Pfizer Inc. To Pay Largest Criminal Fine In U.S. History For Health Care Fraud

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Pfizer to pay record $2.3B penalty over promotions

WASHINGTON – Pfizer Inc., the world's largest drug maker, will pay a record $2.3 billion civil and criminal penalty over unlawful prescription drug promotions, the Justice Department announced Wednesday.

The department said the $2.3 billion settlement included a $1.2 billion criminal fine, the largest criminal fine in U.S. history. The agreement also included a criminal forfeiture of $105 million.

"Combating health care fraud is one of this administration's top priorities," Associate Attorney General Thomas Perelli said in announcing the settlement. He said it illustrates ways the department "can help the American public at a time when budgets are tight and health care costs are rising."

The overall settlement is the largest ever paid by a drug company for alleged violations of federal drug rules.

The government said the company promoted four prescription drugs, including the pain killer Bextra, as treatments for medical conditions different than those the drugs had been approved for by federal regulators.

Use of drugs for so-called "off-label" medical conditions is not uncommon, but drug manufacturers are prohibited from marketing drugs for uses that have not been approved by the Food and Drug Administration.

A Pfizer subsidiary, Pharmacia and Upjohn Inc., which was acquired in 2003, has entered an agreement to plead guilty to one count of felony misbranding.

"These agreements bring final closure to significant legal matters and help to enhance our focus on what we do best — discovering, developing and delivering innovative medicines to treat patients dealing with some of the world's most debilitating diseases," said Amy W. Schulman, senior vice president and general counsel of Pfizer.

Authorities said Pfizer's salesmen and women created phony doctor requests for medical information in order to send unsolicited information to doctors about unapproved uses and dosages.

Justice officials discussed details of the deal at a news conference with FBI, federal prosecutors, and Health and Human Services Department officials.

In financial filings in January, the company had indicated that it would pay $2.3 billion over allegations it had marketed the pain reliever Bextra an possibly other drugs for medical conditions different than their approved use. The settlement announced Wednesday also covered Pfizer's promotions of three other drugs: Geodon, an anti-psychotic, Zyvox, an antibiotic, and Lyrica, an anti-epileptic.

Under terms of the settlement, Pfizer must pay $1 billion to compensate Medicaid, Medicare, and other federal healthcare programs. Some of that money will be shared among the states: New York, for example, will receive $66 million, according to the state's attorney general, Andrew Cuomo.

"Pfizer ripped off New Yorkers and taxpayers across the country to pad its bottom line," Cuomo said. "Pfizer's corrupt practices went so far as sending physicians on exotic junkets as well as wining and dining health care professionals to persuade them to prescribe the company's drugs for patients in taxpayer-funded programs."

Pfizer spokesman Chris Loder confirmed Wednesday that the $2.3 billion charge to the company's earnings had been taken in the fourth quarter of 2008.

"No additional charge to the company's earnings will be recorded in connection with this settlement," he said.

In her statement, Schulman said: "We regret certain actions taken in the past, but are proud of the action we've taken to strengthen our internal controls and pioneer new procedures so that we not only comply with state and federal laws, but also meet the high standards that patients, physicians and the public expect from a leading worldwide company dedicated to healing and better health."

"Corporate integrity is an absolute priority for Pfizer," she said, "and we will continue to take appropriate actions to further enhance our compliance practices and strengthen public trust in our company."

When Pfizer originally disclosed the settlement figure, it also announced plans to acquire rival Wyeth for $68 billion. That deal, which would bolster Pfizer's position as the world's top drug maker by revenue, is expected to close before year's end.

Shares of Pfizer were up 9 cents at $16.47 in early trading Wednesday.

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AP Business Writer Linda A. Johnson in Trenton, N.J. contributed to this report.

Pfizer to pay record $2.3B penalty over promotions - Yahoo! News

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"We regret certain actions taken in the past, but are proud of the action we've taken to strengthen our internal controls and pioneer new procedures so that we not only comply with state and federal laws, but also meet the high standards that patients, physicians and the public expect from a leading worldwide company dedicated to healing and better health."

That is such bs. This is certainly not the first time this has come up and they responded by getting worse.

YouTube - States Hold Pfizer Accountable for Dangerous Marketing

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From 2004

Pfizer to Pay $420 Million in Illegal Marketing Case

By KENNETH N. GILPIN
Published: Thursday, May 13, 2004

Pfizer Inc., the world's biggest drug company, has agreed to settle criminal and civil charges and pay fines of more than $430 million, the Justice Department and federal prosecutors in Massachusetts said today.

The settlement ends federal and various state investigations into the marketing of Neurontin, a drug that was originally approved for epilepsy but that rung up sales of billions of dollars in the last decade after doctors began prescribing it for an array of other maladies.

The settlement covers sales of Neurontin from 1994 through mid-2000, when it was sold by Parke-Davis, a subsidiary of the Warner-Lambert Company. Pfizer, which bought Warner-Lambert in June 2000, said in a statement on its Web site today that any misconduct had occurred before it acquired Warner-Lambert.

Still, Pfizer agreed to sign a ``corporate integrity'' agreement that allows for the monitoring of future marketing practices.

The settlement, announced in Washington by Associate Attorney General Robert D. McCallum Jr. and the United States Attorney for Massachusetts, Michael J. Sullivan, stems from a federal investigation of collusion among drug companies and doctors to bill government health programs for free samples given as promotions.

A lawsuit against Parke-Davis and Warner-Lambert was originally filed in 1996 by Dr. David Franklin, a former Parke-Davis medical liaison, who asserted that the company had used an illegal marketing plan to drive up sales of Neurontin. As part of today's settlement, Dr. Franklin will receive approximately $24.6 million of the civil penalty as a reward under federal whistle-blower statutes. The False Claims Act, as the law has been known since Congress passed it in 1863 as a tool against widespread fraud against the government by Civil War contractors, authorizes individuals to bring suits on behalf of the government and to receive as their reward a share of any recovery.

In his original lawsuit, Dr. Franklin charged that Warner-Lambert promoted the drug for relieving pain, headaches, bipolar disorder and other psychiatric illnesses. The company paid doctors to attend so-called ``consultants meetings,'' in which physicians received a fee for attending expensive dinners or conferences during which presentations about off-label uses of Neurontin were made.

In its statement, the Justice Department said that these events included ``lavish weekends and trips to Florida, the 1996 Atlanta Olympics and Hawaii.'' There was ``little or no'' significant consulting provided by the physicians at these events, the Justice Department statement said.

In his statement, Mr. Sullivan said: ``This illegal and fraudulent promotion scheme corrupted the information process relied upon by doctors in their medical decision making, thereby putting patients at risk.

``This scheme deprived federally funded Medicaid programs across the country of the informed, impartial judgment of medical professionals - judgment on which the program relies to allocate scarce financial resources to provide necessary and appropriate care to the poor.''

Once a drug is approved by the Food and Drug Administration, doctors can prescribe it for any use. But the promotion of drugs for so-called ``off-label uses'' is prohibited by the Food and Drug Cosmetic Act.

Under the provisions of the Food, Drug and Cosmetic Act, ``a company must specify the intended uses of a product in its new-drug application to the F.D.A.,'' the Justice Department said in a statement announcing the settlement. ``Once approved, the drug may not be marketed or promoted for so-called `off-label' uses - any use not specified in an application approved by the F.D.A.''

Recent studies indicate that more than 90 percent of Neurontin's sales are ``off label.'' Since 1995, sales of the drug have jumped, from $97.5 million that year to nearly $2.7 billion last year.

As part of the agreement, Warner-Lambert agreed to plead guilty to two counts of violating the Food, Drug & Cosmetic Act, and to pay a $240 million criminal fine.

In addition, Warner Lambert agreed to pay the government $83.6 million, plus interest, in civil damages for losses suffered by the Medicaid program as a result of Neurontin's fraudulent promotion.

To settle civil liability claims with the 50 states and the District of Columbia for losses state Medicaid programs suffered, Warner-Lambert agreed to pay $68.4 million, plus interest. And the company also agreed to pay an additional $38 million, plus interest, to the states to cover hard caused to consumers by the marketing scheme.

Last May, federal prosecutors in Boston filed a brief in support of Dr. Franklin's lawsuit.

Pfizer has been in settlement negotiations since then. In January, the company said it was taking a pretax charge of $427 million and $403 million after taxes to settle the negotiations.

Neurontin's basic patent expired 10 years ago. Pfizer has maintained that other patents protect the drug from generic competition for years to come.

Those claims are being contested in court, however, and many drug analysts say they expect to see generic drugs on the market later this year, or sometime in 2005.

Pfizer has a successor to Neurontin, called Lyrica, that is awaiting F.D.A. approval. In addition to epilepsy, the Lyrica application seeks approval of the drug for treatment of neuropathic pain and generalized anxiety disorder.

In early afternoon trading on the New York Stock Exchange, Pfizer shares were down 44 cents, at $35.27.


Pfizer to Pay $420 Million in Illegal Marketing Case - The New York Times