http://www.fiercepharmamanufacturin...lant-problems-are-nearly-wrapped-a/2014-11-20
Hospira says shareholder suits tied to its plant problems are nearly wrapped up--again
November 20, 2014 | By Eric Palmer
In March, Hospira ($HSP) announced it had reached a $60 million agreement to settle a three-year-old lawsuit that said investors had been kept in the dark about the quality problems at its manufacturing operations that led to FDA warning letters and shaved investments. But another suit was filed last June, and now the Lake Forest, IL, company says it has been rolled into the settlement.
As part of the settlement, the company agreed to make changes so that executives in charge of quality will meet regularly with board members, as well as strengthening its insider trading policy for senior executives.
In recent filings with the Securities and Exchange Commission, the drugmaker said a federal judge has given preliminary approval for the settlement and that a final hearing has been set for Jan. 23 of next year. The company has said that insurance is expected to pick up most of the cost.
It did not say whether the additional litigation would add to the settlement cost. The new agreement does call for Hospira to pay attorneys in litigation filed in Illinois up to $2.3 million, and attorneys in the case filed in June in Delaware up to $330,000. It also agreed to an arrangement for the attorneys to apply to the court for incentive awards of up to $3,000 per plaintiff. All of this was hammered out with a mediator.
A spokesperson could not be reach today for comment. In an earlier statement, the company said it did not believe it had done anything wrong but was settling to avoid the disruption of an extended legal battle.
The initial litigation accused the maker of sterile injectable drugs of skimping on quality when it launched its "Project Fuel" plan in 2009 with the idea that it would boost shareholder value by reducing its workforce and some operating units. Instead, the lawsuit claimed, it hurt quality and eventually cost investors. Hospira's shares fell 21% following a third-quarter 2011 announcement that it was cutting its earnings projections in the face of FDA actions, the suit said.
Problems at Hospira's massive Rocky Mount, NC, plant were first noted in a warning letter in 2010. The company launched a major overhaul of its U.S. manufacturing network including plants in Austin, TX; Clayton, NC; and Boulder, CO, in addition to the Rocky Mount facility, investing more than $375 million. It has added to its quality-control management but continues to struggle with quality issues. Last year, the company received a warning letter for a plant in India. In October, the FDA filed a warning letter for a Hospira plant in Australia. More recently, the company has reported continued progress at Rocky Mount, in which it invested more than $200 million, as well as saying it is resolving issues at the plant in India.
Hospira says shareholder suits tied to its plant problems are nearly wrapped up--again
November 20, 2014 | By Eric Palmer
In March, Hospira ($HSP) announced it had reached a $60 million agreement to settle a three-year-old lawsuit that said investors had been kept in the dark about the quality problems at its manufacturing operations that led to FDA warning letters and shaved investments. But another suit was filed last June, and now the Lake Forest, IL, company says it has been rolled into the settlement.
As part of the settlement, the company agreed to make changes so that executives in charge of quality will meet regularly with board members, as well as strengthening its insider trading policy for senior executives.
In recent filings with the Securities and Exchange Commission, the drugmaker said a federal judge has given preliminary approval for the settlement and that a final hearing has been set for Jan. 23 of next year. The company has said that insurance is expected to pick up most of the cost.
It did not say whether the additional litigation would add to the settlement cost. The new agreement does call for Hospira to pay attorneys in litigation filed in Illinois up to $2.3 million, and attorneys in the case filed in June in Delaware up to $330,000. It also agreed to an arrangement for the attorneys to apply to the court for incentive awards of up to $3,000 per plaintiff. All of this was hammered out with a mediator.
A spokesperson could not be reach today for comment. In an earlier statement, the company said it did not believe it had done anything wrong but was settling to avoid the disruption of an extended legal battle.
The initial litigation accused the maker of sterile injectable drugs of skimping on quality when it launched its "Project Fuel" plan in 2009 with the idea that it would boost shareholder value by reducing its workforce and some operating units. Instead, the lawsuit claimed, it hurt quality and eventually cost investors. Hospira's shares fell 21% following a third-quarter 2011 announcement that it was cutting its earnings projections in the face of FDA actions, the suit said.
Problems at Hospira's massive Rocky Mount, NC, plant were first noted in a warning letter in 2010. The company launched a major overhaul of its U.S. manufacturing network including plants in Austin, TX; Clayton, NC; and Boulder, CO, in addition to the Rocky Mount facility, investing more than $375 million. It has added to its quality-control management but continues to struggle with quality issues. Last year, the company received a warning letter for a plant in India. In October, the FDA filed a warning letter for a Hospira plant in Australia. More recently, the company has reported continued progress at Rocky Mount, in which it invested more than $200 million, as well as saying it is resolving issues at the plant in India.
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