2nd UPDATE: Pfizer In $2.3 Billion Drug-Marketing Case Settlement
September 02 2009 - 3:34PM
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 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.)