Pfizer pays $2.3 billion for deceptive marketing practices

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The world's largest pharmaceutical company, Pfizer, and its subsidiary Pharmacia & Upjohn Company Inc. have agreed to pay $2.3 billion, the largest healthcare fraud settlement in the history of the Department of Justice, to resolve criminal and civil liability charges arising from the illegal promotion of certain pharmaceutical products, the Justice Department announced today.

According to the Department of Justice, Pharmacia & Upjohn Company has agreed to plead guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead.

Bextra is an anti-inflammatory drug that Pfizer pulled from the market in 2005. Under the provisions of the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called "off-label" uses. Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns. The company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the US for any matter. Pharmacia & Upjohn will also forfeit $105 million, for a total criminal resolution of $1.3 billion.

In addition, Pfizer has agreed to pay $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs—Bextra; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug—and caused false claims to be submitted to government healthcare programs for uses that were not medically accepted indications and therefore not covered by those programs.

The civil settlement also resolves allegations that Pfizer paid kickbacks to healthcare providers to induce them to prescribe these, as well as other, drugs. The federal share of the civil settlement is $668,514,830 and the state Medicaid share of the civil settlement is $331,485,170. This is the largest civil fraud settlement in history against a pharmaceutical company.

As part of the settlement, the Justice Department said that Pfizer also has agreed to enter into an expansive corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. That agreement provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to this matter.

The investigation was triggered by whistleblower lawsuits filed under the [qui tam] provisions of the False Claims Act that are pending in the District of Massachusetts, the Eastern District of Pennsylvania and the Eastern District of Kentucky. As a part of the resolution, six whistleblowers will receive payments totaling more than $102 million from the federal share of the civil recovery.

Tom Perrelli, associate Attorney General, said that today's landmark settlement is an example of the Department of Justice's ongoing and intensive efforts to protect the American public and recover funds for the federal treasury and the public from those who seek to earn a profit through fraud. “It shows one of the many ways in which federal government, in partnership with its state and local allies, can help the American people at a time when budgets are tight and healthcare costs are increasing," said Perrelli.

Kathleen Sebelius, secretary of Department of Health and Human Services, said that the “historic settlement” will return nearly $1 billion to Medicare, Medicaid and other government insurance programs, securing their future for the Americans who depend on these programs. "The Department of Health and Human Services will continue to seek opportunities to work with its government partners to prosecute fraud wherever we can find it. But we will also look for new ways to prevent fraud before it happens. Healthcare is too important to let a single dollar go to waste," Sebelius said.

In a company release, Amy W. Schulman, senior vice president and general counsel of Pfizer, 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, and we will continue to take appropriate actions to further enhance our compliance practices and strengthen public trust in our company.”

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