The largest fine ever.. but still going strong
The US Department of Justice announced that US pharmaceutical Pfizer agreed to pay $2.3 billion to settle a health care fraud. Pfizer’s subsidiary Pharmacia & Upjohn agreed to plead guilty to having misbranded Brextra with the intent to defraud and mislead. Brexta is an antiflammatory drug that was discontinued in 2005. Although the FDA had safety concerns related to Bextra for certain usage and dosages and did not approve these usages/dosages for promotion and sale, Pfizer did so nevertheless. The company will pay a $1.195 billion criminal fine, the largest ever in the US (and world?) history. Combined with forfeiture of illicit proceeds the total criminal resolution totals $1.3 billion.
In addition, Pfizer has 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.
Pfizer reported in January that it had taken a $2.3 billion charge to resolve claims involving Bextra and other drugs. It was Pfizer’s fourth settlement over illegal marketing activities since 2002.“Among the factors we considered in calibrating this severe punishment was Pfizer’s recidivism,” said Michael K. Loucks, acting United States attorney for the Massachusetts district.
Whistleblowers started the investigation. John Kopchinski sold Pfizer’s arthritis drug Bextra but not as aggressively as the bosses wanted. They told the sales force to pitch it for post-surgical pain, acute pain, migraines and a host of other conditions for which the drug had been rejected by the U.S. Food and Drug Administration, says Kopchinski’s lawyer, Erika Kelton. Nor would he advise doctors to boost the recommended dosage to two, four, even eight times the amount approved, though other salespeople did. “The sales managers were having us do what was blatantly illegal,” Kopchinski told the BBC. Those who did were rewarded financially. He refused, was fired and spent the next six years depleting his retirement funds. Kopchinski took his experiences to the government as one of the whistleblowers against Pfizer.
Now 6 whistleblowers will receive more than $102 million from the federal share of the civil recovery. The state of Florida announced that it is using its part of the fraud settlement to create a Medicaid fraud informant program, the attorney general said Thursday. Florida will reward informants who provide the state with information about Medicaid fraud that leads to a fine, civil or criminal charges or the forfeiture of property. The state is putting about $1 million from the Pfizer settlement into the reward program. Rewards will only be paid out after a case has been resolved. The amount of the reward may be up to 25 percent of the amount recovered, or a maximum of $500,000 per case. The chase is even more intense now. Let’s see what it brings.
The SEC wants to reward whistleblowers financially as well in the hope to catch Madoff like fraudsters before they can do much harm. Is cash a good incentive to get valuable information? Intelligence professionals will tell you that luring informers just by cash is a dangerous tactic.
“This historic settlement emphasizes the government’s commitment to corporate and individual accountability and to transparency throughout the pharmaceutical industry,” said Daniel R. Levinson, Inspector General of the United States Department of Health and Human Services. “The corporate integrity agreement requires senior Pfizer executives and board members to complete annual compliance certifications and opens Pfizer to more public scrutiny by requiring it to make detailed disclosures on its Web site. We expect this agreement to increase integrity in the marketing of pharmaceuticals.”
Any forecasts for this expected “increased integrity”? Who will oversee the efforts made by Pfizer related to the corporate integrity agreement? Is Pfizer too big to be guilty?
http://www.usdoj.gov/opa/pr/2009/September/09-aag-900.html
http://www.miamiherald.com/news/breaking-news/story/1216019.html
http://www.reuters.com/article/marketsNews/idINN0311783320090904?rpc=44
http://www.bloomberg.com/apps/news?pid=20601039&sid=ahodmf54hyPA
http://www.nytimes.com/2009/09/03/business/03health.html?scp=2&sq=pfizer&st=cse
