DOJ and qui tam lawsuits lead to guilty plea, $1.2 billion criminal fine and $1 billion settlement with Pfizer
Posted Sep 10 2009 10:16pm
Largest criminal fine imposed by US in any matter
Last week, the Department of Justice (DOJ) announced that its investigaton and several whistle-blower, or qui tam lawsuits had lead to a $2.3 billion dollar settlement resolving the alleged criminal and fraudulent marketing and promotion of the drug Bextra by Pfizer (NYSE: PFE), as well as their illegal promotions of 12 other drugs. The settlement included $1.2 billion criminal fine for the felony promotion of Bextra, the largest ever imposed by the US for any matter.
The lawsuits were brought in response to the regarding various civil and criminal charges connected to the fraudulent marketing and the payment of kickbacks. The settlement includes a guilty plea and a civil settlement of $1 billion, with $668 Million for federal programs, and the remainder going to reimburse States Medicaid costs.
What did Pfizer do?
While the exact terms of the guilty plea are not available yet, it is alleged that Pfizer committed a felony by ‘misbranding’ the drug Bextra, or promoting its sale and use for treatments and at dosages above the maximum levels approved by FDA. (Bextra was approved by the FDA to treat symptoms associated with osteoarthritis, rheumatoid arthritis and primary dysmenorrheal. While a doctor can prescribe a drug for any use, a drug manufacturer may not promote any use other than that which has been approved by FDA.) The settlement agreement describes the DOJ allegations that Pfizer acted illegally by:
Making false and misleading claims of safety and efficacy of Bextra in sales materials and sales messages;
Promoting Bextra directly to physicians, using payments disguised as so-called advisory boards, consultant meetings, or travel to lavish resorts;
Creating sham requests in order to send unsolicited information to physicians about unapproved uses and dosages;
Sponsoring purportedly independent continuing medical education programs (“CME”) to disseminate specific messages about unapproved uses of Bextra;
Promoting Bextra for unapproved uses and dosages by initiating, funding and sometimes ghostwriting scientific articles about Bextra for unapproved uses, without appropriate disclosure of Pfizer’s role in preparing the article, and;
Providing promotional samples and otherwise promoting Bextra for unapproved uses and dosages to surgeons and other medical prescribers who had no FDA-approved use for the Bextra samples, or at that dosage;
But wait, there’s more: Pfizer’s off-label promotion and deceptive marketing of twelve other drugs
The settlement also releases other claims related to the DOJ’s allegations that Pfizer “made and /or disseminated unsubstantiated and/or false representations or statements about the safety and efficacy of” of the drugs Geodon, Zyvox, and Lyrica, and that Pfizer “offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe” these drugs for various time periods between 2001 and 2008. Further, the agreement notes that the DOJ claims that such promotions were for ‘off-label’ uses, i.e. for uses not approved by FDA.
The settlement also resolves the federal government’s claims regarding “kickback” or other “illegal remuneration” paid by Pfizer “to health care professionals to induce them to promote and prescribe the drugs Aricept, Celebrex, Lipitor, Norvasc, Relpax, Viagra, Zithromax ,Zoloft, and Zyrtec,” from “January 2001, through December 2004….” This “illegal remuneration” took the form of “speaker programs, mentorships, preceptorships,journal clubs, and gifts (including entertainment, cash, travel and meals)….”
What’s next: increased government oversight of Pfizer
In addition, as part of the settlement, Pfizer has entered into a comprehensive five-yearCorporate Integrity Agreement with the Office of Inspector General in the Department of Health and Human Services. This allows monitoring for the next five years. Pfizer will also:
Publicly disclose on its website information about payments to doctors, honoraria, travel or lodging;
Notify doctors about this settlement and establish a mechanism by which doctors can report questionable conduct by any Pfizer representative;
Undergo an annual audit of their Board of Directors;
Have their senior executives certify annually that Pfizer is in compliance with the Corporate Integrity Agreement, and
Proactively identify potential risks associated with promoting individual products and then it implement a plan to mitigate the identified risks.
If Pfizer fails to meet the requirements in its Corporate Integrity Agreement, it could face higher penalties AND be barred from inclusion in Federal health programs, like Medicare and Medicaid.
Pfizer: don’t settle for second:
Interestingly, Pfizer had paid $430 million to settle a criminal and civil case brought by federal and state prosecutors regarding the off-label promotion of the anti-epilepsy drug Neurontin. Entered into in just 2004, this agreement included what the DOJ described as a “$240 million criminal fine, the second largest criminal fine ever imposed in a health care fraud prosecution” at the time. However this new $2.3 Billion dollar settlement puts Pfizer in the lead, and easily outpaces the last government settlement for $1.42 Billion with Eli Lilly over the marketing of Zyprexa.
The size of the new $1.2 billion criminal fine may be in response to that fact that Pfizer’s 2004 settlement also included a ‘compliance program.’ We hope this record fine, and the continued watchful eye of HHS will help to keep Pfizer in line. But with billions of dollars in profits from off-label promotion of their many drugs, only time will tell.
Benefits for consumers: not yet, but stay tuned
We here at PAL are glad to see this settlement, and to see signs that the DOJ is actively investigating abuses by the pharmaceutical industry. Mr. Tony West, Assistant Attorney General for the Civil Division of the Department of Justice, describes what’s at stake:
“Illegal conduct and fraud by pharmaceutical companies puts the public health at risk, corrupts medical decisions by health care providers and costs the government billions of dollars. This civil settlement and plea agreement by Pfizer represent yet another example of what penalties will be faced when a pharmaceutical company puts profits ahead of patient welfare”
But this settlement does not include any compensation for consumers, union benefit funds, or insurers who paid for Bextra.A seperate agreementhas been reached with Pfizer concerning their promotion of Bextra and Celebrex, with consumers and private, non-governmental insurers to share $89 million to settle suits brought by consumers and “third party payors” who alleged that they defrauded by Pfizer’s marketing and failure to disclose the risks of the drugs. Please keep your eye on our blog, or check our website for updates on consumer settlements.