UPDATE: Pfizer In $2.3 Billion Drug-Marketing Case Settlement - DOJ
September 02 2009 - 1:25PM
Dow Jones News
Pfizer Inc. (PFE) has agreed to pay $2.3 billion to settle
criminal and civil charges that it illegally marketed the pain drug
Bextra and three other medicines for uses that weren't approved by
the Food and Drug Administration, the U.S. Justice Department
announced Wednesday.
The Justice Department said the agreement was the largest
health-care fraud settlement in the department's history.
Under the deal, Pfizer will pay $1.3 billion in criminal fines
and forfeitures and another $1 billion in civil fines, and Pfizer
subsidiary Pharmacia & Upjohn Co. will plead guilty to a felony
violation in connection with the improper promotion of Bextra.
Government officials said Pfizer also will enter into the most
comprehensive corporate integrity agreement that a drug company has
ever signed with the United States.
Among other things, the company will have to create a mechanism
in which doctors can report questionable conduct by Pfizer sales
representatives, and it must post information online about its
payments and gifts to doctors, officials said.
Senior Pfizer executives annually will have to certify that the
company is complying with the agreement.
Department lawyers said the penalties were steep because of
Pfizer's repeated run-ins with law enforcement.
"One of the factors we considered in calibrating this severe
punishment is Pfizer's recidivism," said Michael Loucks, acting
U.S. attorney in Massachusetts, whose office led the criminal
investigation.
"This is the fourth Pfizer settlement with the Justice
Department this decade," he noted.
Pfizer alerted investors in January that a settlement was near,
saying in an earnings release that it took a $2.3 billion charge in
the fourth quarter of 2008 to cover the cost of the settlement.
That announcement came the same day the New York drug maker said it
was acquiring New Jersey-based Wyeth in a $68 billion deal.
Amy W. Schulman, senior vice president and general counsel of
Pfizer, said in a statement Wednesday that the drug maker regretted
"certain actions taken in the past," but she said the company was
proud of "the action we've taken to strengthen our internal
controls and pioneer new procedures."
"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," Schulman said.
Pfizer pulled Bextra from the market in 2005 because the FDA
concluded its risks, including a rare but serious skin reaction,
outweighed its benefit.
The Justice Department said Pfizer promoted Bextra for several
uses and dosages that the FDA specifically declined to approve
because of safety concerns.
Pfizer also improperly promoted the anti-psychotic drug Geodon,
the antibiotic drug Zyvox and the anti-epileptic drug Lyrica, the
department said.
The FDA approved Bextra in 2001 to treat arthritis and menstrual
cramps. But the Justice Department said Pfizer also marketed the
drug to treat acute pain and surgical pain - at dosages above the
maximum levels approved by the FDA.
Government officials said Pfizer made false and misleading
claims about the drug's safety, pushed the drug on doctors for
unapproved uses and paid kickbacks to health-care providers who
prescribed Bextra and other Pfizer drugs.
Officials said Pfizer's allegedly fraudulent marketing caused
false claims to be submitted to government health-care programs
such as Medicaid and Medicare, which paid for unapproved uses of
Bextra and other drugs.
Pfizer said it expressly denies all of the government's civil
allegations, "with the exception that Pfizer acknowledges certain
improper actions related to the promotion of Zyvox."
The company also said Wednesday it will pay $33 million to 42
states and the District of Columbia to settle state civil consumer
protection allegations related to its past promotional practices
concerning Geodon. A charge in that amount will be recorded this
quarter.
Bextra's troubles began in 2004 when Vioxx, Merck & Co.'s
(MRK) popular non-steroidal painkiller somewhat similar to Bextra,
was withdrawn from the market after being linked to heart attacks.
That November, during a Senate hearing on Vioxx, a whistleblower
from the FDA testified that he believed five other prominent drugs
should also be withdrawn because of safety issues, and named Bextra
as one.
His words sent analysts and brokers who had jammed into the
hearing room running to their phones.
Pfizer's other non-steroidal painkiller, Celebrex, hasn't been
withdrawn, but last October the company agreed to pay $894 million
to settle a series of state, personal-injury and class-action
lawsuits involving both drugs.
-By Brent Kendall, Dow Jones Newswires; 202-862-9222;
brent.kendall@dowjones.com
(Alicia Mundy and Peter Loftus contributed to this report.)