Pfizer Settles Neurontin Medicaid Fraud Case for $430 Million
Pfizer reportedly has agreed to plead guilty to criminal wrongdoing and pay a settlement of $430 million in a whistleblower lawsuit alleging that the Parke-Davis unit of Pfizer subsidiary Warner-Lambert illegally encouraged physicians to prescribe the epilepsy drug Neurontin for treatment of more than a dozen medical conditions without FDA approval, the Wall Street Journal reports. Citing unnamed sources, the Journal reports that the agreement, which "represents one of the largest Medicaid-fraud settlements" ever, could be announced as early as this week (Armstrong/Zimmerman, Wall Street Journal, 5/13). The suit charged that Parke-Davis, which Pfizer acquired as part of its purchase of Warner-Lambert in 2000, greatly increased sales of Neurontin for off-label uses by suppressing and manipulating study results. Physicians can write prescriptions for medications for uses not approved by FDA, but pharmaceutical companies cannot market treatments for unapproved uses. However, FDA rules allow pharmaceutical companies to provide physicians with educational information about off-label uses of medications. A federal investigation and similar actions by states and the District of Columbia, both of which resulted from the whistleblower suit, sought to recoup Medicaid expenditures for Neurontin prescriptions that resulted from the allegedly illegal promotional practices. According to court documents, Parke-Davis concealed and misstated some clinical information about Neurontin's ability to treat conditions that were not included in its FDA approval and paid physicians millions of dollars to promote Neurontin for off-label uses. (Kaiser Daily Health Policy Report, 5/30/03). Studies have found that more than 90% of Neurontin prescriptions are off-label, the Journal reports. Pfizer has said that the claims concern alleged actions that occurred before Pfizer acquired Parke-Davis.
Settlement
The settlement was negotiated by the U.S. attorney in Boston and all 50 states' attorneys general. Pfizer will pay $240 million in criminal fines; $152 million in civil fines, to be divided between state and federal Medicaid agencies and the whistleblower who brought the case; and $38 million for state consumer-protection divisions that investigate drug companies. Pfizer will also sign a corporate integrity agreement that allows for "monitoring of marketing practices," and the company will be allowed to continue conducting business with the government, according to the Journal. The settlement amount is close to the estimated $421.6 million in Medicaid costs resulting from off-label use of Neurontin during the settlement period from 1994 to mid-2000. According to the Journal, Pfizer said it "was taking a pretax charge of $427 million and $403 million after taxes to settle the investigations into the promotion of Neurontin." Pfizer on Wednesday declined to comment on the deal. Neurontin accounted for $2.7 billion in revenue for Pfizer last year, but many analysts expect copycat drugs to enter the market and increase competition later this year or in 2005, following the resolution of pending legal challenges to patents related to the drug. Pfizer at the end of last year applied for FDA approval for Neurontin's successor drug, Lyrica, which is expected to win approval for sale in Europe as soon as next month (Wall Street Journal, 5/13)
