Pfizer Resolves Federal Marketing Allegations for $491 Million

Pfizer (NYSE: PFE  ) has agreed to pay $490.9 million to resolve allegations of improper marketing of kidney transplant drug Rapamune, according to the U.S. Department of Justice. Rapamune was approved by the U.S. Food and Drug Administration in 1999 for use in kidney transplant patients.

The allegations maintain that Wyeth Pharmaceuticals, which was acquired by Pfizer in 2009, promoted use of Rapamune for "off-label" uses other than kidney transplants. Wyeth was accused of training its sales force to market the drug for unapproved types of transplants and providing financial incentives for sales made for these unapproved uses.

Under terms of its agreement with the Department of Justice, Wyeth pleaded guilty to a criminal charge under the Federal Food, Drug and Cosmetic Act for misbranding Rapamune. This plea requires the company to pay a fine of $157.58 million and forfeit assets of $76 million.

Wyeth will also resolve civil liability with federal and state governments by paying $257.4 million. This civil liability stemmed from allegations that Wyeth violated the False Claims Act from 1998 through 2009 by submitting claims to Medicare, Medicaid, and other federal health care programs for uses of Rapamune that were not approved. The pharmaceutical company will pay approximately $230.1 million to the federal government and $27.3 million to the states.

The Rapamune case stemmed from a whistleblowing ex-Wyeth sales rep.

Pfizer noted in a statement quoted by some media outlets that it "was not a subject or target of this matter, and cooperated fully with the government from the time it learned of this investigation in October 2009."

-- Material from The Associated Press was used in this report.


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  • Report this Comment On July 31, 2013, at 4:23 PM, EllenBrandtPhD wrote:

    This headline and any others should, of course, read Wyeth, not Pfizer.

    PFE just bought Wyeth - most thought at a good price - and is responsible now for its liabilities. This doesn't reflect much on PFE itself.

    Surprised PFE still has not been given credit for its earnings report, which was fine. And Business Insider story on which companies might benefit most from a repatriation tax holiday - which I think is definitely coming - places PFE near the top of the list.

    If Dow had rallied into the close, PFE would have rallied more, almost certainly going all the way to 30.20 or so.

    Now, we have to see how general market reacts to ECB and BOE actions - European stocks on US market did well this afternoon, which usually means a higher Europe tomorrow - and Asian/Middle Eastern news. Oil could turn positive on contract turnover, if all the still horrid things that are happening are permitted to come into the market - and the Lords of the Market often like to counter that with a Bullish day here.

    Friday, of course, depends on Jobs. I think Goldilocks is again the best bet for a rally. Too cool is better than too hot - although Fed today seemed to imply - I heard them just the same as you did - that September is OFF the table and October or December is much more likely.

    But we will see what we will see.

    In any case, don't blame Pfizer for what Wyeth did the year of the acquisition. And they have so much cash on hand now, getting rid of settlements here is exactly the same as it is at Halliburton or Morgan.

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