Commonwealth to Benefit from Health Care Fraud Settlement

Attorney General Bill Mims announced that the Commonwealth, along with state and federal partners, has reached the largest health care fraud legal settlement in the nation’s history.

Pharmaceutical giant Pfizer Inc. and its subsidiary Pharmacia & Upjohn Company Inc. have agreed to pay nearly $2.3 billion nationally to resolve criminal and civil liability arising from the illegal promotion of certain pharmaceutical products.

Virginia’s total federal and state Medicaid recovery is nearly $12 million, with $6.2 million being returned to the Commonwealth for health care costs.

Pharmacia & Upjohn Company have agreed to plead guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead.

Bextra is an anti-inflammatory drug that Pfizer pulled 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 FDA. Once approved, the drug may not be marketed or promoted for so-called "off-label" uses, such as any use not specified in an application and approved by FDA.

Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns. The company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States. Pharmacia & Upjohn will also forfeit $105 million, for a total criminal resolution of $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.

The civil settlement also resolves allegations that Pfizer paid kickbacks to health care providers to induce them to prescribe these, as well as other, drugs. The federal share of the civil settlement is $668,514,830 and the states’ Medicaid share of the civil settlement is $331,485,170. This is the largest civil fraud settlement against a pharmaceutical company in history.

“Through hard work and coordination by federal and state partners across the nation, collectively we were able to reach an historic settlement with Pfizer,” says Mims. “When health care companies misbrand their products and employ fraudulent marketing schemes for their drugs, it is at the expense of Medicaid recipients and taxpayers. That is not acceptable.”

The Virginia Attorney General’s Medicaid Fraud Control Unit and the offices of various state Attorneys General assisted the U.S. Department of Justice, the U.S. Department of Health and Human Services, the FBI, the Food and Drug Administration and other federal partners in the successful investigation and prosecution.