Imagine being charged with a crime, but an imaginary friend takes the rap for you. That was the case when Pfizer, the world’s largest pharmaceutical company, was caught illegally marketing Bextra, a painkiller that was taken off the market in 2005 because of safety concerns.
“When the criminal case was announced last fall, federal officials touted their prosecution as a model for tough, effective enforcement, CNN reported.
But when it came to prosecuting Pfizer for its fraudulent marketing, the pharmaceutical giant had a trump card: Just as the giant banks on Wall Street were deemed too big to fail, Pfizer was considered too big to nail. Why? According to CNN: “Because any company convicted of a major health care fraud is automatically excluded from Medicare and Medicaid. Convicting Pfizer on Bextra would prevent the company from billing federal health programs for any of its products. It would be a corporate death sentence.
Prosecutors said that excluding Pfizer would most likely lead to Pfizer’s collapse, with collateral consequences: disrupting the flow of Pfizer products to Medicare and Medicaid recipients, causing the loss of jobs including those of Pfizer employees who were not involved in the fraud, and causing significant losses for Pfizer shareholders.”
So how was it resolved? Pfizer and the feds cut a deal. Instead of charging Pfizer with a crime, prosecutors would charge a Pfizer subsidiary, Pharmacia & Upjohn Co. Inc.
The CNN Special Investigation found that the subsidiary is nothing more than a shell company whose only function is to plead guilty. In all, Pfizer lost the equivalent of three months’ profit. It maintained its ability to do business with the federal government.
[Source]
Chapter: Health :: 18 May 2010
