Wednesday, August 13, 2008

Drug Companies Don't Want to Disclose Lawsuit Defense Costs

Several drug firms sent a letter last week accounting-rule lawmakers, arguing that mandatory disclosure of estimated costs of ongoing litigation is expensive, not helpful and won't provide worthwhile information for investors.

Costs estimating of ongoing litigation is "highly subjective, subject to huge swings as underlying assumptions change, and unlikely to provide financial statement users with meaningful or reliable information," the companies said in a letter to the Financial Accounting Standards Board. Link here.

Currenly, drug companies only have to disclose the estimated costs when they believe it is probable a case will be lost.