Pfizer to Pay $2.3B in Fraud Settlement

Pfizer will pay $2.3 billion to settle a DOJ lawsuit alleging that it had illegally marketed some of its drugs, the AP reports.
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(Updated to provide further detail about the settlement.)



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officially settled Justice Department suits alleging that the pharmaceuticals giant marketed its drugs illegally.

The Justice Department announced the $2.3 billion settlement in a press conference Wednesday morning.

The news wasn't unexpected. Pfizer had said it would pay the $2.3 billion in SEC filings in January, and it had already booked a charge in that sum -- the largest-ever settlement payment for off-label drug promotion -- in the fourth quarter of 2008.

Also Wednesday, Pfizer said it reached agreements with 42 states and the District of Columbia to settle allegations that the company had mis-promoted its schizophrenia drug Geodon. Pfizer will pay $33 million total and take a charge in that amount in its third quarter.

The government alleged that Pfizer engaged in both civil and criminal fraud by promoting four drugs -- Geodon, the pain medicine Bextra, the anti-epileptic Lyrica, and the infection treatment Zyvox -- for conditions other than their approved uses.

Pfizer unit Pharmacia, which had made Bextra until it was yanked from the market in 2005, agreed to plead guilty to a felony violation of federal laws for misbranding the pain reliever.

"Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns," the Justice Department said in a press release.

For that misdeed, Pfizer will pay nearly $1.2 billion. It's the biggest criminal fine ever imposed in the U.S. for any crime, the DOJ said.

The rest of the $2.3 billion settles civil fraud allegations, including a $48 million payment for claims that Pfizer paid kickbacks to doctors, in effect bribing them to hawk nine other of the company's drugs.

"Today's landmark settlement is an example of the Department of Justice's ongoing and intensive efforts to protect the American public," Associate Attorney General Tom Perrelli said in Wednesday's news conference.

The settlement money will go to Medicare, Medicaid, the Tricare health plan of the U.S. military, and other government insurance programs.

Pfizer shares had moved slightly higher Wednesday morning, trading at $16.40, up 2 cents from the previous session's close.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.