Pfizer to Pay $49 Million in Fraud Case

Pfizer has agreed to pay $49 million to settle charges that a subsidiary defrauded the Medicaid program by overcharging for the cholesterol-lowering drug Lipitor, the Justice Department said today.

Medicaid, the state-federal health insurance program for the poor, requires drug makers to pay quarterly rebates to states to account for discounts drug companies give to favored customers.

Parke-Davis Labs was accused of overstating the best price for Lipitor in the first and second quarters of 1999 by concealing $250,000 in discounts to a managed care customer in Louisiana, the Justice Department said.

Parke-Davis was acquired by Pfizer in 2000 when it bought Warner-Lambert. Lipitor had sales of $6.45 billion in 2001.

The Justice Department said the unreported discounts allowed Parke-Davis/Warner-Lambert to retain more than $20 million in rebates owed to Medicaid.

The Lipitor accusations stem from a lawsuit brought by a former Warner-Lambert employee. The government has said that it will not pursue other accusations in the lawsuit involving payments to five other health plans and two pharmacy benefit managers, a Pfizer statement said.

In addition to the payment, the Justice Department said that Pfizer agreed to a five-year corporate integrity agreement intended to prevent problems.

''We are pleased to bring this legacy Warner-Lambert matter to a conclusion,'' said Jeffrey Kindler, Pfizer's general counsel.