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For Immediate Release
February 20, 2003
Contact: Sean Caine, 410-576-6357

CURRAN ANNOUNCES $49 MILLION SETTLEMENT WITH PFIZER
Maryland Will Receive over $190,000 in Restitution and Penalties

Attorney General J. Joseph Curran, Jr. announced today that a settlement has been reached with Pfizer, Inc. to pay $49 million to the State Medicaid programs for violating the federal Medicaid drug rebate statute by failing to accurately report statutorily mandated "best price" information for Lipitor, an anti-cholesterol medication. As part of the settlement, the State of Maryland will recover $190,231 in restitution and penalties. Forty-seven states and the District of Columbia are participating in the settlement.

The federal Medicaid drug rebate statute requires that all pharmaceutical manufacturers that supply products to Medicaid recipients must provide "best price" information to the Centers for Medicare and Medicaid Services. CMS uses this "best price" information to calculate rebates payable to the state Medicaid programs under the statute.

Pfizer’s liability is based on its acquisition of Warner-Lambert, the developer of Lipitor. In 1999, representatives of Warner-Lambert provided unrestricted "educational grants" of $250,000 to a health maintenance organization in exchange for keeping Lipitor on the HMO’s formulary. This settlement is based on the states’ contention that this $250,000 should have been included in the calculation of "best price" under the federal Medicaid drug rebate statute. By failing to include this amount in the calculation of "best price", the state Medicaid programs received improperly lowered rebate amounts for 1999.

"The price of prescription drugs is a major concern for many people–especially those who depend on Medicaid for financial support," Attorney General Curran said. "I am hopeful that this action will put drug manufacturers on notice that we will monitor drug pricing methods and strictly enforce existing laws to protect Maryland consumers."

As part of the settlement, Pfizer has entered into a Corporate Integrity Agreement with United States Department of Health and human Services Inspector General. The CIA will require strict scrutiny of Pfizer’s marketing and sales practices for the next five years.

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