U.S. DOJ hits Pfizer with $2.3 billion fine

How do you know the government is upset about spending allits money on healthcare? When you're required to pay a record $2.3 billioncivil and criminal penalty over unlawful prescription drug promotions.

The U.S. Department of Justice (DOJ) recently levied thelargest criminal fine in U.S. history against Pfizer after accusing the drugcompany of such things as creating false doctor requests for medical informationin order to send unsolicited information to doctors about unapproved uses anddosages, and wining-and-dining doctors—including sending sent them on exotictrips—all to get them to prescribe its drugs.

The government claims that Pfizer promoted prescriptiondrugs, such as the painkiller Bextra, as treatments for medical conditionsdifferent than those the drugs had been approved by the U.S. Food and DrugAdministration (FDA). The use of drugs for off-label medical conditions is afairly routine practice, but drug companies are prohibited from marketing drugsfor 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 felonyviolation of the Food, Drug and Cosmetic Act for misbranding Bextra with theintent to defraud or mislead. Bextra is an anti-inflammatory drug that Pfizerpulled from the market in 2005. Under the provisions of the Food, Drug andCosmetic Act, a company must specify the intended uses of a product in its newdrug application to FDA. Once approved, the drug may not be marketed orpromoted for so-called 'off-label' uses—i.e., any use not specified in anapplication and approved by the FDA. Pfizer promoted the sale of Bextra forseveral uses and dosages that the FDA specifically declined to approve due tosafety concerns. The company will pay a criminal fine of $1.195 billion, thelargest criminal fine ever imposed in the United States for any matter.Pharmacia & Upjohn will also forfeit $105 million, for a total criminalresolution of $1.3 billion."

In addition, Pfizer has agreed to pay $1 billion to resolveallegations under the civil False Claims Act that the company illegallypromoted four drugs—Bextra; Geodon, an anti-psychotic drug; Zyvox, anantibiotic; and Lyrica, an anti-epileptic drug—and caused false claims to besubmitted to government healthcare programs for uses that were not medicallyaccepted indications and therefore not covered by those programs.

The civil settlementalso resolves allegations that Pfizer paid kickbacks to healthcare providers toinduce them to prescribe these as well as other drugs. The federal share of thecivil settlement is $668,514,830, and the state Medicaid share of the civilsettlement is $331,485,170. This is the largest civil fraud settlement inhistory against a pharmaceutical company.

Pharmacia and Upjohn entered an agreement to plead guilty toone 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 painmedication that was pulled from the U.S. market due to the risk of heartattack, stroke and death.

Other inappropriate drug promotions involved the nerve painand epilepsy treatment Lyrica, schizophrenia medicine Geodon, antibiotic Zyvoxand nine other medicines. Under terms of the settlement, Pfizer must pay $1billion 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 therevelation that former sales manager Thomas Farina, who is doing six months ofhard home confinement with an electronic ankle bracelet for his role in thecase referred to his team as "the Highlanders"—a reference to a movie and TVshow about a cult of immortals living secretly among us who must kill or bekilled. Farina signed his e-mails, "There can be only one," a reference to themotto of the show.

Highlighting that the Obama administration is serious aboutcutting expenses, Associate Attorney General Tom Perrelli noted that: "Becausehealthcare fraud is such a significant problem for the public and the federal[budgets], the Justice Department and HHS recently invigorated our longstandingpartnership in fighting healthcare fraud by launching the Health Care FraudEnforcement Action Team—or HEAT—earlier this year. This working task force isled by key senior-level leadership in both agencies and has already increasedcoordination and intelligence data-sharing between the agencies, and hassecured indictments charging dozens of defendants with healthcare fraudoffenses."

In an earlier announcement that actually helped distractattention from the settlement, Pfizer announced plans to acquire Wyeth for $68billion. That deal is expected to close before the end of the year.

Stephen Albainy-Jenei is a patent attorney at Frost BrownTodd LLC, serving up chat at PatentBaristas.com. Write him with comments orquestions at Stephen@patentbaristas.com. Albainy-Jenei doesn't own shares ofcompanies mentioned in this article.