The pharmaceutical giant Pfizer Inc. and its subsidiary Pharmacia & Upjohn Company Inc. faced severe legal repercussions, agreeing to a staggering $2.3 billion settlement. This landmark case, announced by the Department of Justice, marks the largest health care fraud settlement in history and addresses criminal and civil liabilities stemming from the illegal promotion of pharmaceutical products.
Pharmacia & Upjohn Company pleaded guilty to a felony for misbranding Bextra, an anti-inflammatory drug Pfizer removed from the market in 2005. The company admitted to violating the Food, Drug and Cosmetic Act by promoting Bextra for unapproved uses, intending to defraud or mislead. Drug manufacturers must specify intended uses in their FDA applications, and marketing drugs for “off-label” uses—those not approved by the FDA—is illegal. Pfizer aggressively promoted Bextra for uses and dosages specifically rejected by the FDA due to safety concerns. This criminal misconduct resulted in a $1.195 billion criminal fine, the largest ever in the U.S., along with a $105 million forfeiture, totaling a $1.3 billion criminal resolution.
Adding to their legal woes, Pfizer also settled civil allegations under the False Claims Act for $1 billion. The accusations centered on the illegal promotion of four drugs: Bextra, Geodon (an antipsychotic), Zyvox (an antibiotic), and Lyrica (an anti-epileptic). Pfizer was accused of causing false claims to be submitted to government health care programs for uses of these drugs that lacked medical acceptance and were therefore not covered. Furthermore, the civil settlement addressed allegations of Pfizer providing kickbacks to healthcare providers to incentivize prescriptions for these and other drugs. The federal government’s share of the civil settlement amounted to $668,514,830, with state Medicaid programs receiving $331,485,170. This civil settlement stands as the largest fraud settlement against a pharmaceutical company in history.
Kathleen Sebelius, then Secretary of Department of Health and Human Services, emphasized the commitment to prosecuting and preventing health care fraud.
In conjunction with the settlement, Pfizer entered into a comprehensive corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. This agreement mandates the implementation of procedures and reviews designed to prevent and quickly detect any recurrence of similar misconduct.
The investigation was initiated by whistleblower lawsuits filed under the qui tam provisions of the False Claims Act in various district courts. As a result of this resolution, six whistleblowers received over $102 million from the federal share of the civil recovery.
The U.S. Attorney’s offices for multiple districts and the Civil Division of the Department of Justice were instrumental in these cases. The criminal investigation into Bextra was spearheaded by the U.S. Attorney’s Office for the District of Massachusetts, with collaborative efforts from numerous agencies including the HHS Office of Inspector General, FBI, DCIS, FDA Office of Criminal Investigations, VA Office of Criminal Investigations, OPM Office of the Inspector General, USPS Office of the Inspector General, National Association of Medicaid Fraud Control Units, and state Attorneys General offices.
Associate Attorney General Tom Perrelli highlighted the Department of Justice’s dedication to protecting the public and recovering funds lost to fraud.
Associate Attorney General Tom Perrelli stated, “Today’s landmark settlement is an example of the Department of Justice’s ongoing and intensive efforts to protect the American public and recover funds…from those who seek to earn a profit through fraud.” He emphasized the coordinated effort of federal, state, and local partners in safeguarding public funds and public health.
Secretary of Department of Health and Human Services Kathleen Sebelius remarked, “This historic settlement will return nearly $1 billion to Medicare, Medicaid, and other government insurance programs… Health care is too important to let a single dollar go to waste.” She underscored the commitment to both prosecuting and preventing health care fraud.
Assistant Attorney General for the Civil Division Tony West asserted, “Illegal conduct and fraud by pharmaceutical companies puts the public health at risk, corrupts medical decisions… and costs the government billions of dollars… when a pharmaceutical company puts profits ahead of patient welfare.”
Acting U.S. Attorney for the District of Massachusetts Mike Loucks commented on the severity of Pfizer’s actions, stating the “huge criminal fine of $1.3 billion, reflect the seriousness and scope of Pfizer’s crimes… such blatant and continued disregard of the law will not be tolerated.”
U.S. Attorney Michael L. Levy emphasized the importance of FDA regulations for ensuring drug safety and effectiveness.
FBI Assistant Director Kevin Perkins affirmed the FBI’s commitment to ensuring lawful conduct within pharmaceutical companies. U.S. Attorney Michael L. Levy highlighted the FDA’s crucial role in ensuring drug safety and effectiveness, stating, “When manufacturers undermine the FDA’s rules, they interfere with a doctor’s judgment and can put patient health at risk.”
U.S. Attorney Jim Zerhusen and Inspector General Daniel R. Levinson further emphasized the government’s dedication to pursuing False Claims Act violations, corporate and individual accountability, and transparency within the pharmaceutical industry. Daniel R. Levinson noted the corporate integrity agreement’s requirement for senior Pfizer executives and board members to complete annual compliance certifications and increase public scrutiny through detailed website disclosures, aiming to enhance integrity in pharmaceutical marketing.
Director of the Defense Criminal Investigative Service Sharon Woods, Inspector General of the U.S. Office of Personnel Management Patrick E. McFarland, and Special Agent in Charge for the Postal Service’s Office of Inspector General Joseph Finn each highlighted the impact of Pfizer’s illegal activities on their respective sectors, from military healthcare to federal employee health benefits and postal worker compensation. Joseph Finn noted the significant financial impact on the Postal Service, with over 10,000 postal employees on workers’ compensation affected by these drugs.
