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Pfizer Settles Marketing Probes

The case involves its popular drug Neurontin and includes fines of $430 million.

Updated from 11:37 a.m. EDT

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were lower Thursday after the company settled state and government investigations relating to the marketing for unapproved uses of the epilepsy drug Neurontin.

Federal prosecutors announced on Thursday afternoon that Pfizer had agreed to plead guilty and pay fines and charges amounting to $430 million. The charges relate to marketing practices by a unit ofWarner-Lambert, which Pfizer acquired in 2000. The case involves Pfizer's fourth best-selling drug, Neurontin, which produced $696 million in revenue for the first quarter.

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"The allegations and conduct pertain solely to Warner-Lambert practices," Pfizer said Thursday. "Pfizer has cooperated fully with the government to resolve this matter, which did not involve Pfizer practices or employees."

Recently, the company's stock was down 58 cents, or 1.6%, to $35.13, in a case that Pfizer had telegraphed to investors in January when it said it would take a charge to fourth-quarter 2003 earnings of $427 million pretax ($403 million after-tax) in regard to the investigations.

Federal and state investigations were prompted by a Warner-Lambert employee, who sued Warner-Lambert and its Parke-Davis division in 1996. He alleged that the company tried to persuade doctors to use Neurontin for diseases other than epilepsy, which, at the time, was the only use approved by the Food and Drug Administration. The employee, David Franklin, said the drug was also being promoted as a treatment for pain, headaches and certain psychiatric illnesses.

Federal law allows doctors to use an FDA-approved drug for any treatment, but a company can only promote the drug for diseases approved by the agency. The FDA approved Neurontin in 1993 as an epilepsy treatment. In 2002, the FDA approved the drug for treating pain related to shingles.

Pfizer agreed to plead guilty to violating the Food, Drug and Cosmetic Act and pay a $240 million criminal fine. The company will pay $152 million in civil fines to be shared among state and federal Medicaid agencies. Another $38 million would go to state consumer-protection agencies. The settlement includes a $24.6 million payment to the whistleblower David Franklin.

"By resolving all outstanding investigations related to Neurontin, Pfizer will no longer have the expense and the uncertainty associated with them," the company said Thursday.