September 3, 2009 - Pfizer Fined $2.3 Billion for Illegal Marketing

In the largest health care fraud settlement in history, pharmaceutical giant Pfizer must pay $2.3 billion to resolve criminal and civil allegations that the company illegally promoted uses of four of its drugs, including the painkiller Bextra, the U.S. Department of Justice announced Wednesday.

Besides Bextra, the drugs were Geodon, an anti-psychotic; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug. Once the Food and Drug Administration approves drugs, doctors can prescribe them off-label for any use, but makers can't market them for anything other than approved uses.

Pfizer subsidiary Pharmacia & Upjohn pleaded guilty to a felony violation for promoting off-label uses of Bextra, such as for pain relief after knee-replacement surgery.

At the FDA's request, Pfizer pulled Bextra off the market in April 2005 because risks, including a rare, sometimes fatal, skin reaction, outweighed benefits. It had been approved only for treating rheumatoid arthritis, osteoarthritis and menstrual pain.

As part of the settlement, Pfizer will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the USA for any matter, according to the Justice Department. Pharmacia & Upjohn must pay a $105 million criminal fine.

Pfizer also has agreed to pay $1 billion in civil damages and penalties to compensate federal health care programs for false claims.

The investigation resulted from whistle-blower lawsuits, the first of which was filed by former Pfizer sales representative John Kopchinski, 45.

When Kopchinski began questioning Pfizer's marketing of Bextra, Pfizer fired him, says his attorney. Of the $102 million that will be divided among six whistle-blowers, Kopchinski will receive $51.5 million.

Pfizer mentioned the settlement in January in filings with the Securities and Exchange Commission because the drugmaker had reserved $2.3 billion on last year's books to pay for it. But the lawsuits were sealed and the investigation was ongoing at the time, so no details could be released, Justice Department spokesman Charles Miller said Wednesday. Pfizer shares closed at $16.28, down 10 cents.

In a statement, Amy Schulman, Pfizer senior vice president and general counsel, said, "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."

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