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Pfizer, a company too big to fail, made a deal with the government to avoid being excluded from Medicare and Medicaid. They created a shell company, Pharmacia and Upjohn Company Incorporated, to take the blame for any convictions. This allowed Pfizer to continue doing business with the federal government. Despite paying a $1.2 billion criminal fine and settling civil suits for $1 billion, Pfizer's punishment may not be enough to deter other big pharma companies from engaging in illegal activities. The fear is that dealing with the Department of Justice is just seen as a cost of doing business.
Full Transcript
Speaker 0: Just as giant banks on Wall Street were considered too big to fail, Pfizer was considered too big to nail. Why? Because a company convicted of major fraud would automatically be kicked out of Medicare and Medicaid. Pfizer would no longer be allowed to bill any federal health programs for any of its products. It would be a corporate death sentence.
Speaker 1: If a company like Pfizer ex is excluded from Medicare and Medicaid, they're out of business.
Speaker 0: Lewis Morris, a top lawyer at the Department of Health and Human Services, told us Pfizer's collapse could leave 1,000 out of work, Millions not getting their medications.
Speaker 1: We have to ask whether by excluding the company, are we harming our patients? Are we harming the beneficiaries who need these critical drugs?
Speaker 0: Since shutting down Pfizer was unthinkable, Pfizer and the feds cut a deal. And here's how they did it. Pfizer, located here in New York, owns a company named Pharmacia Corporation, which owns another company called Pharmacia and Upjohn LLC, which owns Pharmacia and Upjohn Company LLC, which in turn owns Pharmacia and Upjohn Company Incorporated. And what does Pharmacia and Upjohn Company Incorporated do? Nothing.
It's a shell created to be a legal shield for Pfizer. In other words, if Pfizer was at risk of being convicted, The Shell company would take the hit. Think of it as the great great grandson of the parent company. Birthday, March 27, 2007, just in time to plead guilty in a kickback case Against the company Pfizer had acquired a few years earlier. With that conviction, Pharmacia and Upjohn Company Incorporated, Which had never sold so much as a single pill was excluded from Medicare.
2 years later, When Pfizer was in trouble with Bextra, Pharmacia and Upjohn Company Incorporated, the Shell company, stepped up again and pleaded guilty. It was like having an imaginary friend, an imaginary bad guy to take the rap. And Pfizer, too big to nail, is still doing business with the federal government.
Speaker 1: It is true that if a company is created, to take a criminal plea, but it's just a shell. The impact of an exclusion is minimal or nonexistent.
Speaker 0: Did the punishment fit the crime? Pfizer says yes. It paid nearly $1,200,000,000 in a criminal fine for Bextra, the largest Fine ever. It paid $1,000,000,000 more to settle civil suits, although it denies wrongdoing on allegations it illegally promoted 12 other drugs. In all, Pfizer lost the equivalent of 3 months profit.
But even Mike Lautz, who spent more than a decade prosecuting some of the largest Drug companies in the country isn't sure that $2,000,000,000 is enough to make big pharma clean up its act.
Speaker 2: I worry that the incentives are so great, the money is so great, that that has, maybe made Dealing with us, the Department of Justice, is just a cost of doing business.