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U.S. DOJ hits Pfizer with $2.3 billion fine
October 2009
by Stephen Albainy-Jenei  |  Email the author

How do you know the government is upset about spending all its money on healthcare? When you're required to pay a record $2.3 billion civil and criminal penalty over unlawful prescription drug promotions.  
The U.S. Department of Justice (DOJ) recently levied the largest criminal fine in U.S. history against Pfizer after accusing the drug company of such things as creating false doctor requests for medical information in order to send unsolicited information to doctors about unapproved uses and dosages, and wining-and-dining doctors—including sending sent them on exotic trips—all to get them to prescribe its drugs.  
The government claims that Pfizer promoted prescription drugs, such as the painkiller Bextra, as treatments for medical conditions different than those the drugs had been approved by the U.S. Food and Drug Administration (FDA). The use of drugs for off-label medical conditions is a fairly routine practice, but drug companies are prohibited from marketing drugs for uses that have not been approved by the FDA.  
According to the press release by the DOJ: "Pharmacia & Upjohn Co. (a Pfizer subsidiary) has agreed to plead guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. Bextra is an anti-inflammatory drug that Pfizer pulled from the market in 2005. Under the provisions of the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called 'off-label' uses—i.e., any use not specified in an application and approved by the FDA. Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns. The company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States for any matter. Pharmacia & Upjohn will also forfeit $105 million, for a total criminal resolution of $1.3 billion."
In addition, Pfizer has agreed to pay $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs—Bextra; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug—and caused false claims to be submitted to government healthcare programs for uses that were not medically accepted indications and therefore not covered by those programs.
The civil settlement also resolves allegations that Pfizer paid kickbacks to healthcare providers to induce them to prescribe these as well as other drugs. The federal share of the civil settlement is $668,514,830, and the state Medicaid share of the civil settlement is $331,485,170. This is the largest civil fraud settlement in history against a pharmaceutical company.
Pharmacia and Upjohn entered an agreement to plead guilty to one count of felony misbranding over the promotion practices for Bextra (i.e., the guilty plea was not in Pfizer's name). Bextra is a Cox-2 inhibitor pain medication that was pulled from the U.S. market due to the risk of heart attack, stroke and death.
Other inappropriate drug promotions involved the nerve pain and epilepsy treatment Lyrica, schizophrenia medicine Geodon, antibiotic Zyvox and nine other medicines. Under terms of the settlement, Pfizer must pay $1 billion to compensate Medicaid, Medicare and other federal healthcare programs, some of which will be shared among the states.
The best tidbit to come out of the investigation was the revelation that former sales manager Thomas Farina, who is doing six months of hard home confinement with an electronic ankle bracelet for his role in the case referred to his team as "the Highlanders"—a reference to a movie and TV show about a cult of immortals living secretly among us who must kill or be killed. Farina signed his e-mails, "There can be only one," a reference to the motto of the show.  
Highlighting that the Obama administration is serious about cutting expenses, Associate Attorney General Tom Perrelli noted that: "Because healthcare fraud is such a significant problem for the public and the federal [budgets], the Justice Department and HHS recently invigorated our longstanding partnership in fighting healthcare fraud by launching the Health Care Fraud Enforcement Action Team—or HEAT—earlier this year. This working task force is led by key senior-level leadership in both agencies and has already increased coordination and intelligence data-sharing between the agencies, and has secured indictments charging dozens of defendants with healthcare fraud offenses."
In an earlier announcement that actually helped distract attention from the settlement, Pfizer announced plans to acquire Wyeth for $68 billion. That deal is expected to close before the end of the year.  
Stephen Albainy-Jenei is a patent attorney at Frost Brown Todd LLC, serving up chat at Write him with comments or questions at Albainy-Jenei doesn't own shares of companies mentioned in this article.



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