When Drug Makers' Profits Outweigh Penalties

[Guest guest]

-------

 

 

 

 

"When Drug Makers' Profits Outweigh Penalties"

 

 

 

Jan Slama <slamajama2

 

 

 

 

 

 

 

 

 

 

 

Charge

them with willful neglect, so you don’t have to prove

intent!

Jan

 

 

 

 

 

ALLIANCE FOR

HUMAN RESEARCH PROTECTION

 

"When Drug Makers'

Profits

Outweigh Penalties" appearing in today's Washington Post is an updated

version of David Evans' riveting, prize winning investigative report,

Big

Pharma's Crime Spree, published in Bloomberg News, December 2009. Some

of the

tables from the expanded Bloomberg Magazine version can be accessed at:

<http://www.ahrp.org/cms/content/view/653/109/

 

One thing remains unchanged:

 

"Across the United

States, pharmaceutical companies have

pleaded guilty to criminal charges or paid penalties in civil cases

when

the Justice Department finds that they deceptively marketed drugs for

unapproved uses, putting millions of people at risk of chest

infections,

heart attacks, suicidal impulses or death."

 

The biggest fine ever imposed in U.S. history, $2.3 billion

against

recidivist Pfizer, represented a mere 14% of the revenue stream from

selling the drugs at issue over seven years.

 

"So immune to criminal sanctions was that the company launched its

off-label Bextra campaign at the same time the company was pleading

guilty

to doing precisely the same thing with other drugs. The

anti-inflammatory medication was later yanked from the market because

of

increased risk of heart attacks and stroke."

 

Rather than being tried for their crimes rogue corporate giants-in the

pharmaceutical industry is being subsidized and the financial industry

(giants

deemed "too big to fail")-is being bailed out by US taxpayers.

 

A follow-up on Evans' report, Bloomberg News columnist, Ann Woolner

took

the bull by the horns in her column, "Jail Time for Executives Might

Stop Drug Crimes" published by BusinessWeek (below) noting

that: "Pharmaceutical and medical device companies repeatedly signal

they just don't seem to care what the law says if they can find a way

around it."

 

For example, "internal documents show Johnson & Johnson planning

a push for $302 million in geriatric sales for a drug after the FDA

had

said that for the elderly, the medication wasn't as helpful and

carried

more risks than the company had claimed.The company denies

wrongdoing."

 

"Throwing a few company executives in jail might do the trick."

 

The problem is the difficulty in proving intent. However, the Food and

Drug Act, allows misdemeanor convictions without proof of intent to do

wrongdoing. But until now, the FDA did not prosecute pharmaceutical

executives.

 

So, the very rogue pharmaceutical companies that have pled guilty to

criminal

marketing of toxic, mostly useless drugs who paid hundreds of

millions-even

over a billion dollars in fines-have continued to profiteer from

defective hazardous products.

 

Unless the FDA enforces the prosecutorial provisions of the FDC; unless

Congress supports health-care fraud prosecutions; and unless the Obama

administration will prohibit taxpayer reimbursement for criminally

marketed drugs and medical devices, rogue companies will continue

profit

from harm producing, hazardous drugs that pose risks of disability and

death.

 

Contact: Vera Hassner Sharav veracare

<veracare%40ahrp.org 212-595-8974

 

<http://www.washingtonpost.com/wp-dyn/content/article/2010/03/19/

AR2010031905

578_pf.html THE WASHINGTON

POST When drug Makers' Profits Outweigh Penalties By David Evans

Bloomberg News

Sunday, March 21, 2010; G01

 

Prosecutor Michael Loucks remembers clearly when attorneys for Pfizer,

the world's largest drug company, looked across the table and promised

it

wouldn't break the law again.

 

It was January 2004, and the lawyers were negotiating in a conference

room on the ninth floor of the federal courthouse in Boston, where

Loucks was head of the

health-care fraud unit of the U.S. Attorney's Office. One of Pfizer's

units had

been pushing doctors to prescribe an epilepsy drug called Neurontin

for

uses the Food and Drug Administration had never approved.

 

In the agreement the lawyers eventually hammered out, the Pfizer unit,

Warner-Lambert, pleaded guilty to two felony counts of marketing a

drug

for unapproved uses. New York-based Pfizer agreed to pay $430 million

in

criminal fines and civil penalties, and the company's lawyers assured

Loucks and three other prosecutors that Pfizer and its units would

stop

promoting drugs for unauthorized purposes.

 

What Loucks, who was acting U.S.

attorney in Boston

until November, didn't know until years later was that Pfizer managers

were breaking that pledge not to practice off-label marketing even

before

the ink was dry on their plea.

 

On the morning of Sept. 2, 2009, another Pfizer unit, Pharmacia &

Upjohn, agreed to plead guilty to the same crime. This time, Pfizer

executives had been instructing more than 100 salespeople to promote

Bextra --

a drug approved only for the relief of arthritis and menstrual

discomfort

-- for treatment of acute pain of all kinds.

 

For this new felony, Pfizer paid the largest criminal fine in U.S.

history: $1.19 billion. On the same day, it paid $1 billion to settle

civil

cases involving the off-label promotion of Bextra and three other

drugs

with the United

States

and 49 states.

 

"At the very same time Pfizer was in our office negotiating and

resolving the allegations of criminal conduct in 2004, Pfizer was

itself in

its other operations violating those very same laws," Loucks, 54,

says. "They've repeatedly marketed drugs for things they knew they

couldn't demonstrate efficacy for. That's clearly criminal."

 

The penalties Pfizer paid for promoting Bextra off-label were the

latest

chapter in the drug's benighted history. The FDA found Bextra to be so

dangerous that Pfizer took it off the market for all uses in 2005.

 

Across the United

States,

pharmaceutical companies have pleaded guilty to criminal charges or

paid

penalties in civil cases when the Justice Department finds that they

deceptively marketed drugs for unapproved uses, putting millions of

people at risk of chest infections, heart attacks, suicidal impulses or

death.

 

It used to be legal for companies to promote drugs in the United States

for any use. Congress banned the practice in 1962, requiring

pharmaceutical

companies to first prove their drugs were safe and effective for

specific

uses.

 

If the law is clear, why do drug companies keep breaking it? The

answer

lies in economics. Pharmaceutical companies spend about $1 billion to

develop and test a new drug. To recoup their investment, the companies

want doctors to prescribe their drugs as widely as possible.

 

Since May 2004, Pfizer, Eli Lilly, Bristol-Myers Squibb and four other

drug companies have paid a total of $7 billion in fines and penalties.

Six of the companies admitted in court that they marketed medicines

for

unapproved uses. In September 2007, New York-based Bristol-Myers paid

$515 million -- without admitting or denying wrongdoing -- to federal

and

state governments in a civil lawsuit brought by the Justice

Department.

The six other companies pleaded guilty in criminal cases.

 

In January 2009, Indianapolis-based Lilly, the largest U.S.

psychiatric drugmaker, pleaded guilty and paid $1.42 billion in fines

and

penalties to settle charges that it had for at least four years

illegally

marketed Zyprexa, a drug approved for the treatment of schizophrenia,

as

a remedy for dementia in elderly patients.

 

In five company-sponsored clinical trials, 31 people out of 1,184

participants

died after taking the drug for dementia -- twice the death rate for

those

taking a placebo, according to an article in the Journal of the

American

Medical Association.

 

"Marketing departments of many drug companies don't respect any

boundaries of professionalism or the law," says Jerry Avorn, a

professor

at Harvard

Medical School.

"The Pfizer and Lilly cases involved the illegal promotion of drugs

that have been shown to cause substantial harm and death to patients."

 

The widespread off-label promotion of drugs is yet another

manifestation

of a health-care system that has become dysfunctional.

 

"It's an unbearable cost to a system that's going broke," Avorn

says. "We can't even afford to pay for effective, safe

therapies."

 

About 15 percent of all U.S.

drug sales are for unapproved uses without adequate evidence the

medicines work,

according to a study by Randall Stafford, a medical professor at Stanford University.

 

As large as the penalties are for drug companies caught breaking the

off-label

law, the fines are tiny compared with the firms' annual revenue.

 

The $2.3 billion in fines and penalties Pfizer paid for marketing

Bextra

and three other drugs cited in the Sept. 2 plea agreement for off-label

uses

amount to just 14 percent of its $16.8 billion in revenue from selling

those medicines from 2001 to 2008.

 

The total of $2.75 billion Pfizer has paid in off-label penalties

since

2004 is a little more than 1 percent of the company's revenue of $245

billion

from 2004 to 2008.

 

Lilly already had a criminal conviction for misbranding a drug when it

broke the law again in promoting schizophrenia drug Zyprexa for

off-label uses

beginning in 1999. The medication provided Lilly with $36 billion in

revenue from 2000 to 2008. That's more than 25 times as much as the

total

penalties Lilly paid in January.

 

Companies regard the risk of multimillion-dollar penalties as just

another cost of doing business, says Lon Schneider, a professor at the

University of Southern California's Keck School of

Medicine in Los Angeles.

In 2006, he led a study

for the National Institute of Mental Health of off-label use of drugs,

including Zyprexa.

 

"There's an unwritten business plan," he says. "They're drivers

that knowingly speed. If stopped, they pay the fine, and then they do

it

again."

 

Paying the doctors In pushing off-label use of drugs, companies find

ready and

willing partners in physicians. Under the fragmented system of U.S.

medical regulation, it's legal for doctors to prescribe FDA-approved

drugs for any use. The FDA has no authority over doctors, only over

drug

companies, regarding off-label practices. It's up to the states to

oversee

physicians.

 

"I think the physician community has to take some ownership

responsibility and do their own due diligence beyond the sales and

marketing person," says Boston's

former

U.S. Attorney Michael Sullivan.

 

Doctors generally don't tell people they're prescribing drugs pitched

to them

by pharmaceutical salespeople for unapproved treatments, says Peter

Lurie,

former deputy medical director of Public Citizen, a Washington- based

public interest group. Most doctors don't keep track of FDA-approved

uses

of drugs, he says.

 

"The great majority of doctors have no idea; they don't even

understand the distinction between on- and off-labeling," he says.

 

Pfizer's marketing program offered doctors up to $1,000 a day to allow

a Pfizer

salesperson to spend time with the physician and his patients,

according to a

whistle-blower lawsuit filed by John Kopchinski, who worked as a

salesman

at Pfizer from 1992 to 2003.

 

"By 'pairing up' with a physician, the sales representative was able to

promote over a period of many hours, without the usual problems of

gaining access to prescribing physicians," Kopchinski says. "In

essence, this amounted to Pfizer buying access to physicians."

 

Pfizer spokesman Chris Loder says the company stopped what it calls

"mentorships" in 2005. He says Pfizer paid doctors $250 a visit.

The goal was clear: Get doctors to prescribe a new drug as widely as

possible.

 

Pfizer's Neurontin is a case in point. The FDA approved the drug as a

supplemental

medication to treat epilepsy in 1993. Pfizer took in $2.27 billion from

sales

of Neurontin in 2002. A full 94 percent -- $2.12 billion -- of that

revenue came from off-label use, according to the prosecutors' 2004

Pfizer sentencing memo.

 

Since 2004, companies that are now Pfizer divisions have pleaded

guilty

to off-label marketing of two drugs. Pfizer continued off-label

promotions for these medications after buying the firms, according to

documents.

 

Pfizer first stepped into an off-label scheme in 1999, when it offered

to

buy Warner-Lambert, based in New

Jersey. Prosecutors charged that Warner-Lambert

marketed Neurontin off-label between 1995 and 1999.

 

Warner-Lambert admitted doing so for one year in a May 2004 guilty

plea

for which Pfizer paid $430 million in fines and penalties.

 

When the FDA approved Neurontin in 1993 to be used only along with

other

epilepsy drugs, the agency wrote that as a side effect, the drug can

induce depression and suicidal thoughts in patients.

 

The whistle-blower Much of what prosecutors learned about

Warner-Lambert's

marketing of Neurontin comes from a former employee, David Franklin,

who holds

a Ph.D. in microbiology.

 

Franklin,

48,

whose title at Warner-Lambert was medical liaison, says his job

involved

more salesmanship than science. He told doctors that Neurontin was the

best drug for a dozen off-label uses, including pain relief, bipolar

disease and depression.

 

"Technically, I had responsibility for answering physician questions

about all of Parke-Davis's drugs," Franklin

says. "In practice, my real job was to promote Neurontin for

off-label indications heavily -- to the exclusion of just about

everything else."

 

Franklin

says

he knew such uses of the drug had no scientific support for

effectiveness

and safety. "I was actually undermining their ability to fulfill the

Hippocratic oath," Franklin

says, referring to a physician's pledge to "First, do no harm."

 

After working for Warner-Lambert for three months, Franklin quit and filed a

whistle-blower lawsuit on behalf of taxpayers to recover money the

government

paid for illegally promoted drugs. He stood to collect as much as 30

percent of any settlement the company made with the government.

 

Franklin

had to

wait four years -- until 2000 -- before the Justice Department began a

criminal

investigation. In November 1999, Pfizer made its public offer to buy

Warner-Lambert. In January 2000, a federal grand jury in Boston issued

subpoenas to Warner-Lambert

employees to testify about the marketing of Neurontin.

 

That March, Warner-Lambert's annual report disclosed that prosecutors

were building a criminal case. Undeterred, Pfizer bought Warner-Lambert

in June for $87 billion -- the third-largest merger in U.S.

history.

 

More sales than Viagra A year after the acquisition, the FDA discovered

that

Neurontin was still being marketed off-label. In a June, 2001 letter

to

the company, the agency wrote that Pfizer's promotion of the drug

"is misleading and in violation of the Federal Food, Drug and

Cosmetics Act."

 

Pfizer marketed Neurontin off-label after receiving that letter, agency

records

show. For 2001, Pfizer reported revenue of $1.75 billion from Neurontin

sales,

making it the company's fourth-largest-selling drug that year, ahead

of

impotence pill Viagra, which Neurontin topped for four years.

 

As Neurontin sales soared to $2.27 billion in 2002, the FDA found that

Pfizer

was improperly claiming that the drug was useful for a broader range

of

brain disorders than scientific evidence had established.

 

The agency sent a letter dated July 1, 2002, that said the company's

marketing

practices were in violation of FDA rules. It asked Pfizer to stop

using

misleading promotions. Pfizer reported $2.7 billion in revenue from

Neurontin in 2003. Overall, the drug has provided Pfizer with $12

billion

in revenue.

 

Pfizer spokesman Chris Loder says, "Regarding the 2001 and 2002 FDA

letters, we do not believe that they were suggestive of any continuing

off-label promotion."

 

For blowing the whistle on his employer, Franklin

collected $24.6 million under the False Claims Act. Prosecutors Loucks

and Sullivan got involved in the case after Franklin

filed his suit, relying on information from Franklin and their own investigation.

Before

2004, prosecutions for off-label marketing were rare. "Until a couple

of

these cases became public, companies were probably saying, 'Everybody

does it

this way,' " Sullivan says.

 

Loucks had a track record in off-label prosecutions. In 1994, he

negotiated a $61 million settlement with C.R. Bard of New Jersey,

which pleaded guilty to

promoting off-label use of a heart catheter that led to patient deaths.

 

The off-label campaign In the January 2004 settlement negotiations with

Loucks,

Sullivan and two other prosecutors, Pfizer's lawyers assured the U.S.

Attorney's Office that the company wouldn't market drugs off-label.

"They asserted that the company understood the rules and had taken

steps

to assure corporate compliance with the law," Loucks says. "We

remember those promises."

 

What Pfizer's lawyers didn't tell the prosecutors was that Pfizer was

at that

moment running an off-label marketing promotion using more than 100

salespeople

who were pitching Bextra, according to a Pfizer sales manager who

pleaded

guilty to misbranding a drug in March 2009.

 

Pharmacia & Upjohn developed Bextra, which was approved by the FDA

in

2001 for only the treatment of arthritis and menstrual discomfort.

P & U and

Pfizer had by then crafted a joint marketing agreement to sell the

drug.

In November 2001, Mary Holloway, a Pfizer Northeast regional manager,

began

illegally training and directing her sales team to market Bextra for

the relief

of acute pain, Holloway admitted in the plea.

 

On Dec. 4, 2001, Pfizer executives sent Holloway a copy of a nonpublic

FDA

letter to the company. The agency had denied Pfizer's application to

market Bextra for acute pain. Clinical trials had shown Bextra could

cause heart damage and death.

 

Pfizer bought Pharmacia & Upjohn in April 2003. From 2001 through

2003, P & U, first as an independent company and then as a unit of

Pfizer,

paid doctors more than $5 million in cash to lure them to resorts,

where

salespeople illegally pitched off-label uses for Bextra, P & U

admitted.

 

In her guilty plea, Holloway said her team had solicited hospitals to

create protocols to buy Bextra for the unapproved purpose of acute

pain

relief. Her representatives didn't mention the increased risk of heart

attacks

in their marketing. They told doctors that side effects were no worse

than those of a sugar pill, Holloway said.

 

In 2003, Holloway reported her unit's off-label promotions of Bextra

up

the corporate ladder at Pfizer, according to a presentencing memo to

the

judge written by Robert Ullmann, Holloway's attorney. Top managers

didn't

attempt to halt the illegal conduct, the memo said.

 

By late 2004, Bextra reached blockbuster status, with annual sales of

$1.29 billion. Holloway promoted Bextra until the FDA asked Pfizer in

April 2005 to pull it from the market for all uses.

 

The agency concluded that the drug increased the risk of heart attacks,

chest

infections and strokes in cardiac surgery patients. In June 2009,

Holloway, 47,

was sentenced to two years on probation and fined $75,000. She didn't

return phone calls seeking comment.

 

'We regret . . . ' By 2007, the criminal and civil cases against

Pfizer, its

employees and its subsidiaries had begun to mount. The tally of drugs

cited by federal prosecutors for off-label promotion reached six by

2009. In

April 2007, P & U pleaded guilty to a felony charge of offering a

$12

million kickback to a pharmacy benefit manager. Pfizer paid a criminal

fine of $19.7 million. In September 2009, Pfizer agreed to pay $2.2

billion in fines and penalties. P & U pleaded guilty to a felony

charge

of misbranding Bextra with the intent to defraud. After the

settlement,

Pfizer general counsel Amy Schulman said the company had learned its

lesson. "We regret certain actions we've taken in the past," she

said. "Corporate integrity is an absolute priority for Pfizer."

 

One reason drug companies keep breaking the law may be because

prosecutors and judges have been unwilling to use the ultimate sanction

-- a

felony conviction that would exclude a company from selling its drugs

for

reimbursement by state health programs and federal Medicare.

 

At Pfizer's Pharmacia sentencing in October, U.S. District Court Judge

Douglas

Woodlock said companies don't appear to take the law seriously. "It

has become something of a cost of doing business for some of these

corporations,

to shed their skin like certain animals and leave the skin and move

on," he said.

 

As prosecutors continue to uncover patterns of deceit in off-label

marketing,

millions of patients across the nation remain in the dark. Doctors

often choose

the medications based on dishonest marketing by drug company salesmen.

 

Loucks says that putting an end to the criminal off-label schemes will

be

difficult. As drugmakers repeatedly plead guilty, they've shown they're

willing

to pay hundreds of millions of dollars in fines as a cost of generating

billions in revenue.

 

The best hope, Loucks says, is that drug companies actually honor the

promises

they keep making -- and keep breaking -- to obey the law of the land. As much as $100 million for health-care

fraud enforcement

is tied up in the stalled reform legislation, according

to

Loucks. "It will be

increasingly hard

for the threat of exclusion to seem credible and thus serve as a

deterrent to

bad corporate behavior," he says, "unless Congress supports health-care

fraud prosecutions with more money."

 

A version of this story originally appeared in Bloomberg Markets

Magazine. It

was awarded a 2010 Society of American Business Editors and Writers

award

for enterprise reporting and general excellence.

 

 

 

<http://www.businessweek.com/news/2010-03-16/jail-time-for-executives-

might-s top-drug-crimes-ann-woolner.html Businessweek Jail Time for

Executives

Might Stop Drug Crimes Commentary by Ann Woolner March 16, 2010

 

March 17 (Bloomberg) -- If a surgeon cuts open your chest and implants

a device

meant to shock your heart into beating regularly, you are counting on

the thing

not short-circuiting.

 

You assume every aspect of its manufacture, each change in the process,

has

been reviewed and approved by proper authorities. If malfunctions turn

up,

surely the company will so report.

 

And if it fudges on notification, gets caught, admits a crime and pays

a

whopping fine, you figure the maker surely would never again let its

reporting

lapse.

 

Alas.

 

This week Boston Scientific Corp. halted sales of implantable

defibrillators

because it hadn't told the U.S. Food and Drug Administration of changes

in its

manufacturing process. Not to worry. There is no reason to fear the

manufacturing changes made the devices dangerous, the company assures

us. But

it's hard to trust an entire industry that keeps promising to do

better

and doesn't. We badly want to believe those who make medical devices

and drugs

because they hold lives in their hands.

 

Boston Scientific disclosed its reporting lapses this week, little more

than

four months after pleading guilty to two misdemeanors stemming from,

guess

what?

 

Reporting lapses.

 

In the earlier case, prosecutors said an outfit the company bought,

Guidant,

hid malfunctions it had known about for three years. Some of its

defibrillators

were short-circuiting, and at least one patient died. Boston

Scientific

is slated to pay a fine of almost $300 million for that, on top of

$240

million to settle related civil complaints.

 

Doing Better Maybe the parent company is trying to do better than

Guidant did.

Boston Scientific says it suspended defibrillator sales voluntarily

this week

when it discovered a reporting lapse. There is no evidence the latest

notification failure hid a problem with the product, as happened

before. The

unease stems from context. Pharmaceutical and medical device companies

repeatedly signal they just don't seem to care what the law says if

they can

find a way around it.

 

Internal documents show Johnson & Johnson planning a push for $302

million

in geriatric sales for a drug after the FDA had said that for the

elderly, the

medication wasn't as helpful and carried more risks than the company

had

claimed, Bloomberg reported earlier this month. The New Brunswick, New

Jersey-based

company denies wrongdoing.

 

Examples abound that these companies keep breaking rules and violating

laws to

make and market their products, no matter how many times they are

caught, fined

and forced to promise to go straight.

 

Off-Label Use One insider at Warner-Lambert -- now part of Pfizer Inc.

--

worried about promoting children's use of a drug for a purpose the FDA

hadn't

approved. His sales manager told him not to fret about off-label uses.

 

"It'll never get back to us," the manager said, according to

Bloomberg Markets magazine.

 

The biggest fine ever imposed in U.S. history, $2.3 billion

against

recidivist Pfizer, represented a mere 14 percent of the revenue stream

from

selling the drugs at issue over seven years. So immune to criminal

sanctions

was the New York-based company that it launched its off-label Bextra

campaign

at the same time the company was pleading guilty to doing precisely

the

same thing with other drugs. The anti-inflammatory medication was later

yanked

from the market because of increased risk of heart attacks and stroke.

 

What's to be done? The government can essentially kill a company by

pushing for

the parent firm to be barred from government work, which would include

Medicaid

and Medicare.

 

Teaching a Lesson That would teach the company a lesson. But it would

also hurt

the millions of people who depend, in Pfizer's case, on products from

Accupril

to treat congestive heart failure to Zyvox when you have certain

pneumonias or

infections.

 

And then there are those thousands of company employees who do good,

honest

work and who would suddenly find themselves in already massive

unemployment

lines.

 

And yet, companies count on selling drugs to patients that can't

benefit from

the medications and may be harmed by them. An estimated 15 percent of

sales were prescribed for off-label uses.

 

Through the years, companies have admitted to paying doctors kickbacks

for

meeting with sales people who promote off- label uses and to

sponsoring

golf vacations and Caribbean respites

for

prescribing physicians.

 

The challenge is to find a way to make it not worthwhile to break the

rules.

 

Executives Behind Bars

 

Throwing a few company

executives

in jail might do the trick. On occasion, sales managers and physicians

have

been prosecuted.

 

As for top managers at pharmaceuticals, six have been convicted or

pleaded

guilty, mostly for misbranding or promoting off-label uses, according

to

the Justice Department.

 

Winning felony convictions is tough to pull off because you have to

prove they had

specific intent to commit fraud. As with any white-collar crime, that

is

tricky.

 

But there is a way around that obstacle, and the FDA announced this

month that

it would go that route to focus on pharmaceutical executives, the Wall

Street

Journal reported.

 

The Food and Drug Act allows misdemeanor convictions without proof of

intent to

do wrong.

 

That is an awesome power and it can be easily abused. The timing of the

FDA

announcement suggests that it's a response to critics in Congress and a

brutal

Government Accountability Office report that the division operates

without

scrutiny or, well, accountability.

 

And yet, used for the right cases, the misdemeanor prosecution of an

executive

or two who set up incentives for the sales force to push drugs

illegally and

withhold information about devices from regulators just might do the

trick.

 

Nothing else has yet.

 

--Editors: James Greiff, Jim Rubin.

 

To contact the writer of this column: Ann Woolner in Atlanta at

awoolner

<awoolner%40bloomberg.net>.

To contact the editor responsible for this column: James Greiff at

jgreiff

<jgreiff%40bloomberg.net>.

 

 

 

 

 

[Guest guest]

Going to jail for these executives needs to be put in place. They consider getting caught and paying a fine as a "cost of doing business". They then continue the same practices until they get caught again. This is the health of many thousands of people that is being threatened so drug makers have more money to bribe politicians.Mridula Sharma <mridula49To:

Sent: Tue, March 23, 2010 9:51:55 AMRe: "When Drug Makers' Profits Outweigh Penalties"

 

 

In the US one can sue the company for wrong doings. So if all those people who have suffered because of the nedicines or vaccines, sue them for damages, then the money to be paid in damages will be very high may be that becomes a deterent. Putting them in jail, I don't know how it works there but in India a high flying person enjoys five star comforts in jail.

 

 

 

Raven <NWRaven (AT) gmail (DOT) com>"1 @ " <>; "1 MedicalConspiracies @googlegrou" <MedicalConspiracies @googl. com>; "1 Paranormal_Research @" <Paranormal_Research >Mon, 22 March, 2010 12:32:19 PM[Health_and_ Healing] "When Drug Makers' Profits Outweigh Penalties"

-------

 

 

 

"When Drug Makers' Profits Outweigh Penalties"

 

 

Jan Slama <slamajama2 (AT) gmail (DOT) com>

 

 

Charge them with willful neglect, so you don’t have to prove intent!

Jan

 

 

 

 

ALLIANCE FOR HUMAN RESEARCH PROTECTION

"When Drug Makers' Profits Outweigh Penalties" appearing in today's Washington Post is an updated version of David Evans' riveting, prize winning investigative report, Big Pharma's Crime Spree, published in Bloomberg News, December 2009. Some of the tables from the expanded Bloomberg Magazine version can be accessed at: <http://www.ahrp. org/cms/content/ view/653/ 109/One thing remains unchanged:"Across the United States , pharmaceutical companies have pleaded guilty to criminal charges or paid penalties in civil cases when the Justice Department finds that they deceptively marketed drugs for unapproved uses, putting

millions of people at

risk of chest infections, heart attacks, suicidal impulses or death."The biggest fine ever imposed in U.S. history, $2.3 billion against recidivist Pfizer, represented a mere 14% of the revenue stream from selling the drugs at issue over seven years."So immune to criminal sanctions was that the company launched its off-label Bextra campaign at the same time the company was pleading guilty to doing precisely the same thing with other drugs. The anti-inflammatory medication was later yanked from the market because of increased risk of heart attacks and stroke."Rather than being tried for their crimes rogue corporate giants-in the pharmaceutical industry is being subsidized and the financial industry (giants deemed "too big to fail")-is being bailed out by US taxpayers.A follow-up on Evans' report, Bloomberg News columnist, Ann Woolner took the bull by the horns in her column, "Jail Time

for Executives Might Stop Drug Crimes" published by BusinessWeek (below) noting that: "Pharmaceutical and medical device companies repeatedly signal they just don't seem to care what the law says if they can find a way around it."For example, "internal documents show Johnson & Johnson planning a push for $302 million in geriatric sales for a drug after the FDA had said that for the elderly, the medication wasn't as helpful and carried more risks than the company had claimed.The company denies wrongdoing.""Throwing a few company executives in jail might do the trick."The problem is the difficulty in proving intent. However, the Food and Drug Act, allows misdemeanor convictions without proof of intent to do wrongdoing. But until now, the FDA did not prosecute pharmaceutical executives.So, the very rogue pharmaceutical companies that have pled guilty to criminal marketing of

toxic, mostly useless drugs who paid hundreds of millions-even over a billion dollars in fines-have continued to profiteer from defective hazardous products.Unless the FDA enforces the prosecutorial provisions of the FDC; unless Congress supports health-care fraud prosecutions; and unless the Obama administration will prohibit taxpayer reimbursement for criminally marketed drugs and medical devices, rogue companies will continue profit from harm producing, hazardous drugs that pose risks of disability and death.Contact: Vera Hassner Sharav veracare (AT) ahrp (DOT) org <veracare%

40ahrp.org 212-595-8974<http://www.washingt onpost.com/ wp-dyn/content/ article/2010/ 03/19/ AR2010031905 578_pf.html THE WASHINGTON POST When drug Makers' Profits Outweigh Penalties By David Evans Bloomberg News Sunday, March 21, 2010; G01Prosecutor Michael Loucks remembers clearly when attorneys for Pfizer, the world's largest drug company, looked across the table and promised it wouldn't break the law again.It was January 2004, and the lawyers were negotiating in a conference room on the ninth floor of the federal courthouse in Boston , where Loucks was head of the health-care fraud unit of the U.S. Attorney's Office. One of Pfizer's units had been pushing doctors

to prescribe

an epilepsy drug called Neurontin for uses the Food and Drug Administration had never approved.In the agreement the lawyers eventually hammered out, the Pfizer unit, Warner-Lambert, pleaded guilty to two felony counts of marketing a drug for unapproved uses. New York-based Pfizer agreed to pay $430 million in criminal fines and civil penalties, and the company's lawyers assured Loucks and three other prosecutors that Pfizer and its units would stop promoting drugs for unauthorized purposes.What Loucks, who was acting U.S. attorney in Boston until November, didn't know until years later was that Pfizer managers were breaking that pledge not to practice off-label marketing even before the ink was dry on their plea.On the morning of Sept. 2, 2009, another Pfizer unit, Pharmacia & Upjohn, agreed to plead guilty to the same crime. This time, Pfizer executives had been instructing

more than 100 salespeople to promote Bextra -- a drug approved only for the relief of arthritis and menstrual discomfort -- for treatment of acute pain of all kinds.For this new felony, Pfizer paid the largest criminal fine in U.S. history: $1.19 billion. On the same day, it paid $1 billion to settle civil cases involving the off-label promotion of Bextra and three other drugs with the United States and 49 states."At the very same time Pfizer was in our office negotiating and resolving the allegations of criminal conduct in 2004, Pfizer was itself in its other operations violating those very same laws," Loucks, 54, says. "They've repeatedly marketed drugs for things they knew they couldn't demonstrate efficacy for. That's clearly criminal."The penalties Pfizer paid for promoting Bextra off-label were the latest chapter in the drug's benighted history. The FDA found Bextra to be so dangerous that

Pfizer took it off the market for all uses in 2005.Across the United States , pharmaceutical companies have pleaded guilty to criminal charges or paid penalties in civil cases when the Justice Department finds that they deceptively marketed drugs for unapproved uses, putting millions of people at risk of chest infections, heart attacks, suicidal impulses or death.It used to be legal for companies to promote drugs in the United States for any use. Congress banned the practice in 1962, requiring pharmaceutical companies to first prove their drugs were safe and effective for specific uses.If the law is clear, why do drug companies keep breaking it? The answer lies in economics. Pharmaceutical companies spend about $1 billion to develop and test a new drug. To recoup their investment, the companies want doctors to prescribe their drugs as widely as possible.Since May 2004, Pfizer, Eli

Lilly, Bristol-Myers Squibb and four other drug companies have paid a total of $7 billion in fines and penalties. Six of the companies admitted in court that they marketed medicines for unapproved uses. In September 2007, New York-based Bristol-Myers paid $515 million -- without admitting or denying wrongdoing -- to federal and state governments in a civil lawsuit brought by the Justice Department. The six other companies pleaded guilty in criminal cases.In January 2009, Indianapolis- based Lilly, the largest U.S. psychiatric drugmaker, pleaded guilty and paid $1.42 billion in fines and penalties to settle charges that it had for at least four years illegally marketed Zyprexa, a drug approved for the treatment of schizophrenia, as a remedy for dementia in elderly patients.In five company-sponsored clinical trials, 31 people out of 1,184 participants died after taking the drug for dementia -- twice

the death rate for those taking a placebo, according to an article in the Journal of the American Medical Association."Marketing departments of many drug companies don't respect any boundaries of professionalism or the law," says Jerry Avorn, a professor at Harvard Medical School . "The Pfizer and Lilly cases involved the illegal promotion of drugs that have been shown to cause substantial harm and death to patients."The widespread off-label promotion of drugs is yet another manifestation of a health-care system that has become dysfunctional."It's an unbearable cost to a system that's going broke," Avorn says. "We can't even afford to pay for effective, safe therapies."About 15 percent of all U.S. drug sales are for unapproved uses without adequate evidence the medicines work, according to a study by Randall Stafford, a medical professor at Stanford University .As large as the

penalties are for drug companies caught breaking the off-label law, the fines are tiny compared with the firms' annual revenue.The $2.3 billion in fines and penalties Pfizer paid for marketing Bextra and three other drugs cited in the Sept. 2 plea agreement for off-label uses amount to just 14 percent of its $16.8 billion in revenue from selling those medicines from 2001 to 2008.The total of $2.75 billion Pfizer has paid in off-label penalties since 2004 is a little more than 1 percent of the company's revenue of $245 billion from 2004 to 2008.Lilly already had a criminal conviction for misbranding a drug when it broke the law again in promoting schizophrenia drug Zyprexa for off-label uses beginning in 1999. The medication provided Lilly with $36 billion in revenue from 2000 to 2008. That's more than 25 times as much as the total penalties Lilly paid in January.Companies regard

the risk of multimillion- dollar penalties as just another cost of doing business, says Lon Schneider, a professor at the University of Southern California 's Keck School of Medicine in Los Angeles . In 2006, he led a study for the National Institute of Mental Health of off-label use of drugs, including Zyprexa."There's an unwritten business plan," he says. "They're drivers that knowingly speed. If stopped, they pay the fine, and then they do it again."Paying the doctors In pushing off-label use of drugs, companies find ready and willing partners in physicians. Under the fragmented system of U.S. medical regulation, it's legal for doctors to prescribe FDA-approved drugs for any use. The FDA has no authority over doctors, only over drug companies, regarding off-label practices. It's up to the states to oversee physicians."I think the physician community has to take some

ownership responsibility and do their own due diligence beyond the sales and marketing person," says Boston 's former U.S. Attorney Michael Sullivan.Doctors generally don't tell people they're prescribing drugs pitched to them by pharmaceutical salespeople for unapproved treatments, says Peter Lurie, former deputy medical director of Public Citizen, a Washington- based public interest group. Most doctors don't keep track of FDA-approved uses of drugs, he says."The great majority of doctors have no idea; they don't even understand the distinction between on- and off-labeling, " he says.Pfizer's marketing program offered doctors up to $1,000 a day to allow a Pfizer salesperson to spend time with the physician and his patients, according to a whistle-blower lawsuit filed by John Kopchinski, who worked as a salesman at Pfizer from 1992 to 2003."By 'pairing up' with a physician, the sales

representative was able to promote over a period of many hours, without the usual problems of gaining access to prescribing physicians," Kopchinski says. "In essence, this amounted to Pfizer buying access to physicians."Pfizer spokesman Chris Loder says the company stopped what it calls "mentorships" in 2005. He says Pfizer paid doctors $250 a visit. The goal was clear: Get doctors to prescribe a new drug as widely as possible.Pfizer's Neurontin is a case in point. The FDA approved the drug as a supplemental medication to treat epilepsy in 1993. Pfizer took in $2.27 billion from sales of Neurontin in 2002. A full 94 percent -- $2.12 billion -- of that revenue came from off-label use, according to the prosecutors' 2004 Pfizer sentencing memo.Since 2004, companies that are now Pfizer divisions have pleaded guilty to off-label marketing of two drugs. Pfizer continued off-label promotions for these

medications after buying the firms, according to documents.Pfizer first stepped into an off-label scheme in 1999, when it offered to buy Warner-Lambert, based in New Jersey . Prosecutors charged that Warner-Lambert marketed Neurontin off-label between 1995 and 1999.Warner-Lambert admitted doing so for one year in a May 2004 guilty plea for which Pfizer paid $430 million in fines and penalties.When the FDA approved Neurontin in 1993 to be used only along with other epilepsy drugs, the agency wrote that as a side effect, the drug can induce depression and suicidal thoughts in patients.The whistle-blower Much of what prosecutors learned about Warner-Lambert' s marketing of Neurontin comes from a former employee, David Franklin, who holds a Ph.D. in microbiology.Franklin , 48, whose title at Warner-Lambert was medical liaison, says his job involved more salesmanship than science. He told

doctors that Neurontin was the best drug for a dozen off-label uses, including pain relief, bipolar disease and depression."Technically, I had responsibility for answering physician questions about all of Parke-Davis' s drugs," Franklin says. "In practice, my real job was to promote Neurontin for off-label indications heavily -- to the exclusion of just about everything else."Franklin says he knew such uses of the drug had no scientific support for effectiveness and safety. "I was actually undermining their ability to fulfill the Hippocratic oath," Franklin says, referring to a physician's pledge to "First, do no harm."After working for Warner-Lambert for three months, Franklin quit and filed a whistle-blower lawsuit on behalf of taxpayers to recover money the government paid for illegally promoted drugs. He stood to collect as much as 30 percent of any settlement the company made

with the government.Franklin had to wait four years -- until 2000 -- before the Justice Department began a criminal investigation. In November 1999, Pfizer made its public offer to buy Warner-Lambert. In January 2000, a federal grand jury in Boston issued subpoenas to Warner-Lambert employees to testify about the marketing of Neurontin.That March, Warner-Lambert' s annual report disclosed that prosecutors were building a criminal case. Undeterred, Pfizer bought Warner-Lambert in June for $87 billion -- the third-largest merger in U.S. history.More sales than Viagra A year after the acquisition, the FDA discovered that Neurontin was still being marketed off-label. In a June, 2001 letter to the company, the agency wrote that Pfizer's promotion of the drug "is misleading and in violation of the Federal Food, Drug and Cosmetics Act."Pfizer marketed Neurontin off-label after receiving

that letter, agency records show. For 2001, Pfizer reported revenue of $1.75 billion from Neurontin sales, making it the company's fourth-largest- selling drug that year, ahead of impotence pill Viagra, which Neurontin topped for four years.As Neurontin sales soared to $2.27 billion in 2002, the FDA found that Pfizer was improperly claiming that the drug was useful for a broader range of brain disorders than scientific evidence had established.The agency sent a letter dated July 1, 2002, that said the company's marketing practices were in violation of FDA rules. It asked Pfizer to stop using misleading promotions. Pfizer reported $2.7 billion in revenue from Neurontin in 2003. Overall, the drug has provided Pfizer with $12 billion in revenue.Pfizer spokesman Chris Loder says, "Regarding the 2001 and 2002 FDA letters, we do not believe that they were suggestive of any continuing off-label

promotion."For blowing the whistle on his employer, Franklin collected $24.6 million under the False Claims Act. Prosecutors Loucks and Sullivan got involved in the case after Franklin filed his suit, relying on information from Franklin and their own investigation. Before 2004, prosecutions for off-label marketing were rare. "Until a couple of these cases became public, companies were probably saying, 'Everybody does it this way,' " Sullivan says.Loucks had a track record in off-label prosecutions. In 1994, he negotiated a $61 million settlement with C.R. Bard of New Jersey , which pleaded guilty to promoting off-label use of a heart catheter that led to patient deaths.The off-label campaign In the January 2004 settlement negotiations with Loucks, Sullivan and two other prosecutors, Pfizer's lawyers assured the U.S. Attorney's Office that the company wouldn't market drugs

off-label. "They asserted that the company understood the rules and had taken steps to assure corporate compliance with the law," Loucks says. "We remember those promises."What Pfizer's lawyers didn't tell the prosecutors was that Pfizer was at that moment running an off-label marketing promotion using more than 100 salespeople who were pitching Bextra, according to a Pfizer sales manager who pleaded guilty to misbranding a drug in March 2009.Pharmacia & Upjohn developed Bextra, which was approved by the FDA in 2001 for only the treatment of arthritis and menstrual discomfort. P & U and Pfizer had by then crafted a joint marketing agreement to sell the drug. In November 2001, Mary Holloway, a Pfizer Northeast regional manager, began illegally training and directing her sales team to market Bextra for the relief of acute pain, Holloway admitted in the plea.On Dec. 4, 2001, Pfizer executives sent Holloway a

copy of a nonpublic FDA letter to the company. The agency had denied Pfizer's application to market Bextra for acute pain. Clinical trials had shown Bextra could cause heart damage and death.Pfizer bought Pharmacia & Upjohn in April 2003. From 2001 through 2003, P & U, first as an independent company and then as a unit of Pfizer, paid doctors more than $5 million in cash to lure them to resorts, where salespeople illegally pitched off-label uses for Bextra, P & U admitted.In her guilty plea, Holloway said her team had solicited hospitals to create protocols to buy Bextra for the unapproved purpose of acute pain relief. Her representatives didn't mention the increased risk of heart attacks in their marketing. They told doctors that side effects were no worse than those of a sugar pill, Holloway said.In 2003, Holloway reported her unit's off-label promotions of

Bextra up the corporate ladder at Pfizer, according to a presentencing memo to the judge written by Robert Ullmann, Holloway's attorney. Top managers didn't attempt to halt the illegal conduct, the memo said.By late 2004, Bextra reached blockbuster status, with annual sales of $1.29 billion. Holloway promoted Bextra until the FDA asked Pfizer in April 2005 to pull it from the market for all uses.The agency concluded that the drug increased the risk of heart attacks, chest infections and strokes in cardiac surgery patients. In June 2009, Holloway, 47, was sentenced to two years on probation and fined $75,000. She didn't return phone calls seeking comment.'We regret . . . ' By 2007, the criminal and civil cases against Pfizer, its employees and its subsidiaries had begun to mount. The tally of drugs cited by federal prosecutors for off-label promotion reached six by 2009. In April

2007, P & U pleaded guilty to a felony charge of offering a $12 million kickback to a pharmacy benefit manager. Pfizer paid a criminal fine of $19.7 million. In September 2009, Pfizer agreed to pay $2.2 billion in fines and penalties. P & U pleaded guilty to a felony charge of misbranding Bextra with the intent to defraud. After the settlement, Pfizer general counsel Amy Schulman said the company had learned its lesson. "We regret certain actions we've taken in the past," she said. "Corporate integrity is an absolute priority for Pfizer."One reason drug companies keep breaking the law may be because prosecutors and judges have been unwilling to use the ultimate sanction -- a felony conviction that would exclude a company from selling its drugs for reimbursement by state health programs and federal Medicare.At Pfizer's Pharmacia sentencing in October, U.S. District Court Judge Douglas Woodlock

said companies don't appear to take the law seriously. "It has become something of a cost of doing business for some of these corporations, to shed their skin like certain animals and leave the skin and move on," he said.As prosecutors continue to uncover patterns of deceit in off-label marketing, millions of patients across the nation remain in the dark. Doctors often choose the medications based on dishonest marketing by drug company salesmen.Loucks says that putting an end to the criminal off-label schemes will be difficult. As drugmakers repeatedly plead guilty, they've shown they're willing to pay hundreds of millions of dollars in fines as a cost of generating billions in revenue.The best hope, Loucks says, is that drug companies actually honor the promises they keep making -- and keep breaking -- to obey the law of the land. As much as $100 million for

health-care fraud enforcement is tied up in the stalled reform legislation, according to Loucks. "It will be increasingly hard for the threat of exclusion to seem credible and thus serve as a deterrent to bad corporate behavior," he says, "unless Congress supports health-care fraud prosecutions with more money."A version of this story originally appeared in Bloomberg Markets Magazine. It was awarded a 2010 Society of American Business Editors and Writers award for enterprise reporting and general excellence.<http://www.business week.com/ news/2010- 03-16/jail- time-for- executives- might-s top-drug-crimes- ann-woolner. html

Businessweek Jail

Time for Executives Might Stop Drug Crimes Commentary by Ann Woolner March 16, 2010March 17 (Bloomberg) -- If a surgeon cuts open your chest and implants a device meant to shock your heart into beating regularly, you are counting on the thing not short-circuiting.You assume every aspect of its manufacture, each change in the process, has been reviewed and approved by proper authorities. If malfunctions turn up, surely the company will so report.And if it fudges on notification, gets caught, admits a crime and pays a whopping fine, you figure the maker surely would never again let its reporting lapse.Alas.This week Boston Scientific Corp. halted sales of implantable defibrillators because it hadn't told the U.S. Food and Drug Administration of changes in its manufacturing process. Not to worry. There is no reason to fear the manufacturing changes made the devices dangerous, the company assures us. But it's hard to

trust an entire industry that keeps promising to do better and doesn't. We badly want to believe those who make medical devices and drugs because they hold lives in their hands.Boston Scientific disclosed its reporting lapses this week, little more than four months after pleading guilty to two misdemeanors stemming from, guess what?

 

Reporting lapses.In the earlier case, prosecutors said an outfit the company bought, Guidant, hid malfunctions it had known about for three years. Some of its defibrillators were short-circuiting, and at least one patient died. Boston Scientific is slated to pay a fine of almost $300 million for that, on top of $240 million to settle related civil complaints.Doing Better Maybe the parent company is trying to do better than Guidant did. Boston Scientific says it suspended defibrillator sales voluntarily this week when it discovered a reporting lapse. There is no evidence the latest notification failure hid a problem with the product, as happened before. The unease stems from context. Pharmaceutical and medical device companies repeatedly signal they just don't seem to care what the law says if they can find a way around

it.Internal documents show Johnson & Johnson planning a push for $302 million in geriatric sales for a drug after the FDA had said that for the elderly, the medication wasn't as helpful and carried more risks than the company had claimed, Bloomberg reported earlier this month. The New Brunswick, New Jersey-based company denies wrongdoing.Examples abound that these companies keep breaking rules and violating laws to make and market their products, no matter how many times they are caught, fined and forced to promise to go straight.Off-Label Use One insider at Warner-Lambert -- now part of Pfizer Inc. -- worried about promoting children's use of a drug for a purpose the FDA hadn't approved. His sales manager told him not to fret about off-label uses."It'll never get back to us," the manager said, according to Bloomberg Markets magazine.The biggest fine ever imposed in U.S. history, $2.3 billion against

recidivist Pfizer, represented a mere 14 percent of the revenue stream from selling the drugs at issue over seven years. So immune to criminal sanctions was the New York-based company that it launched its off-label Bextra campaign at the same time the company was pleading guilty to doing precisely the same thing with other drugs. The anti-inflammatory medication was later yanked from the market because of increased risk of heart attacks and stroke.What's to be done? The government can essentially kill a company by pushing for the parent firm to be barred from government work, which would include Medicaid and Medicare.Teaching a Lesson That would teach the company a lesson. But it would also hurt the millions of people who depend, in Pfizer's case, on products from Accupril to treat congestive heart failure to Zyvox when you have certain pneumonias or infections.And then there are those thousands of company employees

who do good, honest work and who would suddenly find themselves in already massive unemployment lines.And yet, companies count on selling drugs to patients that can't benefit from the medications and may be harmed by them. An estimated 15 percent of sales were prescribed for off-label uses.Through the years, companies have admitted to paying doctors kickbacks for meeting with sales people who promote off- label uses and to sponsoring golf vacations and Caribbean respites for prescribing physicians.The challenge is to find a way to make it not worthwhile to break the rules.Executives Behind Bars

 

Throwing a few company executives in jail might do the trick. On occasion, sales managers and physicians have been prosecuted.As for top managers at pharmaceuticals, six have been convicted or pleaded guilty, mostly for misbranding or promoting off-label uses, according to the Justice Department.Winning felony convictions is tough to pull off because you have to prove they had specific intent to commit fraud. As with any white-collar crime, that is tricky.But there is a way around that obstacle, and the FDA announced this month that it would go that route to focus on pharmaceutical executives, the Wall Street Journal reported.The Food and Drug Act allows misdemeanor convictions without proof of intent to do wrong.That is an awesome power and it can be easily abused. The timing of the FDA announcement

suggests that

it's a response to critics in Congress and a brutal Government Accountability Office report that the division operates without scrutiny or, well, accountability.And yet, used for the right cases, the misdemeanor prosecution of an executive or two who set up incentives for the sales force to push drugs illegally and withhold information about devices from regulators just might do the trick.Nothing else has yet.--Editors: James Greiff, Jim Rubin.To contact the writer of this column: Ann Woolner in Atlanta atawoolner (AT) bloomberg (DOT) net <awoolner% 40bloomberg.

net>.To contact the editor responsible for this column: James Greiff atjgreiff (AT) bloomberg (DOT) net <jgreiff% 40bloomberg. net>.

 

 

 

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