Bloomberg news reports on why the acting U.S. attorney in Boston is blasting a top pharmaceutical company for engaging in “clearly criminal” actions.

“Prosecutor Michael Loucks remembers clearly when lawyers for Pfizer Inc., the world’s largest drug company, looked across the table and promised it wouldn’t break the law again,” David Evans writes for Bloomberg.

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It was January 2004, and the attorneys were negotiating in a conference room on the ninth floor of the federal courthouse in Boston, where Loucks was head of the health-care fraud unit of the U.S. Attorney’s Office. One of Pfizer’s units had been pushing doctors to prescribe an epilepsy drug called Neurontin for uses the Food and Drug Administration had never approved. In the agreement the lawyers eventually hammered out, the Pfizer unit, Warner-Lambert, pleaded guilty to two felony counts of marketing a drug for unapproved uses. New York-based Pfizer agreed to pay $430 million in criminal fines and civil penalties, and the company’s lawyers assured Loucks and three other prosecutors that Pfizer and its units would stop promoting drugs for unauthorized purposes. What Loucks, who’s now acting U.S. attorney in Boston, didn’t know until years later was that Pfizer managers were breaking that pledge not to practice so-called off-label marketing even before the ink was dry on their plea.

Loucks tells Bloomberg news, “At the very same time Pfizer was in our office negotiating and resolving the allegations of criminal conduct in 2004, Pfizer was itself in its other operations violating those very same laws.”

“They’ve repeatedly marketed drugs for things they knew they couldn’t demonstrate efficacy for,” Loucks added. “That’s clearly criminal.”

Pfizer agreed in September to pay out a record 2.3 billion dollars to settle a high-profile fraud case, pleading guilty to a criminal charge for marketing its painkiller Bextra illegally.

The settlement by the world’s biggest drugmaker was trumpeted as a major victory by President Barack Obama’s administration in its efforts to cut down fraud as part of a major overhaul of America’s health care system.

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Health Secretary Kathleen Sebelius held a press conference to announce the settlement, which will end criminal and civil proceedings against Pfizer over the allegations it illegally marketed drugs for off-label purposes.

“This historic settlement will return nearly one billion dollars to Medicare, Medicaid, and other government insurance programs, securing their future for the Americans who depend on these programs,” she said in a statement.

The agreement with Pfizer is divided into several parts, the largest of which is a 1.195 billion dollar fine — the largest criminal fine ever imposed in the United States for any matter, according to the Justice Department.

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The company will also forfeit 105 million dollars and pay an additional one billion dollars “to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs.”

The case arose from allegations that Pfizer illegally marketed Bextra, the anti-psychotic drug Geodon, the antibiotic Zyvox, and Lyrica, an anti-epileptic drug, for uses that were not approved by the Food and Drug Administration.

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The Justice Department had alleged that Pfizer’s inappropriate marketing “caused false claims to be submitted to government health care programs for uses that were not medically accepted indications and therefore not covered by those programs.”

The settlement also ends civil proceedings over “allegations that Pfizer paid kickbacks to healthcare providers to induce them to prescribe these, as well as other, drugs,” the Justice Department said.

Assistant Attorney General Tom Perrelli said the investigation into Pfizer’s activities illustrated that combating healthcare fraud “is one of this administration’s top law enforcement priorities.”

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“This case is a great example of the department’s commitment to fiscal accountability, combating fraud, and returning much-needed dollars back to the US Treasury and state treasures,” he said.

Amy Schulman, senior vice president and general counsel for Pfizer, said the drug company welcomed the settlement, which it had agreed to pay in principle back in January.

“These agreements bring final closure to significant legal matters and help to enhance our focus on what we do best — discovering, developing and delivering innovative medicines,” Schulman said, adding that the company did “regret certain actions taken in the past.”

The agreement was announced amid continuing efforts by the Obama administration to advance a healthcare reform package that faces stiff opposition.

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The administration has countered that a key provision of the reform package is an effort to reduce waste and fraud.

“Illegal conduct and fraud by pharmaceutical companies puts the public health at risk, corrupts medical decisions by health care providers, and costs the government billions of dollars,” said Tony West, assistant attorney general for the Justice Department’s civil division.

“This civil settlement and plea agreement by Pfizer represent yet another example of what penalties will be faced when a pharmaceutical company puts profits ahead of patient welfare.”

(with afp report)

Bloomberg’s lengthy report can be accessed at this link