By Josh Meyer

Tribune Newspapers

(MCT)

WASHINGTON — The Justice Department on Wednesday announced the largest health-care fraud settlement in its history, in which American pharmaceutical giant Pfizer Inc. has agreed to pay $2.3 billion for fraudulent marketing and a wide array of other potentially illegal acts.

The landmark settlement was announced at a news conference at Justice Department headquarters and reflects a renewed emphasis by the Obama administration on holding U.S. corporations accountable for their activities, Justice Department officials said.

The settlement ends years of investigation by federal prosecutors in several states into Pfizer and its subsidiary, Pharmacia & Upjohn Co. Inc., according to Justice Department documents and officials. Primarily, it resolves criminal and civil liability arising from Pfizer’s illegal promotion of certain pharmaceutical products, including the anti-inflammatory drug Bextra.

As part of the settlement, Pfizer also agreed to pay $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs — Bextra; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug — and caused false claims to be submitted to government health-care programs for uses that were not medically accepted indications and therefore not covered by those programs.

The civil settlement also resolves allegations that Pfizer paid kickbacks to health-care providers to encourage them to prescribe those and other drugs.

The federal share of the civil settlement is $669 million, and state Medicaid programs will collect an additional $331 million.

“Illegal conduct and fraud by pharmaceutical companies puts the public health at risk, corrupts medical decisions by health-care providers and costs the government billions of dollars,” said Tony West, assistant attorney general for the Civil Division. “This civil settlement and plea agreement by Pfizer represent yet another example of what penalties will be faced when a pharmaceutical company puts profits ahead of patient welfare.”

Kathleen Sebelius, secretary of Department of Health and Human Services, hailed the settlement and said her agency “will continue to seek opportunities to work with its government partners to prosecute fraud wherever we can find it.”

“But we will also look for new ways to prevent fraud before it happens,” Sebelius said. “Health care is too important to let a single dollar go to waste.”

Pfizer officials could not be reached immediately for comment. But as part of the settlement, the company has agreed to enter into an expansive corporate integrity agreement with HHS’s Office of Inspector General, under which it will put in place special procedures and reviews “to avoid and promptly detect conduct similar to that which gave rise to this matter,” the Justice Department said in a statement.

Some of the problems were first brought to the attention of authorities by whistleblowers who filed lawsuits under what are known as “qui tam” provisions of the False Claims Act, which entitle them to a portion of the settlement proceeds. Those claims are pending in Massachusetts, Pennsylvania and Kentucky, and as part of the resolution, six whistleblowers will receive payments totaling more than $102 million from the federal share of the civil recovery, Justice officials said.

According to Justice officials, Pharmacia & Upjohn Co. agreed to plead guilty to felony violations of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. Pfizer pulled the popular and lucrative anti-inflammatory drug from the market in 2005.

Under the provisions of the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to the Food and Drug Administration. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses — those not specified in the application and approved by FDA. But Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns, Justice Department officials said.

As a result, the company will pay a criminal fine of $1.2 billion, the largest criminal fine ever imposed in the United States for any matter. Pharmacia & Upjohn also will forfeit $105 million, for a total criminal resolution of $1.3 billion.

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