Pfizer to plead guilty, pay $430 million to settle drug marketing case

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Pfizer to plead guilty, pay $430 million to settle drug marketing case

By Denise Lavoie, Associated Press, 5/13/2004 18:43

 

Pfizer Inc. will plead guilty to criminal charges and pay $430 million in fines

to settle charges that a company it bought four years ago illegally promoted

non-approved uses for a drug by flying doctors to lavish resorts and paying them

hefty speakers' fees to tout it.

 

The settlement with the world's largest pharmaceutical company over the company

it bought, Warner-Lambert, includes a $240 million criminal fine the

second-largest criminal fine ever imposed in a health care fraud prosecution,

the Justice Department said.

 

Whistleblower David Franklin, the scientist who reported the marketing abuses to

authorities, will receive $26.6 million as part of the settlement.

''This is a standard industry practice,'' Franklin told The Associated Press in

an interview. ''Hopefully, real change will happen now, and this will be the

start of something and not the end.''

 

Under the agreement announced Thursday by federal prosecutors, the company

acknowledged spending hundreds of thousands of dollars to promote non-approved

uses for the anti-seizure drug Neurontin.

 

Pfizer will plead guilty to violating the Food, Drug and Cosmetic Act. Besides

the $240 million criminal fine, the company will pay $152 million in civil fines

to be shared among state and federal Medicaid agencies. Another $38 million

would go to state consumer-protection agencies.

New Jersey is to get a total of $1.8 million, with $1.55 million going to its

Medicaid program and the remainder to the Division of Consumer Affairs.

The company said the activity occurred years before it bought Warner-Lambert in

2000.

 

''Pfizer is committed to compliance with all healthcare laws and FDA

requirements and to high ethical standards in all aspects of its business

practices,'' the company said in a statement.

 

The case began in 1996, when Franklin filed a whistleblower lawsuit against drug

maker Parke-Davis and its parent company Warner-Lambert, alleging it used an

illegal marketing plan to drive up Neurontin sales in the 1990s.

 

The lawsuit alleged that while Neurontin was approved only as an epilepsy drug,

the company promoted it for relieving pain, headaches, bipolar disorder and

other psychiatric illnesses.

While doctors can prescribe drugs for any use, the promotion of drugs for these

so-called ''off-label uses'' is prohibited by the Food and Drug Cosmetic Act.

 

Last May, federal prosecutors in Boston filed a brief in support of Franklin's

lawsuit, and have since been in settlement negotiations with New York-based

Pfizer to recover money the Medicaid program spent on Neurontin.

Franklin's lawsuit alleged that the company's publicity plan included paying

doctors to put their names on ghostwritten articles about Neurontin and to

induce them to prescribe the drug for various uses by giving them tickets to

sporting events, trips to golf resorts and speakers fees. One doctor received

almost $308,000 to speak at conferences about the drug.

 

Neurontin's sales soared from $97.5 million in 1995 to nearly $2.7 billion in

2003.

''We believe we have exposed an illegal practice in the pharmaceutical industry

that caused the Medicaid program to pay tens of millions of dollars for

off-label prescriptions that were not eligible for reimbursement under the

Medicaid program,'' said Franklin's attorney, Thomas Greene.

 

Franklin, 42, said Warner-Lambert had conducted a clinical trial that showed

Neurontin was less effective than a placebo for treating bipolar disorder, but

it never published those findings and told doctors the drug was highly effective

for treating the psychological condition.

 

''Patients every day are still taking this drug hoping it's effective, and

there's really no evidence for that,'' Franklin said.

He said he and other medical liaisons were instructed to lie about or exaggerate

Neurontin's effectiveness for non-approved uses, including showing doctors one

case study on a patient who used Neurontin and then telling doctors there were

thousands of similar cases.

 

''I couldn't be more supportive of doctors using drugs for off-label uses.

Doctors have to use their best judgment sound medical judgment to treat their

patients,'' Franklin said

 

''But what this company chose to do was to use that intense desire by doctors

for information about drugs and pollute it with false information,'' he said.

''The primary victims here are the patients whose doctors might have made

another decision if they had the right information.''

 

Franklin filed his lawsuit under the U.S. False Claims Act, which allows private

citizens to sue on behalf of the government and receive a portion of awards in

cases where companies are defrauding the government.

 

''This illegal and fraudulent promotion scheme corrupted the information process

relied upon by doctors in their medical decision-making, thereby putting

patients at risk,'' said U.S. Attorney Michael Sullivan, who joined senior

Justice Department officials in Washington to announce the settlement Thursday.

 

Pfizer shares fell 31 cents to close at $35.40 Thursday on the New York Stock

Exchange.