FOR IMMEDIATE RELEASE
Sept. 2, 2009
Pfizer Inc. to pay Indiana nearly $3.7 million in historic settlement
Off-labeling marketing ploys, kickbacks, end in federal, state action
INDIANAPOLIS – In one of the largest settlements of a healthcare-fraud case in U.S. history, the federal government, Indiana and other states have reached an agreement with Pfizer Inc. to settle allegations of kickback payments and illegal off-marketing campaigns that had improperly promoted drugs Pfizer manufactures.
Pfizer agreed to pay state and federal governments a total $1 billion in civil damages as compensation to Medicaid, Medicare and other federal healthcare programs harmed by the company’s conduct, the federal and state governments announced today.
Under the settlement with Pfizer, the total obtained for the Indiana Medicaid program -- including both the federal and state share -- will be $9,520,231.16 in restitution and other recovery. Of that, the state’s share of the multi-state settlement will be $3,694,888.19.
Indiana Attorney General Greg Zoeller noted that the settlement is based on nine qui tam cases (pronounced “key tam”) involving whistleblowers: nine private individuals who filed lawsuits under state and federal False Claims laws. The suits were filed in federal courts in Massachusetts, Pennsylvania and Kentucky and later consolidated into one case; none of the whistleblowers are from Indiana.
“This case highlights the importance of qui tam laws that allow whistleblowers to file suit on behalf of the government to recover public funds paid on false claims,” Zoeller said. “Our office will work aggressively with employees in whistleblower cases to unearth fraud against the public treasury and recoup funds on behalf of taxpayers.”
Allen Pope, director of the Indiana Medicaid Fraud Control Unit, said, “This is the type of result the Indiana Legislature hoped for when it adopted a whistleblower False Claims Act. Nine whistleblowers, insiders who knew what Pfizer was doing, are sharing a substantial financial reward for their help in calling the government’s attention to this illegal activity.”
The Pfizer subsidiary Pharmacia & Upjohn Company, Inc., also agreed to plead guilty to a felony violation of the federal Food, Drug, and Cosmetic Act (FDCA) and to pay a criminal fine and forfeiture of $1.3 billion, the U.S. Department of Justice announced.
The cases against Pfizer Inc. and its subsidiaries involved allegations both of criminal and civil violations.
At issue in the criminal case was illegal marketing and promotion of Bextra, an anti-inflammatory drug Pfizer pulled off the market in 2005. Because of its illegal promotion, Pharmacia & Upjohn Company, Inc. agreed to plead guilty to a felony for misbranding the drug with the intent to defraud or mislead.
Central to the case against Pfizer were allegations that the world’s largest pharmaceutical manufacturer engaged in a pattern of illegal marketing activity, in order to promote multiple drugs for uses that the Food and Drug Administration had not approved.
Although it is not illegal for a physician to prescribe a drug for an unapproved use, federal law prohibits manufacturers from promoting drugs to doctors for uses not approved by the FDA. In this case, the illegal promotional activity included:
Beyond the improper off-label marketing of these drugs, Pfizer is alleged to have made illegal payments or kickbacks to healthcare professionals to induce them to promote and prescribe Bextra, Geodon, Lyrica, Zyvox, Aricept, Celebrex, Lipitor, Norvasc, Relpax, Viagra, Zithromax, Zoloft and Zyrtec.
Investigators alleged the kickback payments took many forms, including entertainment, cash, travel and meals. Federal law prohibits manufacturers from paying anything of value in exchange for prescribing a product that is paid for through a federal healthcare program.
“The illegal practices did not involve Indiana in any unique way; Indiana physicians apparently were targeted with the same off-label marketing as doctors in every other state,” Zoeller said. “This illegal practice increased the quantity of drugs that Medicaid – and ultimately the taxpayers – ended up paying for.”
Among the conditions of the settlement, Pfizer will enter into a corporate integrity agreement with the U.S. Department of Health and Human Services and the U.S. Office of the Inspector General, which will monitor closely the company’s future marketing and sales practices.
A National Association of Medicaid Fraud Control Units team participated in the investigation and conducted the negotiations with Pfizer on behalf of the states in the settlement. The Indiana Medicaid Fraud Control Unit or MFCU is under the jurisdiction of the Indiana Attorney General’s Office and will receive the settlement on behalf of the state.
“Pfizer has owned up to its improper conduct through which Medicaid was wrongly billed – conduct that whistleblower lawsuits helped bring to light,” Zoeller said. “To us, this case underscores the need for transparency at all levels – federal, state and local – whenever government agencies are asked to pay claims submitted by private entities.”
For three of the drugs involved (Bextra, Geodon and Zyvox), a group of whistleblowers – called “relators” in qui tam legal terminology -- will share 15 percent of the negotiated settlement. For Lyrica, a group of whistleblowers will share 18 percent of the negotiated settlement. Through a complex reimbursement process established by federal law, all of the whistleblowers’ share will be paid out of the federal share of Indiana’s recovery. Paying the relators will not cost Indiana taxpayers anything, Pope said.
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