Pfizer agreed to pay $2.3 billion in a sweeping settlement of civil and criminal allegations regarding off-label marketing and payments to physicians promoting use of about a dozen of the drugmaker's products. Pfizer subsidiary Pharmacia & Upjohn Co., will plead guilty to a felony charge for misbranding the pain reliever Bextra, which was withdrawn from the market in 2005 amid safety concerns.
Pfizer agrees to a record $2.3 billion settlement
The sum is the largest the Justice Department has ever collected in a healthcare case. The company previously disclosed the charge to its 2008 earnings in its fourth-quarter report to investors in January. More than half the figure stems from the criminal charge against Pharmacia & Upjohn, which will pay a fine of $1.2 billion and forfeit another $105 million.
The remaining $1 billion resolves False Claims Act allegations that the company illegally promoted Bextra and three other drugs, as well as paid kickbacks to encourage providers to prescribe those drugs and nine others. About a third of that payment will go to state Medicaid programs. The settlement resolves several whistle-blower lawsuits filed in Kentucky, Massachusetts and Pennsylvania that triggered the investigation, and six whistle-blowers will receive about $102 million from the federal share. Such settlements do not constitute admissions of wrongdoing.
In a news conference announcing the resolution of the investigations, Assistant Attorney General Tony West and HHS Secretary Kathleen Sebelius said the case shows the government is serious about fighting healthcare fraud.
Pfizer also announced that it will pay another $33 million to 42 states and the District of Columbia to resolve consumer-protection allegations involving the schizophrenia drug Geodon. The settlement will be charged to its third-quarter 2009 earnings, according to a news release.
“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 so that we not only comply with state and federal laws, but also meet the high standards that patients, physicians and the public expect from a leading worldwide company dedicated to healing and better health,” Pfizer Senior Vice President and General Counsel Amy Schulman said in the release.
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