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 agreement, the largest health-care fraud settlement in the department's history, calls for Pfizer to pay $1.3 billion in criminal fines and forfeitures and another $1 billion in civil fines. As part of the settlement, Pfizer subsidiary Pharmacia & Upjohn Co. will plead guilty to a felony violation in connection with the improper promotion of Bextra.

Pfizer also will enter into a monitoring agreement that government officials described as unprecedented. The company will have to create a mechanism doctors can use to report questionable conduct by Pfizer sales representatives, and it must post information online about its payments and gifts to doctors.

Any violations of the agreement could lead to additional fines and possible exclusion from participating in government health-care programs.

Along with Bextra, authorities alleged Pfizer improperly promoted anti-psychotic drug Geodon, antibiotic drug Zyvox and epilepsy drug Lyrica.

Authorities also said the drug maker paid kickbacks - including entertainment, cash, travel and meals - to doctors who prescribed those four drugs and nine other Pfizer offerings, including cholesterol drug Lipitor and impotence drug Viagra.

Department lawyers said the penalties were steep because Pfizer is a repeat offender, with four Justice Department settlements this decade.

"One of the factors we considered in calibrating this severe punishment is Pfizer's recidivism," said Michael Loucks, the U.S. attorney in Massachusetts.

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 had taken corrective actions.

Schulman said the settlement gave Pfizer "final closure to significant legal matters."

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.

The FDA approved Bextra in 2001 to treat arthritis and menstrual pain. 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, and pushed the drug on doctors for unapproved uses.

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.

The government's investigation was spurred by several whistle-blower complaints alleging misconduct by Pfizer. As part of the settlement, six whistle-blowers - five Pfizer employees and a doctor in Pennsylvania - will receive payments totaling $102 million.

Pfizer said it expressly denies all of the government's civil allegations, except it acknowledged "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 whistle-blower from the FDA testified that he believed five other prominent drugs should also be withdrawn because of safety issues, and named Bextra as one.

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.)