Oregon Department of Justice

Attorney General Ellen F. Rosenblum

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AG Announces $430 Million Global Settlement Against Warner-Lambert, A Subsidiary Of Pfizer

May 13, 2004

Attorney General Hardy Myers today announced a $430 million global settlement against Warner-Lambert, a wholly-owned subsidiary of Pfizer Inc. The settlement resolves alleged violations of state and federal laws by Warner-Lambert's deceptive and off-label marketing of Neurontin, an epilepsy drug. Oregon is a lead state in the settlement, which was agreed to by all 50 states and the District of Columbia. The states' settlement was reached in conjunction with Warner-Lambert's pleading guilty in U.S. District Court (Boston) to federal criminal charges of violating the Food, Drug and Cosmetics Act.

"Off-label" describes a practice in which physicians prescribe pharmaceutical products for purposes other than those expressly approved by the federal Food and Drug Administration (FDA). While physicians are permitted to prescribe drugs for off-label uses, it is illegal for pharmaceutical manufacturers to promote off-label uses of a drug.

Under the terms of the global settlement, Warner-Lambert will pay a $240 million criminal fine as a result of the federal action. As a result of the states' actions they will pay $152 million to states' Medicaid programs in restitution and fines, pay $28 million to the state Attorneys' General for consumer and physician education programs, and pay $10 million for the states' Attorneys General fees and costs. The settlement also requires that Warner-Lambert adhere to the terms of a Corporate Integrity Agreement (CIA) requiring strict scrutiny of its future marketing and sales practices of products reimbursed by federal health care programs. Additionally, Warner-Lambert entered into an Assurance of Voluntary Compliance (AVC) filed today in the Marion County Circuit Court which prohibits Warner-Lambert from deceptive and misleading pharmaceutical marketing practices in the future.

As a result of the agreement, Oregon Medicaid programs will recover approximately $1.3 million in restitution and damages from the settlement. Additionally, two education accounts totaling $28 million will be established in Oregon. These accounts will be used to establish two grant programs that will be administered by the Oregon Department of Justice along with the other lead states. The first $6 million will be used for a national advertising program to provide consumers and doctors with fair and balanced information about Neurontin and other prescription drugs. The remaining $21 million will fund a doctor and consumer education program, which will award grants to government agencies, academic institutions, and non-profit organizations to provide doctors and consumers with unbiased research and information about pharmaceutical products. Up to $1 million of the fund will be used to evaluate the effectiveness of the grant programs. Finally, the settlement pays $700,000 to Oregon' Consumer Protection and Education Revolving Account, which funds Oregon's Consumer Protection Program.

"Today's settlement is an unprecedented and extraordinary victory for all Oregonians," said Myers. "It holds the world's largest pharmaceutical company accountable for its unethical behavior. It provides a large recovery for Oregon Medicaid programs. It prohibits the unethical and illegal practice of off-label marketing. And it funds two important new educational programs for doctors and patients."

"We are confident that this nearly half billion dollar settlement will send a clear and unambiguous message to pharmaceutical companies - be honest or be held accountable," concluded Myers.

The global federal and state settlements were the result of a 1996 "whistleblower" action filed by a former Warner-Lambert employee, David Franklin, alleging that the company engaged in a massive off-labeling marketing scheme to promote Neurontin. At the time, Neurontin only was FDA-approved as a drug to be prescribed in combination with another epilepsy drug.

In this case, Warner-Lambert illegally promoted off-label uses of Neurontin. The company funded the production and dissemination of anecdotal reports promoting Neurontin as a treatment for such problems as pain management, bipolar disorder, restless leg syndrome, alcohol and drug withdrawal, and migraines.

Warner-Lambert also made payments to physicians for "research" that state and federal officials contend was in effect a kickback for off-label prescribing and provided high-priced perks to physicians who attended or spoke at classes promoting Neurontin for off-label uses. The marketing campaign, aimed at influencing the information stream to physicians and consumers, resulted in inappropriate, unnecessary and ineffective prescriptions of Neurontin paid for by consumers and state Medicaid programs.

This settlement marks the first time that state Attorneys' General Consumer Protection Divisions joined the U.S. Department of Justice and the National Association of Medicaid Fraud Control Units to settle a pharmaceutical marketing case. Oregon and Florida were the only two states with both their Consumer Protection and Medicaid Fraud Control Units playing lead roles. Other lead states in either the consumer protection settlement or Medicaid fraud settlement include Vermont, Delaware, Washington, North Carolina, and a number of states from the National Association of Attorneys General (NAAG) Health Fraud working group.

Consumers wanting more information about the settlement may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392, or online at www.doj.state.or.us.

Contact:

Kevin Neely, Justice, (503) 378-6002
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