US justice department says drug company will pay civil and criminal penalty over unlawful promotions
Pfizer, the world's largest drug maker, will pay a record $2.3bn (£1.4bn) civil and criminal penalty over unlawful prescription drug promotions, the US justice department announced today.
The department said the $2.3bn settlement included a $1.2bn criminal fine, the largest criminal fine in US history. The agreement also included a criminal forfeiture of $105m.
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. The company wined and dined doctors and sent them on exotic trips to induce them to prescribe its drugs, they said.
"Combating healthcare 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 Pfizer had promoted four prescription drugs, including a painkiller, Bextra, as treatments for medical conditions – but, crucially, the ailments were not ones for which those drugs had been federally approved.
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.
Bextra, one of a class of painkillers known as Cox-2 inhibitors, was pulled from the US market in 2005 amid mounting evidence it raised the risk of heart attack, stroke and death.
A Pfizer subsidiary, Pharmacia and Upjohn, which was acquired in 2003, has entered an agreement to plead guilty to one count of felony misbranding. The criminal case applied only to Bextra.
The $1bn in civil penalties was related to Bextra and a number of other medicines. A portion of the civil penalty will be distributed to 49 states and the District of Columbia, according to agreements with each state's Medicaid program.
"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.
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 $2.3bn over allegations it had marketed the pain reliever Bextra and possibly other drugs for medical conditions different than their approved use. The civil settlement announced today also covered Pfizer's promotions of three other drugs: blockbuster nerve pain and epilepsy treatment Lyrica, schizophrenia medicine Geodon, antibiotic Zyvox and nine other medicines. Pfizer said the agreement with the justice department resolves the investigation into promotion of all those drugs, plus several related whistleblower lawsuits.
Under terms of the settlement, Pfizer must pay $1bn 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 $66m, 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 healthcare professionals to persuade them to prescribe the company's drugs for patients in taxpayer-funded programs."
Pfizer spokesman Chris Loder confirmed today that the $2.3bn 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.
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 $68bn. 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.