Pfizer to pay $2.3 Billion in Healthcare Fraud Settlement
Source: Reuters - Ransdell Pierson & Jeremy Pelofsky
Pfizer Inc. agreed on Wednesday to plead guilty to a U.S. criminal charge relating to promotion of its now-withdrawn Bextra pain medicine and will pay a record $2.3 billion to settle allegations it improperly marketed 13 medicines.
The settlement is the largest to date, topping the $1.42 billion Eli Lilly and Co. fine for off-label sales of its Zyprexa schizophrenia drug. The world's biggest drug maker was fined after being deemed a repeat offender in pitching drugs to patients and doctors for unapproved conditions. Pfizer had previously pleaded guilty in 2004 and agreed to pay $430 million to federal and state governments. Its marketing practices have been under federal supervision since then.
Wednesday's agreement was unveiled by the U.S. Department of Justice and Health and Human Services Department. The settlement includes a $1.3 billion criminal fine related to methods of selling Bextra and a $1 billion fine in civil payments.
Pfizer's marketing team promoted Bextra for acute pain, surgical pain and other unapproved uses, while its salesforce promoted the drug directly to doctors for those unapproved uses and dosages, according to the Justice Department. The company and Pharmacia also used advisory boards, consultant meetings and provided travel to lavish resorts to improperly promote Bextra to doctors and made false and misleading claims about the drug's safety and efficacy, the government said.
The settlement and guilty plea are not expected to significantly hurt Pfizer's ability to sell drugs, Morningstar analyst Damien Conover said, "however, it could send the wrong message at a time when you're making some pretty critical negotiations with the U.S. government on healthcare reform." Sandra Jordan, a former federal prosecutor and professor at the Charlotte School of Law in North Carolina, said: "Pfizer can survive this and pay the money. If it had fought the government at trial and lost, and a judge imposed a criminal sentence, that could have resulted in a corporate death penalty. That would have put Pfizer out of business."
On top of the $2.3 billion fine, Pfizer said it would take new charges of up to $33 million in the third quarter to resolve state civil consumer fraud allegations related to past promotions of Geodon.
Under the new settlement, Pfizer has entered into another Corporate Integrity Agreement with the U.S. Department of Health and Human Services, requiring it to adhere to a specified compliance program for five more years. The pact will require Pfizer to post on its Web site information about payments to doctors such as travel or honorarium, and set up a system for doctors to report questionable conduct by Pfizer's representatives.