Pfizer unit hit with record fine for misbranding

WASHINGTON, D.C.—The U.S. District Court, District ofMassachusetts, recently imposed $1.3 billion in criminal penalties on PfizerInc. unit Pharmacia & Upjohn Co. for fraudulently promoting the drugBextra, which was withdrawn from the market in 2005 because of safety concerns.

The payment is part of a previously announced $2.3 billionsettlement with the U.S. Department of Justice (DOJ) over marketing practicesfor Bextra and other drugs. It is the largest health care fraud settlement inthe history of the DOJ, and will resolve criminal and civil liability arisingfrom the illegal promotion of certain pharmaceutical products, the departmentannounced.

Under the provisions of the Food, Drug and Cosmetic Act, acompany must specify the intended uses of a product in its new drug applicationto U.S. Food and Drug Administration (FDA). Once approved, the drug may not bemarketed or promoted for so-called "off-label" uses—i.e., any use not specifiedin an application and approved by FDA.

According to the court, Pfizer promoted the sale of Bextrafor several uses and dosages that the FDA specifically declined to approve dueto safety concerns. The company will pay a criminal fine of $1.195 billion, thelargest criminal fine ever imposed in the U.S. for any matter. Pharmacia &Upjohn will also forfeit $105 million, for a total criminal resolution of $1.3billion.

U.S. District Judge Douglas Woodlock in Boston imposed thecriminal penalty at a court proceeding on Oct. 16, the DOJ said.

"Today's landmark settlement is an example of the Departmentof Justice's ongoing and intensive efforts to protect the American public andrecover funds for the federal treasury and the public from those who seek toearn a profit through fraud. It shows one of the many ways in which federalgovernment, in partnership with its state and local allies, can help theAmerican people at a time when budgets are tight and health care costs areincreasing," Associate Attorney General Tom Perrelli said in a statement. "Thissettlement is a testament to the type of broad, coordinated effort amongfederal agencies and with our state and local partners that is at the core ofthe Department of Justice's approach to law enforcement."

Pfizer seems ready to put the legal troubles behind it. Aspart of the plea agreement, Pharmacia & Upjohn accepted responsibility forits illegal conduct, and the U.S. agreed that the company had fully cooperatedin the probe.

"Today's hearing is the last step in a process to bringfinal closure to the settlement agreement with the U.S. Department of Justicethat was announced on Sept. 2," Pfizer said in a statement. "This agreementallows us to continue to focus on what we do best—discovering and developinginnovative new medicines that improve patients' lives."

As part of the overall agreement with the DOJ announced inSeptember, Pfizer also agreed to pay about $1 billion to settle civilallegations concerning promotional practices related to Bextra, as well asantibiotic Zyvox (linezolid), antipsychotic Geodon (ziprasidone) and epilepsytreatment Lyrica (pregabalin). In January, Pfizer said it took a $2.3-billioncharge in late 2008 to resolve allegations involving Bextra and other drugs,but did not provide further details at the time.

As part of the settlement, Pfizer also has agreed to enterinto an expansive corporate integrity agreement with the Office of InspectorGeneral of the Department of Health and Human Services. That agreement providesfor procedures and reviews to be put in place to avoid and promptly detectconduct similar to that which gave rise to this matter.

The four-year investigation uncovered a range of practices,including kickback payments to doctors in the sale of nine other drugs, amongdrugs, among them the impotence drug Viagra and cholesterol pill Lipitor,officials said.

"This case exposed the total disregard a pharmaceuticalcompany had for patients' lives by putting profits above all else," Erika A.Kelton, a Washington, D.C.-based attorney with Phillips & Cohen LLP, whichrepresented the whistleblower who exposed Pfizer's off-label marketing ofBextra, said in a statement. "Pfizer created a corporate culture thatencouraged and rewarded those who ignored federal safety laws to boost sales.It took an insider to bring these violations to light and dedicated governmentofficials to stop them."

Following the news, shares of Pfizer fell slightly to $17.73in late trading.