Bravado Could Come Back to Haunt Pfizer

William Federman, a class-action attorney in Oklahoma City, called Pfizer's position an "aggressive" one that could bring legal risks. But for now, he said, Pfizer probably still believes that risk is worth taking.

"It's just basic economics," he concluded.

Celebrex, a multibillion-dollar blockbuster for Pfizer, ranks as the most prescribed arthritis pain-relief drug in the world. But some have already started imagining Pfizer without the popular painkiller.

Under a worst-case scenario, Goldman Sachs analyst James Kelly believes that Pfizer's earnings could drop enough to wipe $5.25 from Friday's opening stock price of $28.98 a share. The stock was down $4.10 halfway through the session.

"The market's reaction to this news suggests that investors are assuming that Celebrex and Bextra (a similar painkiller) will be pulled from the market, which may be too pessimistic a view," wrote Morgan Stanley analyst Jami Rubin. "However, it does not appear that investors are assuming any significant legal exposure" for the company.

But Dollarhide, for one, can see the lawsuits coming -- especially if Pfizer knew about Celebrex's cardiac risks but proclaimed the drug safe anyway. Critics have already accused Merck of covering up dangers associated with its own Vioxx.

Both Celebrex and Vioxx, along with Pfizer's Bextra, belong to a new class of painkillers known as COX-2 inhibitors that hit the market with considerable fanfare five years ago. The drugs supposedly offer pain relief without the same stomach bleeding caused by cheaper, over-the-counter alternatives like ibuprofen. But critics have questioned both the effectiveness and the safety of the COX-2 drugs almost from the beginning.

Public Citizen, a nonprofit consumer watchdog organization, began placing all of the COX-2 drugs on its "worst pills" list years ago. The group officially declared the so-called super aspirins "super disasters" after Merck's recall of Vioxx in September.