WASHINGTON — Pfizer agreed Wednesday to pay out a record 2.3 billion dollars to settle a high-profile fraud case, pleading guilty to a criminal charge for marketing its painkiller Bextra illegally.
The settlement by the world's biggest drugmaker was trumpeted as a major victory by President Barack Obama's administration in its efforts to cut down fraud as part of a major overhaul of America's health care system.
Health Secretary Kathleen Sebelius held a press conference to announce the settlement, which will end criminal and civil proceedings against Pfizer over the allegations it illegally marketed drugs for off-label purposes.
"This historic settlement will return nearly one billion dollars to Medicare, Medicaid, and other government insurance programs, securing their future for the Americans who depend on these programs," she said in a statement.
The agreement with Pfizer is divided into several parts, the largest of which is a 1.195 billion dollar fine -- the largest criminal fine ever imposed in the United States for any matter, according to the Justice Department.
The company will also forfeit 105 million dollars and pay an additional one billion dollars "to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs."
The case arose from allegations that Pfizer illegally marketed Bextra, the anti-psychotic drug Geodon, the antibiotic Zyvox, and Lyrica, an anti-epileptic drug, for uses that were not approved by the Food and Drug Administration.
The Justice Department had alleged that Pfizer's inappropriate marketing "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 settlement also ends civil proceedings over "allegations that Pfizer paid kickbacks to healthcare providers to induce them to prescribe these, as well as other, drugs," the Justice Department said.
Assistant Attorney General Tom Perrelli said the investigation into Pfizer's activities illustrated that combating healthcare fraud "is one of this administration's top law enforcement priorities."
"This case is a great example of the department's commitment to fiscal accountability, combating fraud, and returning much-needed dollars back to the US Treasury and state treasures," he said.
Amy Schulman, senior vice president and general counsel for Pfizer, said the drug company welcomed the settlement, which it had agreed to pay in principle back in January.
"These agreements bring final closure to significant legal matters and help to enhance our focus on what we do best -- discovering, developing and delivering innovative medicines," Schulman said, adding that the company did "regret certain actions taken in the past."
Pfizer shares were down 1.16 percent in midday trading.
The agreement was announced amid continuing efforts by the Obama administration to advance a healthcare reform package that faces stiff opposition.
The administration has countered that a key provision of the reform package is an effort to reduce waste and fraud.
"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," said Tony West, assistant attorney general for the Justice Department's civil division.
"This civil settlement and plea agreement by Pfizer represent yet another example of what penalties will be faced when a pharmaceutical company puts profits ahead of patient welfare."
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