Pfizer Inc., the world's biggest drug maker by sales, has agreed yesterday to pay a record $2.3 billion to settle allegations that it has illegally promoted 13 medicines, including now-withdrawn Bextra pain medicine.

It would be the largest settlement to date for improper marketing of prescription drugs, topping the $1.42 billion Eli Lilly and Co agreed to pay earlier this year for off-label sales of its Zyprexa schizophrenia drug.

The case was investigated and settled by a group that included Washington state attorneys general, US Attorneys' offices in Boston and Philadelphia and the US Department of Justice.

The settlement stems from a four-year old charge that Pfizer sent doctors on all-expense-paid trips to resorts, gave out free massages, and paid kickbacks to doctors, all to get them to prescribe its drugs for off-label uses.

Although it is legal for physicians to write such prescriptions, and a common practice, companies are barred from actually promoting their drugs for purposes other than those that have won Food & Drug Administration approval.

The fines were slapped after the company was deemed a repeat offender. The drugs involved in the settlement are Bextra, Geodon, Lyrica, Zyvox, Aricept, Celebrex, Lipitor, Norvasc, Relpax, Viagra, Zithromax, Zoloft and Zyrtec.

The agreement was unveiled by the US Department of Justice and Health and Human Services (HHS) department at a news conference yesterday.

"The size and seriousness of this resolution, including the huge criminal fine of $1.3 billion, reflect the seriousness and scope of Pfizer's crimes," said Mike Loucks, acting US attorney for the District of Massachusetts.

"This civil settlement and plea agreement by Pfizer represent yet another example of what penalties will be faced when a pharmaceutical company puts profits ahead of patient health," said assistant attorney general Tony West.

The fact that HHS secretary Kathleen Sibelius headed the news conference was widely seen as a very public presidential stamp of approval on the Pfizer deal.

HHS "will continue to seek opportunities to work with its government partners to prosecute fraud wherever we can find it," Kathleen said.

"We regret certain actions taken in the past, but are proud of the action we've taken to strengthen our internal controls," said Amy Schulman, Pfizer's general counsel.

Pfizer said it will pay $503 million to resolve practices involving Bextra, $301 million related to its schizophrenia drug Geodon, $98 million for antibiotic Zyvox and about $50 million for Lyrica used to treat nerve pain and seizures.

The company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the US, while Pharmacia, acquired by Pfizer in 2003, will pay an additional $105 million.

Pfizer will also pay $1 billion to resolve civil claims and agreed to enter a "corporate integrity agreement" with the HHS that will monitor future marketing activities.

Of the $1 billion civil settlement, more than $705 million in damages and penalties will be returned to state Medicaid programmes.

However, the settlement will not have a serious impact on Pfizer's balance sheet as the company has already charged the $2.3 billion fine to its 2008 fourth-quarter earnings during its takeover of  Wyeth in January this year (See: Pfizer-Wyeth create $68-billion blockbuster deal).