Pfizer to pay $2.3B to settle fraud case

WASHINGTON — The Justice Department on Wednesday announced the largest health-care-fraud settlement in its history, in which U.S. pharmaceutical company Pfizer agreed to pay $2.3 billion for fraudulent marketing and a wide array of other potentially illegal acts.

The settlement ends years of investigation by federal prosecutors in several states, including Washington, into Pfizer and its subsidiary Pharmacia & Upjohn, according to Justice Department documents and officials. Primarily, it resolves criminal and civil liability arising from Pfizer's illegal promotion of certain pharmaceutical products, including the anti-inflammatory drug Bextra.

As part of the settlement, Pfizer and its subsidiary will pay a $1.3 billion criminal fine, and Pfizer agreed to pay $1 billion to resolve accusations under the civil False Claims Act that the company illegally promoted four drugs — Bextra, anti-psychotic drug Geodon, antibiotic Zyvox and anti-epileptic drug Lyrica — and caused false claims to be submitted to government health-care programs for uses that were not medically accepted indications and therefore not covered by those programs.

The civil settlement also resolves accusations that Pfizer paid kickbacks to health-care providers to encourage them to prescribe those and other drugs. As part of its illegal marketing, Pfizer invited doctors to consultant meetings at resorts, paying their expenses and providing perks, prosecutors said. "They were entertained with golf, massages and other activities," said Mike Loucks, the U.S. attorney in Massachusetts.

Loucks said that even as Pfizer was negotiating deals on past misconduct, it was continuing to violate the same laws with other drugs.

Authorities called Pfizer a repeat offender, noting it is the company's fourth such settlement of government charges in the past decade.

The federal share of the civil settlement is $669 million, and state Medicaid programs will collect $331 million.

Washington Attorney General Rob McKenna said the state's share of the nationwide settlement is $9 million. Dawn Cortez, an assistant attorney general who heads the state's Medicaid Fraud Control Unit, said patients in Washington used less of the medications involved in the suit than in some other states and that is the principal reason Washington's share is relatively small.

To prevent backsliding this time, Pfizer's conduct will be specially monitored by the Health and Human Services Department inspector general for five years.

The head of the Justice Department, Attorney General Eric Holder, did not participate in the record settlement, because he had represented Pfizer on these issues while in private practice.

Pfizer's top lawyer, Amy Schulman, said the settlement brings "final closure to significant legal matters and help to enhance our focus on what we do best — discovering, developing and delivering innovative medicines."

The government said the company promoted the four prescription drugs as treatments for medical conditions different from those that federal regulators had approved the drugs to treat.

Use of drugs for "off-label" medical conditions is not uncommon, but drug manufacturers are prohibited from marketing drugs for uses not approved by the Food and Drug Administration. Authorities said Pfizer's salesmen and women created phony doctor requests for medical information to send unsolicited information to doctors about unapproved uses and dosages.

Bextra, for instance, was approved for arthritis, but Pfizer promoted it for acute pain and surgical pain, and in dosages above the approved maximum. In 2005, Bextra, one of a class of painkillers known as COX-2 inhibitors, was pulled from the U.S. market amid mounting evidence it raised the risk of heart attack, stroke and death.