1992 earnings.
'We are pleased that the court agreed that this settlement is in the best interests of Shiley heart-valve recipients,' said William C. Steere Jr., Pfizer chairman and chief executive officer. 'Our primary concern has always been, and will continue to be, the welfare of people with Shiley C-C heart valves.'
Shiley withdrew the valve from the market in 1986 when federal regulators recalled it. It has been operating the Shiley Heart Valve Research Center, a program designed to establish a patient registry and assist recipients of potentially defective valves.
'Under this settlement, these people will receive important benefits in a timely manner as they continue their productive lives,' Steere said. But he added that the company still believes that claims involving patients with functioning heart valves are 'without merit.'
'This settlement will go far toward putting this complex and time- consuming litigation behind us and help to eliminate the disruptions and uncertainties involved in such litigation,' Steere said.
The settlement of the class-action suit, entered in U.S. District Court in Cincinnati by Judge S. Arthur Spiegel, covers an estimated 51, 000 people worldwide with functioning valves and their spouses.
The settlement consists of a $75 million fund for valve-related research, including development of techniques to identify valve recipients who may have significant risk of valve fracture, and for medical and other expenses they may incur for valve replacement surgery; and a medical consultation fund of $90 million to $140 million to provide payment for consultation with a cardiologist or other health- care provider.
The latter fund includes $10 million to be divided equally among all claimants who are spouses of patients with the valves.
The settlement also includes a guaranteed compensation program, which will be offered in the unlikely event of valve fracture.
Pfizer said in February it had completed the sale of most of Shiley to a subsidiary of the Italian conglomerate, Fiat Group, for $250 million.
The deal, first announced on Dec. 20, did not include seven product lines which Pfizer has said have 'unusual growth potential,' nor does it include Shiley as a corporate entity.
Shiley, started in the garage of engineer Donald Shiley in 1966 and sold to Pfizer in 1979, had about 1,100 employees and $170 million in annual revenues.
Attorney Stanley Chesley, who filed the suit, said Pfizer could wind up paying up to $300 million to $400 million under the settlement, depending on the number of patients whose heart valves must be removed.
In addition to the $75 million to support research that will help the individuals with the Shiley heart valves, Chesley said, 'Everybody will receive a sum of money and will qualify, based on expert panels, to receive the right to free (valve removal).'
Patients whose valves must be removed will receive additional compensation of $38,000 'whether they live in the United States or Ethiopia' and additional payments if the valve fractures or other problems occur in the hospital.