BOSTON, April 25 /PRNewswire-USNewswire/ -- PHARMACIA AND UPJOHN COMPANY, INC., a subsidiary of Pfizer Inc., pleaded guilty today in federal court to one count of offering a kickback to a pharmacy benefit manager in the expectation of obtaining improved formulary status for PHARMACIA's drug products from the pharmacy benefit manager. The company was also sentenced at today's hearing.
United States Attorney Michael J. Sullivan; Joseph C. Moraski, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of the Inspector General in New England; and Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation in New England, announced today that PHARMACIA & UPJOHN COMPANY, INC. was sentenced by U.S. District Judge Richard G. Stearns to pay a criminal fine of $19.68 million. As a result of its criminal conviction, PHARMACIA will be excluded permanently from participation in all federal health care programs.
At the plea hearing, the prosecutor told the Court that, had the case proceeded to trial, the government's evidence would have proven that PHARMACIA offered inflated payments to a subsidiary of a pharmacy benefit manager ("PBM") to administer a distribution contract in the expectation of receiving improved formulary positioning and improved formulary benefits from that PBM for PHARMACIA's drug products. The inflated payment offered by PHARMACIA to the PBM was in the amount of $12.3 million and PHARMACIA's financial analyses showed that PHARMACIA expected to earn that much or more if the PBM had made the formulary positioning or formulary benefit improvements expected by PHARMACIA in return for the offer of inflated payments.
A pharmacy benefit manager, or PBM as they are commonly referred in the pharmaceutical industry, acts as a middleman between pharmaceutical companies and health insurers. PBMs often recommend pharmaceutical products to health plans. The list of pharmaceutical product recommendations is called a formulary. PHARMACIA's offer of a kickback to the PBM was designed to undermine the independent manner in which PBMs are supposed to make drug recommendations to millions of Americans. Those choices should be made based on the efficacy, safety and cost of the each drug, rather than a kickback, or as in this case, the offer of a kickback.
On April 2, 2007, in addition to the criminal plea agreement, it was also announced that another Pfizer subsidiary, PHARMACIA & UPJOHN COMPANY LLC, had entered into a Deferred Prosecution Agreement with the United States Attorney's Office for the District of Massachusetts arising out of its illegal promotion of its human growth hormone product, Genotropin, for the "off-label" uses of anti-aging, cosmetic use and athletic performance enhancement. As a result of the criminal plea and Deferred Prosecution Agreement, the companies will pay a total of $34.7 million.
The case was investigated by the U.S. Attorney's Office for the District of Massachusetts, the Department of Health and Human Services, Office of the Inspector General, and the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorneys Jeremy Sternberg and Susan Winkler in Sullivan's Health Care Fraud Unit. Also assisting in this matter was Auditor Patrick Hegarty of the U.S. Attorney's Office.
U.S. Attorney's Office