Pfizer Settles Off-Label Probe

NEW YORK Pfizer will pay $34.7 million to end an investigation by the Department of Justice into the off-label marketing of its human-growth hormone brand, Genotropin, and allegations that a unit of the firm made kickbacks to “an outside vendor” in order to increase its sales, the company said today.

Pfizer admitted in its statement that a company it acquired, Pharmacia, “improperly promoted Genotropin between January 2000 and March 2003 for anti-aging purposes, improved athletic performance and enhanced appearance.”

The company also said it will plead guilty to a single count of “offering to an outside vendor remuneration in the form of an award of a contract to manage a Genotropin patient-assistance program as an inducement for recommending the purchase of Pharmacia medicines.”

In the plea agreement, the vendor is not named. However, the agreement describes how Pharmacia awarded a contract to a pharmacy benefit manager in return for that company recommending that its customers purchase other Pharmacia products. The vendor got the contract, despite a competing bid that was “$12 million less expensive” than the vendor’s bid.

The settlement requires Pfizer executives to cooperate with any ongoing grand jury probes, the settlement states.

The settlement’s description of the kickback scheme matches a series of allegations reported by Brandweek last year.

Two Pharmacia executives, ex-marketing vp Peter Rost and former senior director of U.S. marketing Carl Worrell, told Brandweek that Express Scripts managed the Genotropin patient assistance program even though other companies had offered to handle the business for much less money.

Rost said that when he tried to move the contract to the cheaper vendor, he was told that it was balanced out by an advantageous relationship Pharmacia had with Express Scripts regarding its much bigger drug, the painkiller Celebrex. “There was some setup in accounting so the Celebrex team reimbursed us $2 million,” Rost said at the time.

Both Pfizer and Express Scripts have repeatedly disclosed to the Securities and Exchange Commission that they were under investigation by the DOJ for this type of issue. Express declined comment at press time.

Pfizer distanced itself from the probe in today’s release. “Pfizer’s marketing and promotion practices are not involved in the settlement,” said Pfizer svp, general counsel Allen Waxman in a statement.

The settlement ends the DOJ’s interest in Pfizer, but it does not end the company’s legal entanglements with Genotropin (Pfizer remains a defendant in two legal cases related to the fiasco). In both cases, Rost sued Pfizer, alleging he was wrongly fired for complaining to Pfizer prior to its acquisition of Pharmacia that the company was engaged in off-label marketing. His federal whistleblower complaint is currently being heard by an appeals court in Massachusetts; his wrongful termination suit is pending before New York State Supreme Court in Manhattan.

“The relationships between pharmaceutical companies and the pharmacy benefit managers who have so much influence over the drug choice of millions of Americans must be free of the taint of kickbacks or other illegal payments,” said U.S. Attorney Michael Sullivan in a statement. “It is my hope that the conduct exposed by this investigation will bring greater transparency and integrity to the dealings between pharmaceutical companies and pharmacy benefit managers.”