The Justice Department has reached a $1 billion settlement in a class-action lawsuit filed by the nation’s largest pharmaceutical company, Pfizer.
The deal, which resolves all pending claims against Pfizer over its price gouge on drugs, was announced Thursday in a lawsuit filed in a California federal court by plaintiffs from California, California, Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Washington and Wisconsin.
The settlement was announced as the company was preparing to open an $8 billion plant in Michigan.
“Pfizer and its distributors, the distributors who made the products Pfizer sold and distributed, were not required to pay the full cost of their products, but the company’s executives and other executives of its marketing, sales and administrative functions had a financial incentive to make those prices high,” the Justice Department said in a statement.
“The company paid a small fraction of what consumers paid for their drugs, but it knew this was not the true cost of the drugs.”
Pfizers agreed to pay $4.4 billion to settle the case.
Pfills said it would donate $3.2 billion to help the affected patients.
Pefills, the nations largest maker of prescription painkillers, said in the statement that the settlement includes the following:The settlement also provides $1 million in relief for the victims of the companywide price gouges, including $3 million for each of the victims in the class-actions lawsuit, and $1,500 for each victim in the settlement in the case in which a Pfizer-branded drug was sold.
Pfiends chief executive officer David Schumacher said in an interview Thursday that the company will also donate $5 million to the Children’s Miracle Network Hospitals, which serve many low-income patients.
“We want to be able to continue to give back to those families and their children and their loved ones,” he said.
Pfsizer has said it is working to address the issue.
Schumacher did not immediately respond to requests for comment.
Nicholas W. Schumaker, a former Pfizer executive, and three other current and former employees of the pharmaceutical giant will be named as co-defendants in the suit.
The three defendants have been named as plaintiffs in the lawsuit by plaintiffs in California, the state with the largest concentration of Pfizer’s branded drugs.
The complaint alleges that Pfizer made the price gouged drugs by inflating the price of the products from $16.50 a pill to as high as $8.40 a pill, and charging patients the full price.
The company also charged patients a higher price for prescriptions of other drugs that the plaintiffs say were not as effective as the branded drugs, the complaint says.
Pfrts lawyers have denied the allegations in the complaint.
“In addition to the settlement, Pfizers will make an additional $10 million to help our employees and their families pay for their medical care,” Pfizer said in its statement.
“The $10 billion of relief is being announced as a result of the lawsuit brought against Pfizers by more than 1,500 Californians, most of whom are elderly, and their attorneys.
The state of California has the strongest legal system in the country, and we will defend vigorously in court.”
The settlement includes $1 in relief and $2 in compensation for the affected class members.
Pfaits said it will donate $1 to the US Centers for Medicare and Medicaid Services.
The Justice Department did not respond to a request for comment on the amount of the settlement.
The pharmaceutical giant has faced allegations of price gougers for years, including in a 2013 class-wide settlement, but has been relatively silent about the issue since.