(Article by Danielle Latenyei republished from MarketRealist.com)
In 2009, Pfizer agreed to pay $2.3 billion in a criminal and civil liability lawsuit stemming from the illegal promotion of certain drugs. At the time, it was the largest healthcare fraud settlement in history.
In 2012, healthcare giant GlaxoSmithKline (GSK) agreed to pay $3 billion in criminal and civil charges for the unlawful promotion of drugs likePaxil and Wellbutrin for uses that weren’t FDA approved. However, Pfizer still holds the record for receiving the largest criminal fine in history.
How FDA approval works for pharmaceutical companies
Under provisions of the Food, Drug and Cosmetic Act enacted in 1938, the FDA approves pharmaceuticals for specific uses that a company identifies on its application. After the FDA approves the product as safe and effective for a specified use, a company’s marketing of its drugs must be limited to the FDA-approved use. Uses other than FDA-approved are considered "off-label uses," and the FDA considers these "misbranded."
GlaxoSmithKline’s $3 billion settlement was the largest in history.
In the GlaxoSmithKline case, the company got in trouble for promoting the anti-depressant Paxil for use with patients under age 18, even though it hadn’t received FDA approval for pediatric use.
GSK also got in trouble for promoting Wellbutrin for weight loss and treatment for sexual dysfunction, substance addictions, and Attention Deficit Hyperactivity Disorder even though the FDA had only approved it to treat Major Depressive Disorder.
Besides pleading guilty to five criminal counts and getting a criminal fine of about $1 billion, GSK was also found liable for civil charges for:
- Promoting the drugs Paxil, Wellbutrin, Advair, Lamictal, and Zofran for off-label, non-covered uses
- Paying kickbacks to physicians to prescribe those drugs as well as the drugs Imitrex, Lotronex, Flovent, and Valtrex
- Making false and misleading statements concerning the safety of diabetes drug Avandia
- Reporting false best prices and underpaying rebates owed under the Medicaid Drug Rebate Program
Pfizer received the largest criminal fine in history.
In Pfizer’s 2009 settlement, the company had to pay a criminal fine of $1.195 billion and its subsidiary Pharmacia & Upjohn Company Inc. had to forfeit $105 million, for a grand total of $1.3 billion. It's still the largest criminal fine ever imposed in the U.S.
The company pled guilty to felony charges or violating the Food, Drug and Cosmetic Act by misbranding the anti-inflammatory drug Bextra and promoting it for uses that the FDA "specifically declined to approved due to safety concerns," the Department of Justice stated.
Pfizer also paid $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs—Bextra, anti-psychotic drug Geodon, antibiotic Zyvox, and anti-epileptic drug Lyrica. The settlement claims that Pfizer paid kickbacks to healthcare providers to entice them to prescribe the drugs.
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