Pfizer Inc. and subsidiary Pharmacia & Upjohn Company Inc. will pay $2.3 billion—the largest healthcare fraud settlement in U.S. history—to resolve criminal and civil charges brought forward in several whistleblower law suits for illegally promoting the off-label use of its drugs, the Justice Department announced today.
In addition, Pharmacia & Upjohn Company will plead guilty to a felony charge for misbranding Bextra, an anti-inflammatory drug that Pfizer pulled from the market in 2005. Under the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its application to FDA, and that drug may not be marketed for off-label uses. Prosecutors say Pfizer ignored the law and promoted Bextra for uses and dosages that the FDA specifically declined to approve due to safety concerns.
As a result, Pfizer will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States 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 it illegally promoted four drugs – Bextra; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug—which reportedly prompted false claims to government healthcare programs for uses that were not medically accepted and, therefore, not covered.
The civil settlement also resolves claims that Pfizer paid kickbacks to healthcare providers to induce them to prescribe the drugs. The federal share of the civil settlement is $668.5 million and the state Medicaid share of the civil settlement is $331.4 million—the largest civil fraud settlement in U.S. history against a drug maker.
"Illegal conduct and fraud by pharmaceutical companies puts the public health at risk, corrupts medical decisions by healthcare providers, and costs the government billions of dollars," says Tony West, assistant attorney general for DOJ's Civil Division. "This civil settlement and plea agreement by Pfizer represent yet another example of what penalties will be faced when a pharmaceutical company puts profits ahead of patient welfare."
As part of the settlement, Pfizer will enter a corporate integrity agreement with the Office of Inspector General at HHS, with procedures in place to avoid or promptly detect future misconduct.
Pfizer General Counsel Amy W. Schulman says the settlements "bring final closure" for the drug maker. "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," Schulman says. "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."
Mike Loucks, acting U.S. attorney for Massachusetts, says Pfizer had been skirting the law for a long time and that the massive fines fit the crimes. "At the very same time Pfizer was in our office negotiating and resolving the allegations of criminal conduct by its then newly acquired subsidiary, Warner-Lambert, Pfizer was itself in its other operations violating those very same laws," Loucks says. "Today's enormous fine demonstrates that such blatant and continued disregard of the law will not be tolerated."
Whistleblower lawsuits filed under the False Claims Act that are pending in Massachusetts, Pennsylvania, and Kentucky triggered this investigation. Six whistleblowers will receive payments totaling more than $102 million from the federal share of the civil recovery.