Pfizer has agreed to plead guilty to a criminal charge relating to promotion of its now-withdrawn Bextra pain medicine and will pay a record $2.3bn to settle allegations it improperly marketed 13 medicines.
The world's biggest drug manufacturer was hit with the huge fines by the US government after being deemed a repeat offender in pitching drugs to patients and doctors for unapproved uses.
Pfizer pleaded guilty in 2004 to an earlier criminal charge of improper sales tactics and its practices have been under US supervision since then.
Pfizer declined to comment when asked if Jeff Kindler, the company’s chief executive, had negotiated the 2004 settlement, and whether he had recommended any safeguards at the time to prevent the kind of recurrent improprieties described yesterday.
The company in January said it took a $2.3bn charge late last year to resolve allegations involving Bextra and other drugs, but did not provide details at the time.
The settlement includes a $1.3bn criminal fine related to methods of selling Bextra, which was withdrawn from the market in 2005 on safety concerns.
Pfizer acquired Bextra in its 2003 purchase of Pharmacia Corp.
Pfizer's marketing team promoted Bextra for acute pain, surgical pain and other unapproved uses, while its sales force promoted the drug directly to doctors for those unapproved uses and dosages, according to the US Department of Justice.
The company and Pharmacia also used advisory boards, consultant meetings and provided travel to lavish resorts to improperly promote Bextra to doctors and made misleading claims about the drug's safety and efficacy, the government said.
The settlement also includes $1 billion in civil payments related to so-called ‘off-label’ sales of drugs - meaning for uses not authorised by the US Food and Drug Administration - and payments to healthcare professionals. Pfizer denied all of the civil allegations, except for acknowledging improper promotions of the antibiotic Zyvox.
US Justice Department officials said cracking down on fraud in the healthcare industry was a key priority and comes as President Barack Obama is trying to push through reforms of the $2.5 trillion healthcare system to clip soaring costs.
The settlement is the largest to date for improper marketing of prescription drugs, topping the $1.42bn Eli Lilly and Co agreed to pay earlier this year for off-label sales of its Zyprexa schizophrenia drug.
Pfizer said it will pay $503m to resolve practices involving Bextra, $301m related to its schizophrenia drug Geodon, $98m for Zyvox and about $50m for its blockbuster Lyrica used to treat nerve pain and seizures.
On top of the $2.3bn fine, Pfizer said it would take new charges of up to $33m to resolve state civil consumer fraud allegations related to promotions of Geodon.
The company said most alleged improprieties took place during or before 2005. But some were as recent as 2007, while Pfizer was essentially still on probation for improper Neurontin promotions.
Pfizer did not specify whether it had disciplined any executives in connection with the latest infractions.
Six whistleblowers, including John Kopchinski, a former sales representative who exposed Pfizer's Bextra marketing tactics, sparking the government probes, will be rewarded with more than $102m under the False Claims Act. Mr Kopchinski's share was expected to be more than $51.5m.
In the 2004 case, Pfizer agreed to pay $430m to federal and state governments and pleaded guilty to criminal charges of illegally marketing epilepsy drug Neurontin for migraine headaches, pain and bipolar disorder. Pfizer obtained Neurontin in its 2000 acquisition of Warner Lambert Corp.
Due to the earlier settlement, Pfizer's marketing practices have been under federal supervision for the past five years.
Under the new settlement, Pfizer must adhere to a specified compliance program for five more years. The pact will require it to post on its website information about payments to doctors such as travel, and set up a system for doctors to report questionable conduct by Pfizer's representatives.