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Pharmaceutical companies object to proposed lawsuit disclosure

Pharma Compliance Alert, August 20, 2008

A proposal by the Financial Accounting Standards Board (FASB) has drawn fire from at least six pharmaceutical companies. The companies complain the proposal would require more disclosures related to lawsuits. Furthermore, the FASB proposal also asks pharmaceutical companies to be more specific about damages they might have to pay.

Eli Lilly, Johnson & Johnson, Merck, Novartis, Pfizer, and Wyeth all signed a letter to FASB expressing their concerns about the proposal. The companies said the proposal could undermine attorney-client privilege and tilt the litigation balance in favor of disclosing companies’ litigation adversaries. The companies are currently defending against tens of thousands of product liability lawsuits.

• Additional analysis of the effectiveness of current requirements
• Substantial revision of disclosure requirements in the FASB’s “Exposure Draft”

FASB is a private organization that establishes standards used in preparing financial reports that are officially recognized by the SEC and the American Institute of Certified Public Accountants. The organization posted the suggested change on its Web site with a package of related proposals.

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