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Fri, Sep 04, 2009 - Page 10 News List

Pfizer to pay US$2.3bn, agrees to criminal plea

BAD MEDICINE: The settlement includes a US$1.3 billion criminal fine related to methods used to market a drug withdrawn from the market in 2005 over safety concerns

REUTERS , NEW YORK AND WASHINGTON

From left, Pfizer-made pain pills Lyrica, antibiotic Zyvox and schizophrenia treatment Geodon are pictured at C.O. Bigelow Pharmacy in New York on Wednesday.

PHOTO: BLOOMBERG

Pfizer Inc agreed on Wednesday to plead guilty to a US criminal charge relating to promotion of its now-withdrawn Bextra pain medicine and will pay a record US$2.3 billion to settle allegations it improperly marketed 13 medicines.

The world’s biggest drugmaker was slapped 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.

“If another one of these charges crops up, it would raise questions whether Jeff Kindler is keeping everyone at Pfizer on a tight enough leash,” said Miller Tabak analyst Les Funtleyder, referring to Pfizer’s chief executive officer.

Kindler had been Pfizer’s general counsel from 2002 until taking the helm in 2006. Pfizer declined to comment when asked if he had negotiated the 2004 settlement, and whether he had recommended any safeguards at the time to prevent the kind of recurrent improprieties described on Wednesday.

The company in January said it took a US$2.3 billion charge late last year to resolve allegations involving Bextra and other drugs, but did not provide details at the time.

“The size and seriousness of this resolution, including the huge criminal fine of US$1.3 billion, reflect the seriousness and scope of Pfizer’s crimes,” said Mike Loucks, acting US attorney for the District of Massachusetts.

The settlement includes a US$1.3 billion criminal fine related to methods of selling Bextra, which was withdrawn from the market in 2005 on safety concerns.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, The US Department of Justice said.

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 US$1 billion in civil payments related to so-called “off-label” sales of drugs — meaning for uses not authorized 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.

“We regret certain actions taken in the past, but are proud of the action we’ve taken to strengthen our internal controls,” said Amy Schulman, Pfizer’s general counsel.

Justice Department officials said cracking down on fraud in the healthcare industry was a key priority and comes as US President Barack Obama is trying to push through reforms of the US$2.5 trillion healthcare system to clip soaring costs.

The settlement and guilty plea are not expected to significantly hurt Pfizer’s ability to sell drugs, Morningstar analyst Damien Conover said.

Sandra Jordan, a former federal prosecutor and professor at the Charlotte School of Law in North Carolina, said: “Pfizer can survive this and pay the money. If it had fought the government at trial and lost, and a judge imposed a criminal sentence, that could have resulted in a corporate death penalty. That would have put Pfizer out of business.”

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