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Pfizer
Faces a Federal Inquiry On Pricing of Cholesterol Drug
By Scott Hensley, The Wall Street Journal March 29,
2002
Pfizer
Inc. said the Justice Department is investigating whether the company
overcharged the government for its cholesterol blockbuster Lipitor during
1999 and 2000 ….. At issue is whether the Medicaid programs, funded by state and federal governments, got the best price for Lipitor. Federal law requires drug makers to offer their medicines to state-run Medicaid programs at the best price available to any customer. The inquiry was disclosed in Pfizer's annual report, filed with the Securities and Exchange Commission. A company spokesman said Pfizer is cooperating with the investigation. A Justice Department spokesman declined to comment. During the period under investigation, Lipitor was owned by Warner-Lambert Co., which co-marketed the drug with Pfizer. In 2000, Pfizer completed a hostile takeover of Warner-Lambert, in large measure to gain complete control over Lipitor, which is the New York-based company's biggest seller and most important drug. Last year, Pfizer reported Lipitor sales of $6.45 billion, a 28% increase compared with 2000. The government is examining whether grants made by Warner Lambert to some health insurers and pharmacy-benefit managers should have been characterized as rebates. Rebates would have been subtracted from the price charged for Lipitor, or any other medicine, to determine the best price under Medicare rules. If the grants, usually made for educational purposes, were instead disguised rebates, then the government might be entitled to a deeper discount for Lipitor. In that case, Pfizer could be required to pay restitution. Separately, Pfizer disclosed in the annual report that it provided information to a consortium of state attorneys general about its promotion of antibiotic Zithromax for treating ear infections in children. Pfizer didn't identify the states involved or disclose the nature of the inquiry, but said it is cooperating with that investigation. Zithromax had 2001 sales of $1.5 billion. Pfizer's share price was at $39.74, down 18 cents, in 4 p.m. New York Stock Exchange composite trading Thursday. Copyright
© 2002 Global Action on Aging
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