Pfizer, the drugs giant, has been ordered to pay $2.3 billion (£1.4 billion), America’s largest healthcare fraud settlement, for making false claims about four prescription medications.
The payout — comprising a $1.3 billion criminal fine and a $1 billion civil fine — includes $102 million to be divided between 11 whistleblowers. All thought to be former employees, they became so concerned that the company was asking them to break the law and mis-sell the drugs — Bextra, Geodon, Zyvox and Lyrica — that they reported it to the authorities.
Mike Loucks, the acting US Attorney for the District of Massachusetts, who led the criminal investigation of Bextra, said he hoped that the case would send a powerful message to corporate America that “blatant and continued disregard of the law” would not be tolerated. “The size and seriousness of this resolution ... reflect the seriousness and scope of Pfizer’s crimes.”
To promote its drugs, Pfizer invited doctors to consultant meetings at resort locations, paying their expenses and providing perks. “They were entertained with golf, massages and other activities,” Mr Loucks said.
Pfizer had pleaded guilty in 2004 to an earlier criminal charge of improper sales tactics and its marketing practices have been under federal supervision since then. Mr Loucks said that at the same time that the company was resolving the allegations of criminal conduct with the authorities in that case, its other operations were “violating those very same laws”.
Tony West, the Assistant Attorney- General, said: “This civil settlement and plea agreement by Pfizer represents yet another example of what penalties will be faced when a pharmaceutical company puts profits ahead of patient welfare.” Of the overall $2.3 billion fine, nearly $1 billion will be returned to Medicare, Medicaid and other government health-insurance programmes.
Pfizer disclosed in January that it had taken a $2.3 billion charge in the fourth quarter of 2008 over allegations connected to Bextra and possibly other drugs, but details were not available then. Pfizer shares fell slightly yesterday to $16.25.
The case centres on the company’s use of “off-label promotion”, in which it marketed the four prescription medications for treatments that did not have the approval of the US Food and Drug Administration. Bextra, used to treat joint pain, swelling and menstrual cramps, was withdrawn from the market in 2005 by Pfizer after it was shown to have adverse side-effects. Geodon is an anti-psychotic drug, Zyvox an antibiotic and Lyrica an anti-epileptic drug.
While the use of so-called “offlabel” drugs for medical conditions is not uncommon, drug manufacturers are not allowed to market them in this way. As part of the settlement, Pharmacia & Upjohn, Pfizer’s subsidiary, agreed to plead guilty to misbranding Bextra with the intent to defraud or mislead.
Amy Schulman, senior vice-president and general counsel of Pfizer, said that the company regretted its past actions, adding that the agreement had now resolved all “material pending matters” with the US Department of Justice.
“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,” Ms Schulman said.
Last October Pfizer agreed to pay $894 million to settle thousands of personal injury claims relating to Bextra and Celebrex, the arthritis treatment that is another of its drugs.
Scott Simmer, of Blank Rome, the Washington-based legal firm that represented three of the whistleblowers said his clients — David Farber, Mark Westlock and Casey Schildhauer — were heroes for taking on the world’s largest drugs maker. “They took a huge risk for themselves and their families. Each came forward only reluctantly. This should send a very powerful message to companies that they should play by the rules.”