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Pfizer Pays Record $2.3 Billion Settlement Over Illegal Marketing Charges

Company accused of misleading customers on Bextra branding

September 2, 2009

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Pharmaceutical giant Pfizer has agreed to pay $2.3 billion in a settlement to the United States government and multiple state governments over charges the company illegally marketed its anti-inflammatory drug Bextra. The settlement includes a nearly $1.3 billion criminal fine, the largest of its kind in history.

Pfizer agreed to a guilty plea over the charge of "felony misbranding" under the Food, Drug, and Cosmetic Act. Under the auspices of the Act, a company must specify the uses and dosage levels of any drug it intends to market, and is forbidden from then marketing the drug for off-brand uses.

The Department of Justice said Pfizer deliberately marketed Bextra for other uses that the U.S. Food and Drug Administration (FDA) had prohibited due to safety concerns.

Numerous studies indicated that Bextra could increase the risk of heart attack and stroke in users, particularly those who had already suffered heart attacks or coronary bypasses. Pfizer had initially claimed that Bextra was safe.

In addition to the criminal fine, Pfizer will pay $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted Bextra and several other drugs--Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug--and caused false claims to be submitted to government health care programs for uses not covered by the programs' rules.

The civil settlement also resolves allegations that Pfizer paid kickbacks to health care providers to induce them to prescribe the drugs.

"This historic settlement will return nearly $1 billion to Medicare, Medicaid, and other government insurance programs, securing their future for the Americans who depend on these programs," said Kathleen Sebelius, Secretary of Department of Health and Human Services. "The Department of Health and Human Services will continue to seek opportunities to work with its government partners to prosecute fraud wherever we can find it. Health care is too important to let a single dollar go to waste."

Among the states that will receive payments under the settlement are New York ($66 million) and California ($34.8 million). New York Attorney General Andrew Cuomo said that "Pfizer ripped off New Yorkers and taxpayers across the country to pad its bottom line."

"Pfizer paid illegal kickbacks in the form of cash, high-priced dinners and weekend getaways to induce physicians to prescribe its drugs," said California Attorney General Edmund G. Brown.

Brown also noted that Pfizer will pay California $2.7 million in a separate settlement over its marketing of Geodon.

Blowing the whistle

The Pfizer investigation began with a whistleblower lawsuit filed by former employee John Kopchinski. Kopchinski, a West Point graduate and Gulf War veteran, was hired by former Pfizer CEO Edward Pratt in 1992 to work as a sales representative for the company.

While there, Kopchinski said he witnessed or discovered numerous examples of Pfizer and its subsidiary Pharmacia deliberately misleading or bribing physicians to prescribe Bextra in much higher doses than what was considered medically safe.

The complaint filed by Phillips & Cohen, the Washington, D.C. law firm representing Kopchinski, alleged that physicians would receive all-expense-paid trips sponsored by Pfizer and Pharmacia, complete with honoraria, in order to hear thinly disguised sales pitches on promoting and marketing Bextra to patients.

Under the terms of the settlement, Kopchinski will receive $51.5 million as part of the Federal False Claims Act, plus an undetermined reward under state false claims laws.

"The past six years have been very stressful," Kopchinski said. "I'm glad it's finally over."

"Organized crime"

Not everyone is satisfied with the verdict, however. Dr. Sidney Wolfe, director of Public Citizen's Health Research Group, said the settlement merely proves there is competition in the "organized crime" of the pharmaceutical industry.

"The U.S. pharmaceutical industry, long one of the most profitable in the country...has engaged in an unprecedented amount of criminal activity in the past decade, all aimed at increasing sales, often by illegally promoting drugs for diseases for which evidence that benefits outweigh harm is lacking," Wolfe said.

"Unfortunately, the ever-escalating fines are unlikely to stop drug companies from continuing to bribe doctors because they represent just a fraction of drug company profits and no one has gone to jail," Wolfe added. "Until corporate titans are forced to fork over a much larger proportion of their illegally gotten profits and are put behind bars, nothing will change."

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