Pfizer expects to pay over $400 mil. to resolve the Boston U.S. Attorney's investigation of Neurontin promotions.

The company reported Jan. 22 that it is reserving $427 mil. to cover the settlement of all pending claims regarding alleged off-label promotion of Neurontin.

"Pfizer believes that today's provision will be sufficient to resolve all outstanding federal and state governmental investigations relating to Neurontin as well as the pending civil qui tam suit concerning this matter," a Pfizer ¹ press release said Jan. 22.

"We are attempting to resolve these matters through settlement, and discussions have recently advanced to the point where it is appropriate to take a provision," the company said.

The U.S. Attorney's Office in Boston is investigating a "whistleblower" complaint alleging that off-label promotion of Neurontin (gabapentin) violated the False Claims Act. The case was filed against Warner-Lambert before the acquisition by Pfizer (² [A#00620140000], p. 3).

Although the legal authority for FDA to challenge off-label promotion has been clouded by recent First Amendment cases, the Boston prosecutors felt that an early ruling in the Neurontin case sets a clear pathway to pursue off-label promotion under the False Claims Act (³ Also see "Neurontin Ruling Is Guide For DoJ Off-Label Promotion Cases – Prosecutor" - Pink Sheet, 13 October, 2003., p. 15).

A $427 mil. settlement would be less than half of the $875 mil. paid by TAP to resolve the Boston prosecutors' investigation into pricing and marketing practices of Lupron (leuprolide acetate) (⁴ Also see "TAP To Audit Marketing Documents Related To Top Lupron, Prevacid Buyers" - Pink Sheet, 8 October, 2001., p. 3).

The proposed payment represents about one quarter's worth of Neurontin sales in the U.S.; full year 2003 sales of the brand were $2.2 bil. in the domestic market. Pfizer expects the brand to continue to grow in 2004, despite pending patent litigation.

While Pfizer appears close to resolving the Neurontin case without significant financial damage, the company will face one last hurdle in managing the public relations side.

Once a settlement agreement is finalized, Pfizer will have to ensure that headlines focusing on the promotional conduct at issue do not cause lasting damage to the company's reputation.

Thus far, Pfizer has been successful in distancing itself from the Neurontin case. In the sales and earnings press release, the issue is described under the heading: "Financial Provisions Recorded for Two Legacy Warner-Lambert Legal Matters."

Pfizer also took a reserve of $975 mil. to cover personal-injury claims arising from the withdrawal of Warner-Lambert's diabetes medicine Rezulin (troglitazone).

The reserve "is expected to be sufficient to cover all known personal-injury claims," Pfizer said. General Counsel Jeff Kindler noted on a Jan. 22 investor call that the company has resolved about 80% of the 35,000 claims made against the company.

The company said there are about 9,300 individuals with pending claims against the company, although only about 3,600 have actually filed suits. Most of the suits have been filed in federal court, which has "more uniform standards" and "many" may be shown to lack merit, Kindler said.

"One of the interesting things that developed here as we went about resolving the 35,000 cases we're talking about is that the plaintiffs' attorneys, on review of their client lists, discovered literally thousands of claims on behalf of people that they could not locate, people that they could not establish ever took Rezulin and people that they could not establish were ever injured by it," Kindler maintained.

Rezulin was removed from the market in March 2000 following 90 cases of acute liver damage, including 63 deaths (⁵ Also see "Avandia, Actos To Accelerate Market Growth With Rezulin's Withdrawal" - Pink Sheet, 27 March, 2000., p. 4).

If Pfizer is able to resolve the litigation for under $1 bil., it can be counted as a significant accomplishment, given the expressions of dissent from FDA reviewers over the drug.

Wyeth, which withdrew the obesity agent Redux at around the same time Rezulin was pulled, has so far reserved $16.6 bil. to cover the liability (⁶ Also see "Big Pharma’s “Black Wednesday”: Quarterly Reports Underscore Uncertainty" - Pink Sheet, 27 October, 2003., p. 18).

Pfizer Ready To Settle Neurontin Promotion Case; Reserves $427 Mil.

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