Pfizer Pays Record Settlement in Marketing-Violation Case

Pfizer Inc. will pay $2.3 billion in a massive settlement of civil and criminal charges for illegally promoting prescription drugs for unapproved indications and bribing physicians with kickbacks, the U.S. Department of Justice (DOJ) announced on September 2.

Federal prosecutors alleged that Pfizer and Pharmacia and Upjohn, a company Pfizer acquired, promoted four of their drugs—valdecoxib, ziprasidone, pregabalin, and linezolid—to health care professionals for unapproved indications and thus violated the federal False Claims Act.

In addition to promoting off-label indications, a practice prohibited by the Food, Drug, and Cosmetic Act, Pfizer was alleged to have induced physicians to prescribe the company's products by flying them to resort locations under the guise of consultant meetings and giving them lavish gifts and entertainments.

Pharmacia and Upjohn pleaded guilty to a criminal charge for“ misbranding Bextra [valdecoxib] with the intent to defraud or mislead,” according to the DOJ announcement. Prosecutors alleged that valdecoxib, a nonsteroidal anti-inflammatory medication, was illegally promoted for indications and dosages that the Food and Drug Administration (FDA) had previously declined to approve because of safety concerns.

Valdecoxib was withdrawn from the market in 2005 at the FDA's request as evidence emerged about serious and potentially fatal adverse events associated with the drug, including cardiovascular events and severe skin reactions. Valdecoxib was initially approved in 2001. Its annual sales in 2004 amounted to $1.3 billion.

Federal authorities said this is the fourth settlement in the past decade between Pfizer and the government regarding Pfizer's unlawful marketing and promotional practices. In a previous case, Pfizer paid $450 million and pleaded to felony charges for illegally promoting off-label uses of gabapentin (Neurontin)—an activity involving Warner-Lambert, another pharmaceutical company it had acquired.

U.S. Attorney for the District of Massachusetts Mike Loucks said Pfizer was illegally marketing the drugs named in this lawsuit during the same time it was negotiating a settlement for the same charges in the gabapentin case.

The DOJ has resolved a string of similar cases with other pharmaceutical companies in recent years. In January, Eli Lilly and Co. reached a $1.41 billion settlement for off-label marketing of olanzapine, the largest such settlement before the current Pfizer case.

Pfizer had already released some information about the settlement figure eight months ago as it reported a huge markdown on its 2008 fourth-quarter profit. It came at the same time that Pfizer announced plans to acquire Wyeth, another major pharmaceutical company, for $68 billion.

The settlement includes a criminal fine of over $1.1 billion for the felony charge, which is the largest criminal fine in DOJ history, said Associate Attorney General Thomas Perelli at a press conference. About $1 billion will go to Medicare, Medicaid, and other government-funded health care programs because these programs had paid for the drugs under false claims.

The DOJ said it began investigating Pfizer's marketing practice after whistleblower lawsuits were filed against the company in Pennsylvania, Massachusetts, and Kentucky in 2003. The six whistleblowers will receive a total of $102 million from the settlement. ▪