Pfizer’s Big Penalty

Following the recent merger of Pfizer (PFE - Analyst Report) and Wyeth, a U.S. court imposed a huge fine on the company’s subsidiary Pharmacia & Upjohn for fraudulent marketing of its painkiller Bextra (valdecoxib). The penalty of $1.195 billion was the largest criminal fine ever imposed in the U.S. In addition, a criminal forfeiture of $105 million was enforced on the company.
 
In September, Pfizer had agreed to pay an additional $1 billion along with interest to settle civil allegations related to fraudulent promotion of four drugs – Bextra, the anti-psychotic drug Geodon, the antibiotic Zyvox and the anti-epileptic drug Lyrica – as well as claims that the company paid kickbacks to physicians to prescribe these and nine other drugs.
 
In addition to the huge penalty, Pfizer had to agree to comply with the terms of a new and significantly expanded corporate compliance program. It seeks to ensure that in future the company will have proper checks to detect and avoid any such violations in time.
 
Bextra was used for the management of inflammation, stiffness and pain associated with osteoarthritis, adult rheumatoid arthritis and menstruation. However, long-term use of the drug led to various adverse events such as cardiovascular problems including heart attack and stroke and potentially life-threatening skin reactions. Due to these potential threats, the FDA compelled Pfizer to voluntarily withdraw Bextra from the market in April 2005, pending further investigations and trials. Patients on Bextra were also advised to contact their healthcare providers for alternate medications. Pharmacia & Upjohn was charged with promoting the sale of Bextra for some applications which had not been approved by the FDA such as general acute pain and surgical pain. The FDA had raised specific safety concerns about these.
 
Pfizer will not incur any additional charges for this penalty as the company had already taken $2.3 billion charges related to the off-label promotion of Bextra in the fourth quarter of 2008.

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