Pfizer to Pay $835 Million in Asbestos Claims

Drugmaker Pfizer says it will pay $430 million to settle asbestos personal injury claims against a subsidiary, Quigley Co. In addition, Pfizer will contribute $405 million to a trust intended to compensate future claimants.

To account for the cost, Pfizer plans to take a $229 million after-tax charge against earnings in the third quarter--the first of several charges to come.

Acquired in 1968 when Pfizer was a more diversified company, Quigley made powdered insulation containing what Pfizer says were small amounts of chrysotile asbestos. The insulation, which the company stopped selling in the early 1970s, was used on pipes, boilers, and furnaces. As of the end of July, Pfizer and Quigley were named as defendants in 171,611 lawsuits, Pfizer says. Quigley's business since 1982 has been to manage its asbestos litigation.

Quigley will file a reorganization plan in U.S. Bankruptcy Court for the Southern District of New York. That plan contains an agreement, between Pfizer and attorneys representing more than 80% of individuals with claims, that provides the $430 million settlement.

The plan will also establish a trust for future claims. If the court and 75% of claimants approve, the reorganization plan calls for a permanent injunction that will channel all future asbestos claims to the trust. Pfizer will fund the trust over a 40-year period through a note and $100 million in insurance.