Pfizer settles Lipitor case inherited in acquisition

Suit alleged overcharging of U.S., state governments

October 29, 2002|By BLOOMBERG NEWS

BEAUMONT, Texas - Pfizer Inc., the world's No. 1 drug maker, agreed to pay $49 million to settle a suit alleging that a company it acquired two years ago overcharged the federal and state governments for Lipitor, a cholesterol-lowering drug.

The settlement was more than double the $21 million the Medicaid program overpaid for the drug in 1999, according to lawyers for plaintiff John David Foster, a former account manager for Pfizer's Parke-Davis unit. Foster raised questions about the charges for Lipitor that led to the whistle-blower suit in 2000.

"Foster refused to work in an environment that compromised the federal laws and now he feels he's vindicated," his attorney, Joel Androphy, said.

The Pfizer agreement comes a year after a record settlement by TAP Pharmaceutical Products Inc., a joint venture of Abbott Laboratories and Takeda Chemical Industries Ltd. TAP paid $875 million to resolve claims it defrauded the government by helping doctors bill Medicare and Medicaid for free drug samples. More than a dozen U.S. drug companies have been subpoenaed in a widening probe of Medicaid fraud.

Pfizer said in a statement that the Lipitor suit was a "legacy" from its acquisition of Warner-Lambert Co., Parke-Davis' parent, in 2000. Pfizer said it will work with the U.S. Department of Health and Human Services to ensure compliance with federal law.

According to the settlement, Pfizer agreed to cooperate with the federal government's investigation of "individuals and entities not specifically released in this settlement," indicating that there may be more civil or criminal charges to come. Justice Department spokesman Charles Miller declined to comment.

"I think you're going to see a bunch of these settlements over the next few years," said Paul Heldman, an analyst with Schwab Washington Research Group. "These are long-running investigations, and the states especially are really set on going after these companies for allegedly overcharging."

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