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.)