Pfizer, Inc.’s Executives Get Pass on Prosecution

Billions in Fines and Settlements a Cost of Business

Can a corporate criminal culture ever be reformed unless high-ranking executives go to prison? Is there even such a thing as a corporate culture? Suppose some CEOs do go to prison but the criminal behavior continues —What then?

When a corporation is a repeat felony offender, corporate reform aside, shouldn’t the human decision-makers be put on trial?

We don’t know the answers to these and many other corporate governance questions but Americans are demanding those answers with great urgency.

In a piece written for Public Citizen, the prestigious public interest organization founded in 1971 by Ralph Nader, the group’s current president, Robert Weismann, had this to say:

Enough! Make Corporate  Criminals Accountable

Is your outrage meter at full tilt? It should be. In recent years, the world’s largest corporations have committed a staggering number of crimes — selling dangerous and defective products, crashing the global economy, ripping off consumers and polluting the planet — and lied about their crimes and wrongdoing. Yet these companies have, by and large, evaded pleading guilty to having committed crimes of any sort. They’ve been hit with fines, but those are easily absorbed as the cost of doing business. And, with a few important exceptions, the executives in charge of these criminal companies have avoided jail time or any legal responsibility whatsoever.

Many politicians would rather change the subject. Republicans, when they aren’t crying crocodile tears at the plight of “hard-working taxpayers” on the TV screen, are busy behind closed doors cutting taxes on the super-rich, carving out new corporate tax loopholes, fighting against minimum wages, diminishing the waning power of organized labor, bashing Social Security, Medicare and worker pensions, and on and on. In other words, they’re doing the bidding of their corporate paymasters. Their candidates much prefer talking about the threat of ISIS and evil immigrants pouring across our borders, threatening the collapse of Western Civilization.

Many Democrats soft-pedal the (Bill) Clinton-initiated Wall Street financing of their party, bought at the expense of deregulating the financial industry. That Faustian bargain destroyed the lives of millions of people, took the world economy down, and in the end may give the Republican Party all three branches of government. One thing we do know the answer to: Time is running out. Bernie Sanders wants a serious debate and real reform. So do we.

The criminal law is only one aspect, and maybe not the most important instrument, to rein in corporate power. But it’s important. It’s painful to see the devices by which federal prosecutors under both Republican and Democratic administrations have allowed large corporations and those responsible for their behavior literally to get away with murder. Painful though it is, a short history of this month’s corporate Frankenstein is instructive.

Mob Bosses in Nice Suits are Dangerous to Your Health


Gambino, Bonanno, Escobar, El Chapo, Lepke, Lansky: Fuggedabout ’em. This global criminal enterprise is far more dangerous than any of them. “Pfizer, Inc.” is what it’s called. The 50-year rap sheet, the multi-billion dollar revenues, the legions of politicians, regulators, researchers, and doctors on the corporate pad, the crippling injuries and deaths by the tens, if not hundreds of thousands: by any measure, Pfizer, Inc.’s status as a career corporate criminal is beyond debate.

Of course, this sounds like hyperbole. A household name we’ve grown up with, one that conjures images of scientists peering through microscopes and doctors in white coats, of miracle drugs and miraculous cures, ought not to be characterized as a brutal sociopath, a Teflon Don. Should it?

Headquartered on East 42nd Street in Manhattan, the giant biopharmaceutical company employs more than 110,000 people worldwide and takes in about $50 billion a year in revenues. To the question whether there is any such thing as a “corporate culture,” Pfizer’s criminal history suggests that though they aren’t people in a common-sense meaning of the word, corporations do indeed have cultures.

Let’s take a close look at this one.

A long series of regulatory judgments, prosecutions and lawsuits has resulted in fines and settlements totalling almost $3.5 billion against Pfizer and its subsidiaries in just the past two decades.

Lest it be thought that this is a recent phenomenon, it’s important to understand that misleading advertising, false patent claims and blatant manipulation of government regulators was Pfizer’s corporate practice at least as early as the 1950s. That first pharmaceutical scandal came to light largely because of a feisty senator who shrugged off corporate charges that he was anti-capitalist and was harming the free-enterprise system. Sound familiar?

Details about that era are spelled out in a related article on page 4. For now, though, let’s look at what Pfizer’s current management has done.

Pfizer in the Modern Era: False Advertising, Price-fixing and Fraud

In 1996 Pfizer was one of 15 large drug companies that agreed to pay more than $408 million to settle a class-action lawsuit for conspiring to fix the prices charged to independent pharmacies.

In 1999 Pfizer pleaded guilty and paid fines totaling $20 million in connection with two international price-fixing conspiracies — one involving the food preservative sodium erythorbate and the other the flavor enhancer maltol.

In 2000 the FDA warned Pfizer and Pharmacia, co-marketers of the arthritis drug Celebrex, that the consumer ads promoting Celebrex were false and misleading. Two years later, the FDA ordered Pfizer to stop running a series of magazine ads that the agency said misleadingly suggested that its cholesterol-lowering drug Lipitor was safer than competing products

In 2002 Pfizer paid $49 million to settle charges that one of its subsidiaries defrauded the federal Medicaid program. It paid an aggregate $430 million to resolve criminal and civil charges. It also agreed to settle claims under the False Claims Act relating to Medicaid reimbursement.

In 2003, after acquiring Pharmacia Corp., Pfizer reneged on its promise to license its AIDS drug Rescriptor for low-cost distribution in poor countries. In the same year, Pfizer paid $6 million to settle with 19 states that had accused the company of using misleading ads to promote its Zithromax medication for children’s ear infections.

Again in 2003, while Congress was considering whether to legalize the importation of cheap prescription drugs from Canada, Pfizer told major Canadian pharmacies that they would have to begin ordering directly from Pfizer rather than wholesalers. Pfizer thus could cut off supply if it suspected the Canadian pharmacies of selling to the U.S. market. The following year, Pfizer announced that wholesalers would have to report on orders from individual drugstores.

Under the Federal Food, Drug and Cosmetic Act (FDCA), when a pharmaceutical company develops a product it must indicate the specific use of the product in its new drug approval application. Once the FDA approves the product for the specific use, a company may not market the drug for any other uses, unless it receives FDA approval for the new use.

In 2004, Warner-Lambert, a newly acquired subsidiary, pled guilty to a felony relating to off-label, illegal promotion of Neurontin, an epilepsy drug. Lawyers for ex-Neurontin users said the defendant knew it posed a suicide risk and failed to disclose the risk to patients and doctors, some of whom benefited financially from prescribing the drug. The company separately settled at least two lawsuits in which the drug played a role in users’ suicides.

A federal jury trial resulted in a judgment of $47.3 million under a provision of the Racketeer Influenced and Corrupt Organizations Act of 1970 (The RICO statute). The federal judge tripled the judgment to $142.1 million. Evidence later surfaced that Pfizer arranged for delays in the publication of scientific studies that undermined its claims for off-label uses of certain of its drugs.

In April 2007, Pharmacia & Upjohn Company, another Pfizer subsidiary, pled guilty to a felony and entered into two separate settlements totaling $34.7 million. Pharmacia & Upjohn Company pled guilty to a $12.3 million illegal kickback to a subsidiary of a pharmacy benefit manager (PBM) to induce health insurers and health plans to recommend its drugs. Under the plea agreement, Pharmacia agreed to pay a $19.68 million criminal fine and was excluded permanently from participation in all federal health care programs.

Pharmacia entered into a Deferred Prosecution Agreement (DPA) to resolve charges that it had promoted Genotropin for off-label uses such as anti-aging, cosmetic use, and athletic performance enhancement. The company agreed to pay a $15 million penalty. Pfizer paid $34.7 million to resolve Genotropin-related investigations conducted by the U.S. Department of Health and Human Services, the U.S. Department of Justice and the FBI.

The Blockbuster: Big Drug, Big Penalties, but Huge Profits

In 2009 Pfizer agreed to pay $2.3 billion to resolve criminal and civil charges relating to the improper marketing of Bextra and three other medications. The amount was a record for a healthcare fraud settlement and a record criminal fine of any kind. Although Bextra had been approved only for arthritis and menstrual cramps, unnamed Pfizer executives instructed sales representatives to tell doctors it could be used for acute and surgical pain, and that it could be taken in high doses. Not only were these unapproved uses, the drug came with serious risks to heart and skin. Pfizer invited doctors to “seminars” held in exotic locations and paid fees for attending, a standard drug-industry practice.

Pfizer finally withdrew Bextra in 2005.

Were these Bextra-related crimes the only blot on Pfizer’s record it would be sufficient to mark it as a homicidal maniac beyond redemption, Hannibal Lecter on steroids.

You may recall that in 1999, the FDA approved and Merck marketed the drug Vioxx (rofecoxib) as a non-steroidal anti-inflammatory drug (NSAID) and prescription painkiller.

Subsequently, FDA researcher David Graham was the lead scientist on a study that analyzed a database of 1.4 million Kaiser Permanente members. The study linked Vioxx to more than 27,000 heart attacks or sudden cardiac deaths nationwide from the time it came on the market in 1999 through 2003.

Graham told Senate Finance Committee investigators that the FDA was trying to block publication of his findings. Republican Senator Charles Grassley said in a statement, “Dr. Graham described an environment where he was ‘ostracized,’ ‘subjected to veiled threats’ and ‘intimidation.’” Graham had given Grassley copies of e-mails that appeared to support his claims that his superiors had suggested watering down his conclusions.

In August 2001, Dr. Eric Topol, chairman of the Cleveland Clinic’s cardiology department—already concerned about the safety data from Vioxx clinical trials—had called on the FDA to require heart-safety studies. He was ignored. Three years later, a study looking at whether Vioxx could prevent colon polyps found the evidence that the drug in fact doubled patients’ risk of heart attacks and death.

In 2004, Merck withdrew the drug from the market. Ten million people had taken Vioxx, which Merck flogged in an aggressive direct-to-consumer advertising campaign. Topol calculated that 160,000 of these patients suffered a Vioxx-caused heart attack or stroke.

There’s much more to say about Merck, Vioxx, and the FDA. This is Pfizer’s story, but we don’t for a moment suggest that the other giant pharmaceutical companies are better actors. So what about Pfizer? One of Vioxx’s chief competitors was Pfizer’s Bextra. Shortly after Vioxx was withdrawn, Pfizer also withdrew Bextra. To our knowledge, nobody has studied how many heart attacks, strokes, and death Bextra caused.

But nobody went to prison. A sales manager who headed a team of sales reps in Brooklyn was sentenced to a six-month home confinement and had to wear an electronic ankle bracelet. At one point, Pfizer had about 100 sales reps selling Bextra off-label. The sales supervisor was fined $75,000 and served two years’ probation.

Pfizer itself had been on a sort of probation associated with its illegal marketing of Neurontin, an epilepsy drug, for which it was fined $430 million in 2004 and had entered into a corporate integrity agreement.

Under the new agreement with the Justice Department, Pfizer paid a $1.3 billion fine related to Bextra and $1 billion in civil fines related to other medicines. In addition, the Pfizer subsidiary Pharmacia and Upjohn pleaded guilty to violating the Food, Drug and Cosmetic Act. The total fine of $2.3 billion amounted to less than three weeks of Pfizer’s sales. It was Pfizer’s fourth settlement for illegal marketing since 2002. The new “corporate integrity agreement” required senior company executives to annually certify legal compliance and required Pfizer to post on its Web site some of its payments to doctors. More on that in a moment.

At the time, Dr. Scott Gottlieb, a top F.D.A. official in the Bush administration who went on to consult for drug makers, was reported in The New York Times to have said that government prosecutors were increasingly criminalizing “what reasonable people might argue is a reasonable exchange of important clinical information between drug companies and doctors.”

Amy W. Schulman, then Pfizer’s general counsel, was reported to have said that “The reasons to trust Pfizer are because, as I have walked the halls at Pfizer, you would see that the vast majority of our employees spend their lives dedicated to bringing truly important medications to patients and physicians in an appropriate manner.” In other words, not a corporate criminal culture, just a few rotten apples. Other drugs associated with illegal marketing charges include Geodon, an antipsychotic; Zyvox, an antibiotic; Lyrica, a drug for nerve pain; Detrol, used for treatment of overactive bladder; and Lipitor.

In 2011 Pfizer agreed to pay $14.5 million to resolve federal charges that it illegally marketed Detrol. Also in 2011 Pfizer conceded to FDA examiners that its “Online Resources” webpage on Lipitor contained misleading statements.

Pfizer created the antidepressant Zoloft (sertraline chloride), which the FDA approved in 1991. By 2002, it was the most popular antidepressant nationwide, bringing Pfizer nearly $2.9 billion that year. The FDA ordered Pfizer to stop making unauthorized and misleading medical claims for the drug. Though its patent protection expired in 2006, by 2011, nearly 100 million people had taken the drug. Mainly used to treat major depressive disorder, Zoloft is part of a class of drugs that come with a risk of suicide and violent behavior, especially in children and adolescents. Using Zoloft while pregnant can lead to birth defects, including persistent pulmonary hypertension in infants (PPHN), which can be fatal. In May 2012, more than 60 Zoloft lawsuits were filed on behalf of babies born with birth defects.

John Kopchinski, a former Pfizer sales representative whose complaint helped bring about a federal investigation of Pfizer’s practices, told The New York Times: “The whole culture of Pfizer is driven by sales, and if you didn’t sell drugs illegally, you were not seen as a team player.”

In 2012, Pfizer paid $164 million to settle a lawsuit that claimed it misled investors about the clinical results of Celebrex, used to treat arthritis. A month after that case was finalized, Pfizer settled a class-action lawsuit concerning investors who were misled about the risks associated with the antidepressant drug Pristiq. The Pristiq case cost the company $67.5 million.

The FDA, in 1999, had approved Pfizer subsidiary Wyeth’s Rapamune, an immunosuppressive drug, for limited use in kidney transplant patients. It required the drug’s label to include a warning against certain uses.

Wyeth thereupon established financial incentives for its sales force to target all transplant patients, providing presentations and materials to promote the drug to transplant physicians for use with non-kidney transplant patients.

For ten years, Wyeth promoted Rapamune for unapproved uses. Because these weren’t medically accepted indications, they were not covered by Medicare, Medicaid and other federal health care programs. The false claims submitted to the federal and state health care programs were brought forward by whistleblowers.

In 2009, Wyeth entered into a $490.9 million settlement with the government to resolve criminal and civil liability. Displaying a talent for stating the obvious, the U.S. Attorney for the Western District of Oklahoma characterized Wyeth’s behavior as “a systemic, corporate effort to seek profit over safety.” As far as the record reveals, nobody went to prison.

This list just skims the surface of the domestic criminal record of Pfizer and its subsidiaries. We thought it important to give readers an idea of just how extensive Pfizer’s domestic criminal record is.

We’re Not Paying Off Doctors; We’re Stimulating Prescribers

We’ve said Pfizer is a global criminal enterprise. Here’s how it operates abroad.

In 2012, the Department of Justice and the Securities and Exchange Commission charged various Pfizer entities with criminal and civil violations arising from the bribery of foreign government and health officials in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia “to obtain regulatory and formulary approvals, sales, and increased prescriptions for the company’s pharmaceutical products.”

A Pfizer subsidiary agreed to pay a $15 million criminal penalty to settle violations of the Foreign Corrupt Practices Act committed specifically in Bulgaria, Croatia, Kazakhstan, and Russia. Pfizer also agreed with the SEC to pay $26.3 million in disgorgement of profits and interest to settle civil charges. And Wyeth LLC separately agreed to pay $18.8 million to the SEC in disgorgement and interest.

On January 24, 2003, a district manager for Pfizer HCP Bulgaria sent an electronic message to four sales representatives that discussed marketing programs and “various possibilities to stimulate the prescribers.” The district manager instructed the sales representatives to “put to each individual doctor a specific target as to how many packs (or new patients) per month he should achieve” and then to decide which doctors would be “stimulated” through promotions such as incentive trips to tourist destinations in Greece.

Similarly, employees of Pfizer HCP Bulgaria offered to provide support to Bulgarian government doctors to attend medical conferences and other educational events in return for agreements to prescribe Pfizer pharmaceutical products. Supervisors reminded the sales people that “commitments” to a certain level of prescription must be made before Pfizer HCP Bulgaria would sponsor the doctors.

Pharmacia Croatia, and later Pfizer HCP Croatia, used “consulting agreements” to bribe prominent doctors and professors of medicine who served on government committees that regulated pharmaceutical sales in Croatia.

Payments were deposited to an Austrian bank account in one Croatian official’s name. In seeking approval for a consulting agreement, the Pharmacia Croatia General Manager explained that the Croatian official was a member of the national Registration Committee regarding pharmaceuticals: “I do expect that all products which are to be registered will pass the regular procedure by his assistance.”

The Croatian official was a member of the committees that determined which pharmaceutical products could be registered and sold in Croatia, as well as which products would be reimbursed under the country’s national health insurance system and at what price they would be reimbursed. During the period the official received payments, at least twelve Pfizer pharmaceutical products were approved for sale by those committees, and at least thirteen Pharmacia and/or Pfizer pharmaceutical products were approved for reimbursement by the national health insurance program. After the merger with Pharmacia in March 2003, Pfizer HCP Croatia continued making payments.

Sometime in December, 2004, a Pfizer Russia employee requested sponsorship for a local department of health employee who was assisting the chief pharmacologist of a regional pediatric hospital in compiling algorithms for antibiotic therapy. The pharacologist wanted “to be financially compensated” for this work. The Pfizer Russia employee noted that, “in return for this,” the pharmacologist “will include our products in the treatment algorithms.” The treatment algorithms constituted the official government-recommended treatment.

This practice was approved by senior leadership in Pfizer Russia, including the country manager and the finance director.

A Tale Told by an Idiot, Full of Sound and Fury, Signifying Nothing.

We hesitate to bring Shakespeare into this dreary account, but when it comes to the government’s response to this relentless criminality, we, after all, are the idiot. Pfizer has paid multimillion-, even billion-dollar fines. It has had at least four Deferred Prosecution Agreements.


During 2008, Pfizer revised its written policies on business conduct. Known as Pfizer’s “Blue Book,” the new rules were distributed to the companies employees in the United States. Global employees were given online Blue Book training. A year later it established “Lead Compliance Counsel” positions within key business divisions. Then came a new “Corrective Action” group in the “Corporate Compliance” division. Then it issued tablet PCs to its sales representatives, claiming that these would support “compliance related controls by limiting opportunities for policy violation and increasing monitoring of the sales force.” Tablet PCs to sales reps to sell more drugs? Not a bit of it.

Then Pfizer formed a “Promotional Quality Assurance” group, whose claimed purpose was “to review relevant records, such as memorandums and emails, to identify signals for potential inappropriate promotion of Pfizer’s pharmaceutical products.”

To comply with its deferred prosecution agreement for illegally promoting off-label uses, Pfizer disclosed that during a six-month period in 2009 it had paid $20 million to some 4,500 doctors and $15 million to 250 medical centers and other research groups for clinical trials. (The disclosure didn’t include payments outside the United States.) Pfizer’s chief medical officer said it was part of the company’s “March to Disclosure” initiative that had begun in 2002.

Dr. Marcia Angell, former editor of The New England Journal of Medicine, told a New York Times reporter, “If they’re doing that — it would amaze me if they did, but if they are — that’s great.” She said she had no specific knowledge but the amounts reported seemed low. “I can’t help but think something has escaped,” she said.

Pfizer named a new corporate compliance officer who would be a member of Pfizer’s “Executive Leadership Team.” That CCO would report directly to the CEO and make regular reports to the audit committee of Pfizer’s Board of Directors.

All that Blue Book training and compliance divisions; enforcement and monitoring groups; CCOs reporting to the CEOs. Makes the head spin.

Pfizer’s spin? “The actions which led to this resolution were disappointing, but the openness and speed with which Pfizer voluntarily disclosed and addressed them reflects our true culture and the real value we place on integrity and meeting commitments.”

Pfizer’s ethical regime is now called “Enhanced Compliance Obligations,” or if you prefer, an ECO! Presumably, under the ECO, the CCO will continue to report to the CEO. What about the DOJ? Will it continue to award DPA’s to Pfizer and its partners in crime?

Deferred Prosecutions Really Mean No Employees Will Face Charges

We didn’t expect anything from the scandal-ridden Ashcroft-Gonzalez Department of Justice during the Bush years but we had hopes that Eric Holder’s DOJ would hold the corporate criminals accountable. We were naive.

“[T]he only tool we had to use in cases of corporate misconduct was a criminal indictment,” and “prosecutors sometimes had to use a sledgehammer to crack a nut. Ultimately, the flexibility available to prosecutors today is “better for companies, better for the government, and better for the American people.”

That was Lanny A. Breuer, Holder’s chief prosecutor and his colleague at the firm Covington & Burling. The thoroughly discredited Breuer was still touting Deferred Prosecution Agreements and his own vigorous enforcement activity long after everything recounted above had occurred.

And there he was in a September 13, 2012 speech to the New York City Bar Association, sort of a farewell address and a pat on his own back for a job well done: “Over the past three and a half years, the Department of Justice has entered into dozens of DPAs, and non-prosecution agreements, or NPAs. I’ve heard people criticize them and I’ve heard people praise them. What I’m here to tell you is that, along with the other tools we have, DPAs have had a truly transformative effect on particular companies and, more generally, on corporate culture across the globe . . . . DPAs have become a mainstay of white collar criminal law enforcement. The result has been, unequivocally, far greater accountability for corporate wrongdoing — and a sea change in corporate compliance efforts . . . .” Breuer took a stab at answering his critics: “I have said before that the strongest deterrent against corporate crime is the prospect of prison time for individual employees — and we do not hesitate to seek long sentences when circumstances warrant.” He then cited a few cases of lesser-known business executives, including a couple of Siemens employees. The decision not to indict HSBC and the executives who had laundered drug money for Mexican cartels and helped finance terrorism prompted The New York Times editorial board to write that it was a “dark day for the rule of law.”

In 2014, senior federal Judge Jed S. Rakoff of the Southern District of New York would say that the failure to prosecute any individuals responsible for the financial crisis represents one of the “more egregious failures of the criminal justice system in many years.”

He continued:
“We are frequently on the receiving end of presentations from defense counsel, CEOs and economists who argue that the collateral consequences of an indictment would be devastating for their client. In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects.

“Sometimes – though, let me stress, not always – these presentations are compelling. In reaching every charging decision, we must take into account the effect of an indictment on innocent employees and shareholders, just as we must take into account the nature of the crimes committed and the pervasiveness of the misconduct. I personally feel that it’s my duty to consider whether individual employees with no responsibility for, or knowledge of, misconduct committed by others in the same company are going to lose their livelihood if we indict the corporation.

“In large multi-national companies, the jobs of tens of thousands of employees can be at stake. And, in some cases, the health of an industry or the markets are a real factor. Those are the kinds of considerations in white collar crime cases that literally keep me up at night, and which must play a role in responsible enforcement.”

Indeed, the damage to innocent stakeholders and even adverse consequences to the economy that may follow the indictment of a large corporation are powerful considerations. But Breuer’s blurring of the distinction between indicting the corporation as opposed to the culpable executives is too obvious to merit much discussion. And when, after distributing so many get-out-of-jail passes to so many past, present, and future Covington & Burling clients, he returns to the firm to lead its white collar criminal practice — it stinks.

Along with Holder, Breuer had come under intense criticism for failing to prosecute Wall Street’s bankers in connection with the 2008 crisis. But the failure to prosecute the bankers, as fiercely criticized as it was, diverted attention from the rampant criminality in all other sectors. Few Americans to this day, though well aware of and mad as hell at the legalized bribery and corruption eating away at our democracy, have any inkling of the corporate crime spree infecting every sector of our economy. Pfizer is one company operating in one area of the economy. We chose it because of its size and because its corporate culture is representative of the industry it’s a part of. Pfizer is about to engineer a variation of the tax inversions that withdraw corporate taxes from the U.S. treasury. We’ll have much more to say about that issue in future editions of Fed Up New Yorkers.

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