Attorney General Thurbert Baker announced today that Georgia has joined with 48 other states [1] and the federal government in reaching the nation’s largest-ever settlement over allegations of healthcare fraud. The agreement with Pfizer Inc settled civil and criminal allegations that Pfizer and its subsidiaries paid kickbacks and engaged in off-labeling marketing campaigns that improperly promoted numerous drugs that Pfizer manufactures. Pfizer will pay the states and the federal government a total of $1 billion in civil damages and penalties to compensate Medicaid, Medicare, and various federal healthcare programs for harm suffered as a result of its conduct. Georgia’s portion of the settlement attributable to damages incurred by the state Medicaid program will be $21,718,588.00, representing both the state and federal share of Georgia Medicaid dollars.[2]

In addition, a Pfizer subsidiary, Pharmacia & Upjohn Company, Inc., has agreed to plead guilty to a federal felony charge of violating the Food, Drug, and Cosmetic Act (FDCA) and to pay a criminal fine and forfeiture of $1.3 billion. The criminal component of the resolution centers on the illegal marketing and promotion of Bextra, an anti-inflammatory drug that Pfizer pulled from the market in 2005. Because of the illegal promotion, Pharmacia & Upjohn Company, Inc. has agreed to plead guilty to a felony violation of the FDCA for misbranding the drug with the intent to defraud or mislead.

In announcing the settlement and plea deal, Attorney General Baker stressed that “this agreement is critical to preserving the integrity of the Medicaid program. Kickback schemes and off-label marketing campaigns drive up improper or unnecessary prescriptions, resulting in increased payments by Medicaid and a corresponding hit for Georgia taxpayers footing the bill.”

Baker went on to relate what $21.7 million means in Medicaid dollars, pointing out that it represents the annual cost to provide insurance coverage for more than 8,900 non-disabled children [3] or to cover treatment costs related to treating cancer patients between the ages of 18-44.[4]

Georgia and the other states, as well as the federal government, alleged that Pfizer, the largest pharmaceutical manufacturer in the world, engaged in a pattern of unlawful marketing activity to promote multiple drugs for certain uses which the Food and Drug Administration (FDA) had not approved. While it is not illegal for a physician to prescribe a drug for an unapproved use, federal law prohibits a manufacturer from promoting a drug for uses not approved by the FDA. This promotional activity included:

  • Marketing Bextra for conditions and dosages other than those for which it was approved;
  • Promoting the use of the antipsychotic drug Geodon for a variety of off-label conditions such as attention deficit disorder, autism, dementia and depression for patients that included children and adolescents;
  • Selling the pain medication Lyrica for unapproved conditions;
  • Making false representations about the safety and efficacy of Zyvox, an antibiotic only approved to treat certain drug resistant infections.

In addition to the improper off-label marketing of these drugs Pfizer is alleged to have paid illegal remuneration to health care professionals to induce them to promote and prescribe Bextra, Geodon, Lyrica, Zyvox, Aricept, Celebrex, Lipitor, Norvasc, Relpax, Viagra, Zithromax, Zoloft and Zyrtec. These payments allegedly took many forms, including entertainment, cash, travel and meals. Federal law prohibits the payment of anything of value in exchange for the prescribing of a product paid for by a federal health care program.

As a condition of the settlement, Pfizer will enter into a Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of the Inspector General, which will closely monitor the company’s future marketing and sales practices. State efforts in reaching this settlement and plea were led by the National Association of Medicaid Fraud Control Units, a national organization comprised of the various state healthcare fraud control units.

[1] Every state except South Carolina joined with the federal government and the District of Columbia in this settlement.

[2] Each state’s Medicaid program is paid for by state expenditures which are “matched” by corresponding federal dollars, often at a greater than 1:1 match.

[3] Based on Department of Health & Human Services 2008 Actuarial Report detailing per enrollee Medicaid spending.

[4] Based on Chronic Disease Cost information provided by the Centers for Disease Control.