Pfizer’s profit rises 26 percent

The Associated Press is reporting this morning that Pfizer’s profits increased 26% over last year’s. Pfizer attributes the increase in profits from cutting costs.

The maker of cholesterol fighter Lipitor, impotence treatment Viagra and smoking cessation drug Chantix slashed costs on everything from manufacturing and marketing to research and development to produce a profit of $2.88 billion.

The $68 billion acquisition of Wyeth last Thursday cements Pfizer’s position atop the industry, and the combined company is expected to eliminate nearly 20,000 jobs by the time integration is complete.

The CEO of Pfizer is Jeff Kindler. He is also Chairman of the Board of Directors. While CEO of Pfizer in 2008, Kindler earned a total compensation of $14,788,302, which included a base salary of $1,575,000, a cash bonus of $3,000,000, stocks granted of $7,553,015, and options granted of $2,222,026.

It should be noted, however, that yesterday MSN Money reported:

Court imposes record fine and forfeiture of $1.3 bln for Pharmacia & Upjohn’s fraudulent marketing of Bextra Pharmacia & Upjohn, a subsidiary of Pfizer (PFE), was sentenced today in federal court for a felony violation of the Food, Drug & Cosmetic Act, for misbranding the drug, Bextra, with the intent to defraud or mislead. Pharmacia was sentenced by U.S. District Judge Douglas P. Woodlock to pay a criminal fine of $1.195 bln and a criminal forfeiture of $105 mln, for a total criminal resolution of $1.3 bln. [Emphasis added]

On September 2, 2009, the United States Department of Justice fined Pfizer $2.3 billion after one of its subsidiaries, Pharmacia & UpJohn Company, pled guilty to marketing four drugs including Bextra “with the intent to defraud or mislead.” Pharmacia & UpJohn admitted to criminal conduct in the promotion of Bextra, and agreed to pay the largest criminal fine every imposed in the United States for any matter, $1.195 billion. A former Pfizer district sales manager was indicted and sentenced to home confinement for destroying documents regarding the illegal promotion of Bextra. In addition, a Regional Manager pled guilty to distribution of a mis-branded product, and was fined $75,000 and twenty-four months on probation.

The remaining $1 billion dollars of the fine was paid to resolve allegations under the civil False Claims Act case and is the largest civil fraud settlement against a pharmaceutical company. Six whistle-blowers were awarded more than $102 million for their role in the investigation. Former Pfizer sales representative John Kopchinski acted as a qui tam relator and filed a complaint in 2004 outlining the illegal conduct in the marketing of Bextra. Kopchinski was awarded $51.5 million for his role in the case because the improper marketing of Bextra was the largest piece of the settlement at $1.8 billion. [See FBI]

We owe those whistleblowers a debt of gratitude.

“In the Army, I was expected to protect people at all costs,” said the whistleblower, John Kopchinski, a West Point graduate and Gulf War veteran. “At Pfizer I was expected to increase profits at all costs, even when sales meant endangering lives. I couldn’t do that.”

They even made a movie about Kopchinski. [Lawyers and Settlements]

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