Consumer Fraud

The Fraud List: Pfizer, A Convicted Corporate Felon

the fraud list 370x210 The Fraud List: Pfizer, A Convicted Corporate FelonPfizer is an American multinational pharmaceutical corporation with roots stretching back to 1849. But it was only in relatively recent years that the company began to grow exponentially by acquiring its competition and expanding its reach through extremely aggressive, sometimes illegal marketing campaigns.

New York City-based Pfizer and its subsidiary companies have also engaged in numerous other schemes to boost profits, such as rebate fraud targeting Medicare, Medicaid, and other government health care programs, unlawful kickback schemes, marketing drugs for unapproved off-label purposes, misleading regulators about the safety of certain products, and other alleged misconduct.

On Sept. 2, 2009, the U.S. Justice Department announced it had reached the largest health care fraud settlement in history after Pfizer agreed to pay $2.3 billion for the illegal marketing of its products.

Three whistleblower lawsuits filed under the False Claims Act in Massachusetts, Pennsylvania and Kentucky federal courts triggered the case against Pfizer and its subsidiary company Pharmacia & Upjohn. The six whistleblowers who were instrumental in bringing Pfizer’s fraud to light shared a reward of more than $102 million.

According to the Justice Department, the record settlement included a criminal fine of $1.195 million against Pfizer – the largest criminal fine ever imposed the U.S. for any crime – and a criminal fine of $105 million against Pharmacia & Upjohn. The massive penalties resolved a felony violation of the Food, Drug and Cosmetic Act for the drug makers’ misbranding of its anti-inflammatory drug Bextra, which was so risky to patients that Pfizer had to pull it from the market in 2005.

Despite knowing of its risks, Pfizer misbranded Bextra with the intent to defraud or mislead, U.S. prosecutors asserted, pushing the risky drug for purposes that the U.S. Food and Drug Administration (FDA) specifically declined to approve due to safety concerns.

Pfizer paid another $1 billion to resolve allegations that it illegally promoted Bextra and three other drugs: Geodon, an anti-psychotic; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug, for unapproved uses. Because Medicare, Medicaid and other taxpayer-funded health care programs reimburse care providers only for approved drugs, devices, and treatments, the off-label promotion of these four drugs resulted the submission of millions of dollars in false claims, the U.S government alleged.

As if Pfizer’s egregious drug promotions weren’t enough, the company also illegally paid kickbacks to health care providers as a way of getting them to prescribe Bextra, Geodon, Zyvox, and Lyrica.

As part of the settlement, Pfizer also agreed to enter into an expansive corporate integrity agreement with the Department of Health and Human Services that required the company to implement a number of procedures and reviews that would promptly detect conduct and avoid future fraud.

“The size and seriousness of this resolution, including the huge criminal fine of $1.3 billion, reflect the seriousness and scope of Pfizer’s crimes,” a U.S. prosecutor involved in the case said. “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.”

Not the first time, won’t be the last

Incredibly, Pfizer’s record settlement wasn’t the first or the last time the company engaged in unlawful practices to boost drug sales. The company has settled numerous False Claims Act cases since 2002, when it and two subsidiary companies agreed to pay the U.S. $49 million to settle allegations involving its blockbuster cholesterol drug Lipitor.

A former employer of Pfizer’s subsidiary companies Warner-Lambert and Parke-Davis, filed a whistleblower suit against all three drug makers, alleging they cheated the federal government out of millions of dollars by not fully paying rebates owed to state and federal governments under the national drug Medicaid Rebate program.

Under the Medicaid Rebate program, drug manufacturers agree to provide drugs to Medicaid at prices at least as low as those paid by private, for-profit buyers and other favored customers. These discounts, made in the form of quarterly payments, are designed to ensure Medicaid costs remain fair and manageable.

Only it’s not easy keeping Medicaid prices low when giant drug corporations engage in schemes that cause the government to overpay for drugs it provides to beneficiaries.

“The Medicaid program was created to help ensure that those with lower incomes receive medical treatment – not to enrich drug companies or providers,” Robert McCallum, Jr., Assistant Attorney General for the Justice Department’s Civil Division, said about Pfizer’s case. “The Medicaid Rebate program plays a critical role in helping the state and federal governments control ever-increasing drug costs.”

In October 2011, Pfizer agreed to settle the last of 10 lawsuits filed under the False Claims Act by whistleblowers who alleged the company illegally marketed Detrol, a drug used to treat overactive bladder in men.

According to the complaint, Pfizer pushed Detrol as a treatment for a multitude of male urological problems that the FDA had not approved as safe or effective, thereby jeopardizing the health of patients and wasting millions of dollars of taxpayer money on potentially unsafe or ineffective treatments.

Pfizer settled the allegations by agreeing to pay the U.S. $14.5 million. The other cases were either dismissed or settled in 2009 as part of the $2.3-billion agreement.

Little more than nine weeks later, Pfizer agreed to pay $55 million to resolve another False Claims Act lawsuit alleging it illegally misbranded Protonix, a proton pump inhibitor administered in tablet form to treat various forms of gastro-esophageal disease.

According to the Justice Department, Pfizer’s Wyeth division gained FDA approval for Protonix as a short-term treatment for erosive esophagitis – a condition associated with gastro-esophageal disease that can only be diagnosed with an invasive endoscopy procedure. According to the government-backed whistleblower complaint, however, Wyeth “fully intended, and did, promote Protonix for all forms of gastro-esophageal disease” for which it was not approved, including symptomatic esophageal disease, which is far more common and diagnosed with an endoscopic procedure.

Because the U.S. did not approve Protonix for these procedures, Wyeth’s misbranding of the drug led to the submission of false claims by health care providers nationwide.

Before Wyeth even began promoting Protonix, the FDA warned the company that its proposed promotional materials were misleading and its claims exaggerated. Despite the warning, Wyeth trained its sales force to push Protonix for all forms of gastro-esophageal disorders and other conditions. In fact, Wyeth also promoted Protonix as the “best protein pump inhibitor for nighttime heartburn,” even though there was no clinical evidence that the drug was a more effective treatment than any other drug of its kind.

Pfizer’s illegal marketing strategies and its noncompliance with FDA regulations in general are just the beginning of the company’s long history as a habitual offender. Pfizer and its subsidiary companies have been the target of a multitude of other controversies, disputes, and legal actions involving product safety, drug pricing, bribery, toxic waste dumping, human rights violations, worker safety, and labor laws.

Coming Up Next:

Next week’s installment of The Fraud List will feature another repeat offender of the False Claims Act, Community Health Systems. A new story in this series will be published each Thursday. Follow #thefraudlist on Google+, Facebook and Twitter.


Corporate Research Project

U.S. Department of Justice: Justice Department Announces Largest Health Care Fraud Settlement in Its History

U.S. Department of Justice: Drug Giant Pfizer & To Subsidiaries to pay $49 million for defrauding drug Medicaid Rebate Program 

U.S. Department of Justice: Pfizer to Pay $14.5 Million For Illegal Marketing of Drug Detrol

U.S. Department of Justice: Pfizer Agrees To Pay $55 Million for Illegally Promoting Protonix For Off-Label Use

U.S. Department of Justice: Wyeth Pharmaceuticals Agrees to Pay $490.9 Million for Marketing the Prescription Drug Rapamune for Unapproved Uses

Federal Bureau of Investigations: 2009 Financial Crimes Report

Taxpayer Against Fraud

Corporate Research Project