Pfizer Hit with $2.3 Billion Penalty, Largest Ever

Calling the drug company a "repeat offender," federal authorities yesterday slapped a $2.3 billion fine on Pfizer, the largest such penalty ever. The world’s largest drugmaker is apparently accustomed to playing fast and loose with the rules, offering a variety of drug promotions that included free golf, massages and trips to glamorous resorts for doctors that prescribed their drugs. Justice Department officials piled on $1.2 billion in criminal fines, $1 billion in civil penalties and another $100 million, just for good measure, that is considered "criminal forfeiture."

The allegations that led to the settlement and fines were from the marketing of 13 different drugs, among them some of the most popular in the world, including Viagra, Zoloft and Lipitor. Mike Loucks, U.S. attorney from Massachusetts, noted, "They were entertained with golf, massages and other activities." In order to prevent further such egregious violations, Pfizer will be monitored by the U.S. Health and Human Services inspector general for a period of five years.

Bill Vaughan, an analyst with Consumers Union, explained some of the reasons drug companies break the rules, noting, "There’s so much money in selling pills, that there’s a tremendous temptation to cheat. There’s a kind of mentality in this sector that [settlements] are the cost of doing business and we can cheat. This penalty is so huge I think consumers can have some hope that maybe these guys will tighten up and run a better ship." The news was greeted with something of a yawn on Wall Street, however, as Pfizer stock dropped just 14 cents during the day to $16.24.