And you were wondering why health care is so expensive.........
This is a perfect example of why a public
option has to be part of any health care
reform bill....
WASHINGTON – Federal prosecutors hit Pfizer Inc.
with a record-breaking $2.3 billion in fines Wednesday and called the
world's largest drugmaker a repeating corporate cheat for illegal drug
promotions that plied doctors with free golf, massages, and resort
junkets.
Announcing the penalty as a warning to all drug manufacturers, Justice Department officials
said the overall settlement is the largest ever paid by a drug company
for alleged violations of federal drug rules, and the $1.2 billion
criminal fine is the largest ever in any U.S. criminal case. The total
includes $1 billion in civil penalties and a $100 million criminal forfeiture.
Authorities called Pfizer
a repeat offender, noting it is the company's fourth such settlement of
government charges in the last decade. The allegations surround the
marketing of 13 different drugs, including big sellers such as Viagra,
Zoloft, and Lipitor.
As part of its illegal
marketing, Pfizer invited doctors to consultant meetings at resort
locations, paying their expenses and providing perks, prosecutors said.
"They were entertained with golf, massages, and other activities," said Mike Loucks, the U.S. attorney in Massachusetts.
Loucks
said that even as Pfizer was negotiating deals on past misconduct, they
were continuing to violate the very same laws with other drugs.
To prevent backsliding this time, Pfizer's conduct will be specially monitored by the Health and Human Service Department inspector general for five years.
In
an unusual twist, the head of the Justice Department, Attorney General
Eric Holder, did not participate in the record settlement, because he
had represented Pfizer on these issues while in private practice.
Associate Attorney General Thomas Perrelli said the settlement illustrates ways the Justice Departmenthealth care costs are rising." "can help the American public at a time when budgets are tight and
Perrelli announced the settlement terms at a news conference with federal prosecutors and FBI, and Health and Human Services Department officials.
The settlement ends an investigation that also resulted in guilty pleas from two former Pfizer sales managers.
Officials
said the U.S. industry has paid out more than $11 billion in such
settlements over the past decade, but one consumer advocate voiced hope
that Wednesday's penalty was so big it would curb the abuses.
"There's so much money in selling pills, that there's a tremendous temptation to cheat," said Bill Vaughan, an analyst at Consumers Union, the nonprofit publisher of Consumer Reports.
"There's
a kind of mentality in this sector that (settlements) are the cost of
doing business and we can cheat. This penalty is so huge I think
consumers can have some hope that maybe these guys will tighten up and
run a better ship."
The government said the company promoted four prescription drugs, including the pain killer
Bextra, as treatments for medical conditions different from those the
drugs had been approved for by federal regulators. Authorities said
Pfizer's salesmen and women created phony doctor requests for medical
information in order to send unsolicited information to doctors about
unapproved uses and dosages.
Use of drugs for
so-called "off-label" medical conditions is not uncommon, but drug
manufacturers are prohibited from marketing drugs for uses that have
not been approved by the Food and Drug Administration.
They said the junkets and other company-paid perks were designed to
promote Bextra and other drugs, to doctors for unapproved uses and
dosages, backed by false and misleading claims about safety and
effectiveness.
Bextra, for instance, was
approved for arthritis, but Pfizer promoted it for acute pain and
surgical pain, and in dosages above the approved maximum. In 2005,
Bextra, one of a class of painkillers known as Cox-2 inhibitors, was pulled from the U.S. market amid mounting evidence it raised the risk of heart attack, stroke and death.
A
Pfizer subsidiary, Pharmacia and Upjohn Inc., which was acquired in
2003, has entered an agreement to plead guilty to one count of felony
misbranding. The criminal case applied only to Bextra.
The $1 billion in civil penalties was related to Bextra and a number of other medicines.
A portion of the civil penalty will be distributed to 49 states and the District of Columbia, according to agreements with each state's Medicaid program.
Pfizer's top lawyer, Amy Schulman, said the settlements "bring final closure to significant legal matters and help to enhance our focus on what we do best — discovering, developing and delivering innovative medicines."
In her statement, Schulman said: "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."
In financial filings in January, the company had indicated that it would pay $2.3 billion over the allegations.
The civil settlement announced Wednesday covered Pfizer's promotions of Bextra, blockbuster nerve painschizophrenia medicine Geodon, antibiotic Zyvox and nine other medicines. The agreement with the Justice Department resolves the investigation into promotion of all those drugs, Pfizer and epilepsy treatment Lyrica, said.
The government said Pfizer also paid kickbacks to market a host
of big-name drugs: Aricept, Celebrex, Lipitor, Norvasc, Relpax, Viagra,
Zithromax, Zoloft, and Zyrtec.
The allegations came to light thanks largely to five Pfizer
employees and one Pennsylvania doctor, who will now share $102 million
of the settlement money.
FBI Assistant Director Kevin Perkins praised the whistleblowers
who decided to "speak out against a corporate giant that was blatantly
violating the law and misleading the public through false marketing
claims."
To rein in the abuses, the government's five-year monitoring
will force Pfizer to notify doctors about Wednesday's agreement,
encourage them to report any similar behavior, and publicly post any
payments or perks it gives to doctors.
Under terms of the settlement, Pfizer must pay $1 billion to compensate Medicaid, Medicare, and other federal health care programs. Some of that money will be shared among the states: New York, for example, will receive $66 million, according to the state's attorney general, Andrew Cuomo.
When Pfizer originally disclosed the settlement figure, it also announced plans to acquire rival Wyeth
for $68 billion. That deal, which would bolster Pfizer's position as
the world's top drugmaker by revenue, is expected to close before
year's end.
Shares of Pfizer dropped 14 cents to $16.24 in midday trading.
