Life Science Compliance Update

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September 03, 2009

Pfizer: $2.3 Billion Settlement and Corporate Integrity Agreement

Pfizer Inc today announced a finalized settlement with the Department of Justice (DOJ) regarding an investigation into past off-label promotional practices related to Bextra, which Pfizer voluntarily withdrew from the market in 2005.

The final agreement also resolved past off-label promotional practices related to certain payments to healthcare professionals involving Zyvox, Geodon and Lyrica, and nine other Pfizer medicines, and several related qui tam actions.

Pfizer previously disclosed a related $2.3 billion charge to its fourth-quarter and full-year 2008 earnings in connection with the DOJ agreement in principle on January 26, 2009. No additional charge to the company’s earnings will be recorded in connection with this settlement.

Under this agreement, which is the largest ever by a drug maker accused of marketing wrongdoing, Pfizer will pay $1.0 billion in civil payments related to a number of medicines, and a $1.3 billion criminal penalty related only to Bextra.

This breaks down to:

· approximately $503 million to resolve civil allegations concerning past promotional practices related to Bextra;

· approximately $301 million for Geodon,

· approximately $98 million for Zyvox, and

· Approximately $50 million for Lyrica.

The settlement also includes a civil payment of approximately $48 million to resolve allegations relating to certain payments to healthcare professionals involving nine other Pfizer medicines.

The company will also pay a total of $33 million to 42 states and the District of Columbia to settle state civil consumer protection allegations related to its past promotional practices concerning Geodon. This charge amount will be taken from their third-quarter 2009 earnings.

Additionally, a Pfizer subsidiary, Pharmacia & Upjohn Company, Inc., will plead guilty to one criminal count of violating the U.S. Food, Drug, and Cosmetic Act related to its past promotion of Bextra. A portion of the civil payments will be distributed to 49 states and DC pursuant to state Medicare agreements.

Amy W. Schulman, senior vice president and general counsel of Pfizer noted that “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 to treat patients dealing with some of the world’s most debilitating diseases.”

Ms. Schulman noted that Pfizer is “proud of the action they are now taking to strengthen their internal controls and pioneer new procedures so they not only comply with state and federal laws, but also meet the high standards that patients, physicians and the public expect from a leading worldwide company dedicated to healing and better health.”

Pfizer expressly denies all of these civil allegations, with the exception that Pfizer acknowledges certain improper actions related to the promotion of Zyvox.

Corporate Integrity Agreement

As part of the DOJ settlement, Pfizer has entered into a Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS). The CIA will create new ways to monitor Pfizer’s compliance with the settlement for five years, and require the company to engage an Independent Review Organization (IRO) that will help the company change it’s promotional and product-related business functions.

Compliance and Monitoring

The CIA agreement to monitor compliance also focuses on continuing medical education (CME) programs as well:

· The term "Third Party Educational Activity" means any continuing CME, disease awareness, or other scientific, educational, or professional program, meeting, or event supported by Pfizer, including but not limited to, sponsorship of symposia at medical conferences.

· Pfizer will develop a monitoring program for activities that are initiated, budgeted, and handled from Pfizer headquarters: 1) consulting arrangements, 2) publication activities, and 3) medical education grants and health care related charitable contributions submitted by MEG


Consulting Arrangement Activities


Health care professionals (HCPs) or Consultants of Pfizer, other than for speaker programs (~ as a member of an advisory board or to attend consultant meetings) that relate to Promotional and Product Related Functions, will be required:


· To enter written agreements describing the scope of work to be performed, the consultant fees to be paid, and compliance obligations for the Consultants.


· Consultants will be paid according to a centrally managed, pre-set rate structure that is determined based on a fair-market value analysis conducted by Pfizer.


· Prior to the retention of Consultants, Pfizer will ensure that a business rationale form has been completed to justify the retention of the consultant. The business rationale form will include information about the numbers and qualifications of the HCPs to be engaged, the agenda for the proposed meeting, and a description of the proposed work to be done and type of work product to be generated


Publication Activities


These same arrangements will be made with respect to HCPs producing articles or other publications for Pfizer relating to Government Reimbursed Products (collectively "Publication Activities").


In addition, within 120 days after the Effective Date, Pfizer will establish a needs assessment process for Publication Activities that is completed and approved by Pfizer's Legal department prior to Pfizer's engagement of an HCP or HCI to conduct Publication Activities.


The assessment will provide a description of the proposed work to be done, type work product to be generated, and the purpose for the work. There will also be audits for at least 30 Publication Activities during each Reporting Period. Pfizer's Policies and Procedures shall be reported to the Compliance Department for appropriate follow-up activity.


Medical Education Group Activities

Pfizer represents that it does not provide funding to companies the business of which is developing and conducting medical education programs (also known as medical education communication companies).

Pfizer does provide funding to healthcare organizations that also provide continuing medical education, incidental to their health care mission.

Pfizer represents that it has established a Medical Education Group (MEG) within its Chief Medical Office as the exclusive mechanism through which requestors may seek or be awarded grants for CME activities.


In addition, the MEG group also reviews and awards certain charitable contributions to a healthcare related charitable organization in which the contribution's purpose is:


  • Related to patient disease state education;

  • To provide health screening; or (3) to improve patient access to treatment (i.e., affordability of care).

Pfizer will establish a Grant Monitoring Program to conduct audits of at least 50 medical education grant requests and at least 10 charitable contribution requests.

Pfizer will publish on its website quarterly CME grants including:


  • The recipient organization's name:

  • A brief description of the program for which the grant or charitable contribution was requested; and

  • The amount of the grant or charitable contribution.

Reporting of Physician Payments


On or before March 31, 2010, Pfizer will post on its website an easily accessible and readily searchable listing of all U.S.-based physicians, and Related Entities who or which received Payments directly or indirectly from Pfizer between July 1, 2009 and December 31, 2009 and the aggregate value of such Payments.


After the initial posting, Pfizer shall post annual listings on March 31, 2010 and March 31 of each of the three successive Reporting Period years. These postings will be managed and updated regularly by Pfizer.


Each listing will include names of physicians, and/or Related Entities to whom or to which Pfizer directly or indirectly made Payments. The Payment amounts in the lists shall be reported in $10,000 increments (e.g., $0 -$10,000, $10,001-$20,000, etc. or in the actual amount paid.


"Payments" made to physicians or Related Entities include honoraria payments, reimbursement for lodging, travel and other expenses made in connection with physicians serving as speakers, participating in speaker training, or serving as Consultants or Authors; payments or compensation for services rendered; grants; fees; payments relating to research; payments relating to education; and payment or reimbursement for food, entertainment, gifts, trips or travel, product(s)/item(s) provided for less than fair market value, or other economic benefit paid or transferred.


The term "Payments" does not include:


i) Samples of drug products that meet the definition set forth in 21 C.F.R. § 203.3(i), or


ii)      Discounts, rebates, or other pricing terms.


Only for purposes of the reporting of  Payments on March 31, 2010, the term "Payments"

does not include:


· Individual Payments of less than $25 per instance, or

· Aggregate Payments in a year to a physician or Related Entity of less than $500.

· Beginning with the March 31, 2011 report and all reports thereafter, individual


Payments' under $25 per instance and aggregate Payments of less than $500 shall be

included in the Payment amounts listed in the applicable report.


Pfizer’s posting of payment information will be subject to confidentiality provisions contained in clinical research agreements that were entered with a U.S.-based physician prior to July 1, 2009. Pfizer will not include any such confidentiality provisions in any new or renewed clinical research agreements entered after the effective date of the CIA that require the payment to a U.S. based physician.


Pfizer represents that it expects all Consultants to fully comply with all applicable disclosure obligations relating to their relationship with Pfizer that may be externally imposed on the Consultants

Pfizer also expects all Authors of biomedical manuscripts to fully comply with the International Committee of Medical Journal Editors (ICMJE) criteria regarding authorship and disclosure of their relationship with Pfizer.

It is important to note that since the settlement in January, Pfizer announced in February 2009, to disclose publicly its financial relationships with physicians, medical organizations and patient advocacy groups, including investigators who conduct clinical research. Pfizer is also the first biopharmaceutical company to report payments for conducting Phase I-IV clinical trials in addition to disclosing payments for speaking and consulting.

Ultimately, Pfizer so far has taken the proper steps to address these problems both on the legal and medical issues. With its new policies and outside support from the government, the company’s progress will continue, and Pfizer will be a leader for disclosure and compliance. 

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