Ex-Pfizer VP Peter Rost Takes On Goliath By Evelyn Pringle

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[sSRI-Research] Pringle - Ex-Pfizer VP Peter Rost Takes On

Goliath

 

 

It is perfectly legal for a physician to prescribe a medication

in any way he see fit. But, a drugmaker cannot promote off label

uses. It is criminal when the company is aware of dangers. Here,

Evelyn Pringle* explores the ongoing saga of pharma greed. Vince

 

 

 

Evelyn Pringle

 

 

http://www.lawyersandsettlements.com/articles/pfizer_offlabel.html

 

 

Ex-Pfizer VP Peter Rost Takes On Goliath

May 9, 2006.

 

By Evelyn Pringle

 

 

Beginning in 1997, Pharmacia, currently a subsidiary of Pfizer, sought

to boost its sales of the drug Genotropin. To that end, the company

illegally marketed the drug to spur growth in short children and as an

anti-aging drug for adults looking for the fountain of youth.

 

In a nutshell, the off-label marketing scheme included: (1) direct

payments to doctors; (2) all-expense paid junkets for doctors; (3)

financial incentives to distributors: and (4) phony consultant

contracts to funnel payments for the off-label promotion.

 

As a result of the scheme's success, sales of the Genotropin

sky-rocketed and over the years, Medicaid and other public healthcare

programs paid millions of dollars for its improper use.

The full amount of damage to health care programs is not yet known.

 

" But this much is certain, " former Pfizer Vice President turned

whistleblower, Dr Peter Rost, says, " Pharmacia turned Genotropin into

a cash cow by illegally peddling a dangerous drug to make short kids

tall and their grandparents young. "

 

Genotropin is a man-made human growth hormone approved to treat a

limited range of hormonal deficiencies. The FDA has never approved the

drug to spur growth for children without hormonal deficiencies or to

prevent aging.

 

Genotropin has serious side effects according to the National

Institute of Health: " If growth hormone is given to children or adults

with normal growth, who do not need growth hormone, serious unwanted

effects may occur because levels in the body become too high. These

effects include the development of diabetes; abnormal growth of bones

and internal organs such as the heart, kidneys, and liver,

arteriosclerosis; and hypertension. "

 

Dr Rost joined Pharmacia in June of 2001 as a VP of Marketing

Endocrine Care. One of his primary responsibilities was to oversee the

marketing of Genotropin but he did not handle day-to-day marketing

activities.

 

A group of about 70 people reported to Dr Rost, among them a US

marketing director with a group of about 22 people under him. The

marketing people who sold Genotropin throughout the US reported to the

Endocrine Care sales director.

 

A few days after Dr Rost came on board he received a copy of a letter

from his supervisor that discussed the off-label sale of Genotropin

and stated that Pharmacia would not promote or encourage the use of

the drug outside approved uses.

 

Dr Rost said he found the letter unusual because " any marketing

director would be well aware that it is illegal to promote drugs for

off-label indications. " When he asked about it he was told that there

had been some problems in the past, but that the issue had since been

resolved.

 

In the fall of 2001, Dr Rost became aware that the company was paying

for between 600 and 800 doctors and their spouses to attend an annual

meeting at a posh Caribbean resort as part of its marketing of

Genotropin. When he expressed concerns, he was assured that the

company's legal department had approved this type of trip.

 

In early 2002, Dr Rost conducted a profitability analysis of the

Genotropin franchise and became uneasy when the senior director of

marketing would not disclose key sales and marketing information

related to the audit.

 

During the analysis, Dr Rost learned that Pharmacia paid cash

incentives to sales reps for each new patient who was prescribed

Genotropin and that 16 of the top 20 earning territories came from the

adult team, in spite of the fact that adult sales accounted for only

about 10% of total sales. He also learned that they received

incentives regardless of whether treatment was on-label or off-label.

 

Dr Rost then decided to track every new patient to determine exactly

how many new anti-aging patients were signed on each month. Based on

high number in his analysis, Pharmacia agreed to change the incentive

payment plan and exclude payments for any patients from physicians

known to engage in off-labeling prescribing.

 

Later in February 2002, Dr Rost learned that Pharmacia had numerous

contracts to sell Genotropin directly to doctors specializing in the

anti-aging field, as well as contracts with wholesalers who

specialized in servicing the off-label Genotropin market.

 

Around this same time, he decided to delve deeper into the marketing

practices and it soon became clear that his subordinates knew that

off-label marketing was illegal, and they were not forthcoming. For

instance, the payments to physicians were not revealed until a manager

left the company and doctors started to call and ask about their payments.

 

Dr Rost first approached Pharmacia management in the fall of 2001, and

in February 2002, the company started an internal investigation. In

March, the firm's Associate General Counsel informed Dr Rost that she

had found that marketing director, Carl Worrell, had engaged in gross

misconduct relating to the off-label promotion and that he was not

forthcoming during the investigation. Based on their concerns, a

decision was made to terminate Worrell's employment in April 2002.

 

After he left, Dr Rost discovered documents that showed that Pharmacia

had been actively engaged in the off-label marketing since at least

2000. In one example, Dr William Abelove, an anti-aging doctor at a

longevity center, had sent a letter to Pharmacia CEO, Fred Hassan, in

2000, and wanted to purchase Genotropin at a discount rate. Mr Hassan

forwarded the letter to the marketing departments and by May 1, 2000,

Worrell had signed a consulting contract with Dr Abelove to assist in

the promotion of Genotropin.

 

In an effort to ensure that the off-label promotion was terminated, Dr

Rost sent an email to the associate director of marketing and her

product managers and explained his concerns about continued payments

and consultancy agreements, and instructed them not to approve any

additional payments without seeing him first.

 

In May 2002, Pharmacia cancelled contracts that gave rebates to

anti-aging doctors and wholesalers who supplied anti-aging clinics but

continued to sell to these doctors and wholesalers.

 

The same month, Dr Rost received a short debriefing of the internal

legal review and was assured that appropriate corrective action had

been taken.

 

In July 2002, Pfizer announced the friendly take-over of Pharmacia.

With this merger, it became clear to Mr Rost that he would have to

address his concerns with Pfizer's management team. To prepare, Dr

Rost started to research the legal statutes related to growth hormones

and the False Claims Act, and other laws Pharmacia may have violated.

 

During the time period of July through September 2002, Dr Rost

continued to receive reports about discoveries of kick-backs paid to

doctors.

 

On October 28, 2002, Mr Rost and several marketing directors

participated in a meeting with Pfizer that included employees from

Pfizer's medical, marketing, regulatory and legal department, as well

as Judith Tytel, Pharmacia's Senior Corporate Counsel.

 

The meeting was intended to be an opportunity for Pharmacia employees

to provide information to their Pfizer counterparts. At the meeting Dr

Rost and his team disclosed that Pharmacia was sponsoring all-expense

paid junkets for physicians and that Pharmacia maintained a data base,

known as the Bridge Program, that contained detailed information

regarding the 30,000 patients who received Genotropin prescriptions.

 

They also explained that payments were being made to US doctors and

discussed how the Bridge Program supplied new patients with free

Genotropin for several months while the company assisted in seeking

reimbursement.

 

Following the meeting, several Pfizer executives asked for more

information and on November 8, 2002, Dr Rost and several directors,

and Associate General Counsel, met with Pfizer representatives and

lawyers and reviewed the Bridge Program.

 

During this time, Dr Rost continued to discuss his concerns with

executives and lawyers at Pharmacia and believed that the company was

concerned about the potential legal exposure related to the off-label

sale of Genotropin.

 

In response to continued reports indicating illegal activities, Dr

Rost repeatedly tried to implement corrective measures. However, he

learned that the corporate culture at Pharmacia made it impossible to

eliminate illegal conduct because of the financial incentives that

drove sales reps to continue it.

 

Through further investigation, Dr Rost learned that the illegal

activities started long before he arrived, and as far back as 1997. He

came to conclude that at times, company officers condoned the

activities despite knowing that they were illegal.

 

On April 16, 2003, the merger between Pfizer and Pharmacia was final.

Pharmacia directors and officers realized enormous financial benefits.

CEO Fred Hassan, received a $9.9 million severance package, 9 other

directors received packages worth, in the aggregate, $31.6 million,

and company directors were able to obtain early vesting of

approximately 6.7 million in stock options.

 

Pharmacia's sales were also a shot in the arm to Pfizer. According to

Pfizer's 2003 Annual Report: " Revenues increased 40% to $45,188

million in 2003... Revenue increases in 2003 were primarily due to the

inclusion of Pharmacia products, " it said.

 

The off-label sales paid off extremely well. Between 1997 and 2003,

Genotropin generated more than $550 million in sales in the US alone

and the company's database shows that about 60% of adult sales, and

25% to 30% of pediatric sales, were for off-label use.

 

On May 22, 2003, Dr Rost became aware of the pervasive nature of

ongoing illegal activity when he met with a manager of the Bridge

Program and was shown documents that confirmed that a massive number

of patients were listed with an off-label diagnosis.

 

In fact, 25% to 30% of the pediatric prescriptions were for off-label

use. Dr Rost understood that pediatric patients received significant

funding from Medicaid and other government programs.

 

He was alarmed at the extent of pediatric use - a staggering number,

he says, not only due to the medial implications to children but also

because it demonstrated that a great percentage of the cost was

reimbursed by Medicaid or other governmental programs.

 

Disturbed by these findings, he decided to file a lawsuit and with

Attorney Erika Kelton, and another Phillips & Cohen attorney, started

drafting a complaint.

 

On June 3, 2003, Ms Kelton, informed an assistant US Attorney that Dr

Rost would be filing a qui tam action alleging fraud relating to the

off-label marketing of Genotropin and delivered a copy of the

complaint to the US Attorney's Office on June 4, 2003.

 

In the Complaint, Dr Rost provided details of a complex scheme

including the nature of the fraud - where it occurred, how it

occurred, when it occurred and the persons responsible for its

commission. The following is a summary of the complaint's specific

factual allegations:

Approximately 60% of adult sales and 25% of its pediatric sales were

for off-label uses.

 

Pharmacia bribed 16 named distributors to promote off-label usage of

Genotropin.

 

Under the pretext of participating in a " study, " Pharmacia paid

doctors $200 for every patient they prescribed to, including off-label

subscriptions, and paid doctors an additional $200 for every year that

such patients continued to use Genotropin.

 

Pharmacia sponsored junkets for physicians and their spouses and

awarded substantial " honoraria " as inducements/kickbacks to promote

the off-label usage of Genotropin.

 

Pharmacia provided discounts to doctors working exclusively in the

anti-aging area, knowing that they would sell Genotropin off-label for

anti-aging treatment and least 18 named doctors signed contracts for

such price discounts.

 

Through contracts and " retainer " agreements, Pharmacia hired persons

and entities, some named in the Complaint, to promote off-label use of

Genotropin and such " consultants " provided no other services.

The false claims were submitted from 1997 to June 5, 2003 across the

US and included false claims and statements made by dozens of named

distributors and doctors, and Pfizer's Bridge Program lists the

patients for which the false claims were submitted.

 

But come to find out, off-label marketing seems to habitual with

Pfizer. At the same time that Dr Rost reported the illegal activities,

Pfizer was fighting off a whistleblower lawsuit arising out of the

off-label marketing of the drug Neurontin, by another company acquired

through a merger, in promoting the drug for pain control and Attention

Deficit Disorder.

 

In the end, Pfizer settled the lawsuit and a related criminal case for

$430 million.

 

In a motion filed in attempt to dismiss Dr Rost's lawsuit, Pfizer

states: " After investigating for more than two years, the Justice

Department recently declined to intervene in this qui tam complaint. "

The inference being that the DOJ does not consider this to be a

serious case.

 

However, a decision by the DOJ not to intervene means nothing.

According to a study by the Government Accounting Office, the DOJ has

declined to intervene in 72% of all qui tam actions initiated between

1987 and 2005.

 

A review of Pfizer regulatory filings reveals an ongoing affair with

the DOJ. In its Form 10-K for 2003, filed with the SEC on March 10,

2004, Pfizer disclosed the following:

" The company recently was notified that the US Department of Justice

is conducting investigations relating to the marketing and sale of

Genotropin and Bextra, as well as certain managed care payments. "

In its Form 10-K for 2004, filed with the SEC on February 29, 2005,

Pfizer disclosed that: " In late 2003, we received a request for

information and documents from the US Department of Justice concerning

the marketing of Genotropin as well as certain managed care payments. "

 

Nine months later, in a Form 10-Q filed on November 9, 2005, Pfizer

revealed that: " The U.S. Department of Justice has informed us that it

is investigating Pharmacia's former contractual relationship with a

health care intermediary. "

 

And make no mistake, Pfizer's legal troubles are far from over.

According to Dr Rost's attorney, Mark Labaton, " a grand jury in Boston

is investigating the illegal promotion and marketing of Genotropin

based on an investigation conducted by the US Attorney's office. "

 

In addition, according to news reports, the US Attorney in the Eastern

District of New York also has an active criminal investigation

involving Pfizer's off-label promotion of Lipitor, he says.

 

Mark Labaton, is a partner at the firm Kreindler & Kreindler, LLP,

with offices in New York and LA. The firm handles cases including

securities and consumer class actions, and FCA whistleblower,

antitrust, and consumer cases.

 

His resume includes 7 years as an Assistant US Attorney for the

Central District of California, where he prosecuted white-collar fraud

cases, including whistleblower actions.

 

Pfizer is the largest pharmaceutical company in the world, and

according to Mr Labaton, " Like most large pharmaceutical companies, it

is financially and politically powerful. "

 

" Litigating against such companies is not for the faint-hearted, " he

warns.

 

" But whistleblower lawyers are inspired by their clients, " Mr Labaton

says. " Warts and all, these clients are a strong, determined, and

courageous lot. "

 

He claims that " off-label promotion of drugs is a form of quackery

that victimizes vulnerable individuals who take these drugs with

serious and dangerous side effects for purposes never intended and

approved by the FDA. "

 

" That's exactly what happened in our case, " he notes.

 

" Pharmacia and its successor company, Pfizer, " Mr Labaton says,

" generated hundreds of millions in revenue by peddling Genotropin to

spurt growth in short children and as an anti-aging drug for adults

seeking eternal youth. "

 

" Genotropin was never intended to make short kids tall and their

grandparents young, " he said.

 

In some whistleblower cases, he says, there is one victim - " the

taxpayer who foots the bill for the fraud. "

 

It costs law firms a fortune to go up against the giant drug makers.

In the Pfizer Neurontin lawsuit, " the civil/whistleblower plaintiffs

in that case took more than 20 depositions and obtained thousands of

pages of documents in discovery, " Mr Labaton reports.

 

But he says he's not complaining. " The costs to us as lawyers and to

our firms can be substantial, " he says, " but these costs pale when

compared to what whistleblowers, like Dr. Rost, have to endure. "

 

" So far, " he points out, " Pfizer has used its muscle to reactively and

vigorously oppose Dr. Rost and to make his life tough. "

 

Dr Rost is indeed being hit from all sides.

 

On December 30, 2005, he was officially nominated for the " Whiny

Whistleblower of the Year " award by a Pharm-backed front group and

won. In truth, whether he knows it or not, it is a top honor, when

considering that he competed against two of the nation's most beloved

whistleblowers, Dr David Graham of Vioxx fame from the FDA, and Dr

Eric Topol, of the Cleveland Clinic.

 

Dr Rost's award was announced by Gilbert Ross, MD, who bills himself

as a doctor and Executive and Medical Director of the American Council

on Science and Health.

 

That in itself is amazing being that Doctor Ross' own achievement of

ripping off Medicaid to the tune of $8 million was only given the

recognition that it deserved last fall.

 

" Ross actually had to abandon medicine on July 24, 1995, when his

license to practice as a physician in New York was revoked by the

unanimous vote of a state administrative review board for professional

misconduct, " according to the November/December issue of Mother Jones

Magazine.

 

" Instead of tending to patients, " Jones reports, " Ross spent all of

1996 at a federal prison camp in Schuylkill, Pennsylvania, having

being sentenced to 46 months in prison for his participation in a

scheme that ultimately defrauded New York's Medicaid program of

approximately $8 million. "

 

For its part, the American Council on Science and Health stopped

disclosing its corporate donors in the early 1990s, according to

Integrity in Science on its [web site].

 

However, the companies noted as contributors in ACSH's 1991 annual

report and ACSH's list of Corporate Donors for 1997 include: Pfizer,

Abbott Laboratories, American Cyanamid, Bristol-Myers Squibb,

Ciba-Geigy, Eli Lilly, Hoffman-La Roche, Johnson & Johnson,

Rhone-Poulenc, Sandoz, Searle, Syntex, Warner-Lambert, Upjohn, and

Pharmaceutical Manufacturers Association.

 

For too many years, off-label marketing offenses resulted in nothing

more than a slap on the wrist to drug makers, if that.

 

The FDA regulated the industry and when it found " off-label "

marketing, the agency sent the company a warning letter. Sometimes

companies were required to sign a consent degree, but they did not

face fines.

 

In 1991, all that changed. Pharmaceutical giant Genentech started the

False Claims ball rolling when the company was caught selling another

growth hormone, Protropin, off-label by influencing doctors to

prescribe it to children who did not suffer from hormone deficiency.

 

Genentech was prosecuted under the FCA and paid $50 million to settle

the case.

 

Since then, the government has used the FCA in 15 cases that were

settled out of court, but according to Taxpayers Against Fraud, a

non-profit advocacy group that assists whistleblowers, 150 more cases

are currently pending.

 

The FCA has become effective in large part due to the reward for

whistleblowers who can receive between 15% and 30% of the amount

recovered in the lawsuit with the average award being $120,000,

according to Taxpayers Against Fraud.

 

In most cases, off-label marketing is usually not a jailable offense;

but it is with Genotropin.

 

" Growth hormone is different from any other drug, " Dr Rost explains,

" distributing the drug for off-label purposes is a crime. "

 

" Not even a doctor is allowed to prescribe growth hormone for

off-label use, " he says.

 

The Controlled Substances Act states in part: " ...whoever knowingly

distributes, or possesses with intent to distribute, human growth

hormone for any use in humans other than the treatment of a disease or

other recognized medical condition, where such use has been authorized

by the Secretary of Health and Human Services ... and pursuant to the

order of a physician, is guilty of an offense punishable by not more

than 5 years in prison.

 

" None of us who became employed by Pharmacia asked to be put into an

incriminating situation, " Dr Rost points out.

 

The criminal penalties were a result of the 1988 and 1990 amendments

to the Food, Drug and Cosmetic Act, that made off-label sale of human

growth hormone to treat age-associated illnesses illegal, according to

a report in the October 26, 2005 Journal of the American Medical

Association.

 

In the JAMA article, authors Dr Thomas Perls, director of the New

England Centenarian Study at Boston Medical Center; Dr Neal Reisman,

clinical professor of plastic surgery at Baylor College of Medicine,

who is also an attorney; and S. Jay Olshansky, professor of

epidemiology at the University of Illinois at Chicago School of Public

Health discuss the little known law.

 

According to the article, human growth hormone can be legally

prescribed for only 3 conditions: HGH deficiency-related syndromes

that cause short stature in children, adult deficiency due to rare

pituitary tumors and their treatment, and muscle-wasting disease

associated with HIV/AIDS.

 

According to Dr Olshansky, " off-label use for many drugs is a normal

and accepted practice in medicine, but that is not true for growth

hormone. According to laws instituted by Congress more than 10 years

ago, HGH can only be distributed for indications specifically

authorized by the Secretary of Health and Human Services, and aging

and its related disorders are not among them. "

 

" The use of HGH as an alleged anti-aging intervention is a major

public health concern not just because it is illegal, " Dr Olshansky

explains, " but also because its provision for anti-aging is not

supported by science and it is potentially harmful. "

 

People are spending a fortune on HGH under the belief that it reverses

aging. " On the contrary, responsibly conducted and peer-reviewed

science indicates that HGH could in fact accelerate aging and shorten

lifespan, " according to Dr Perls.

 

" It is associated with very high rates of serious adverse effects, " he

advised, " and long-term use could increase one's risk of cancer. "

 

In 2004, sales of HGH totaled $622 million (nearly 213,000

prescriptions) not including sales on anti-aging Web sites. " These

data suggest that a very large proportion of HGH sales are for illegal

uses, " Dr Perls noted.

 

Logically, the vast majority of prescriptions should be for children,

but according to the study, 74% of prescriptions in 2004 were for

people 20 and older, and 44% were for people between the age of 40 and 59.