Fwd: Jail Time for Executives Might Stop Drug Crimes _BusinessWeek

March 21, 2010

ALLIANCE FOR HUMAN RESEARCH PROTECTION A Catalyst for Public Debate: Promoting Openness, Full Disclosure, andAccountability http://www.ahrp.org FYI"When Drug Makers' Profits Outweigh Penalties" appearing in today'sWashington Post is an updated version of David Evans' riveting, prizewinning investigative report, Big Pharma's Crime Spree, published inBloomberg News, December 2009. Some of the tables from the expandedBloomberg 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 tocriminal charges or paid penalties in civil cases when the JusticeDepartment 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 againstrecidivist Pfizer, represented a mere 14% of the revenue stream from sellingthe drugs at issue over seven years."So immune to criminal sanctions was that the company launched its off-labelBextra campaign at the same time the company was pleading guilty to doingprecisely the same thing with other drugs. The anti-inflammatory medicationwas later yanked from the market because of increased risk of heart attacksand stroke."Rather than being tried for their crimes rogue corporate giants-in thepharmaceutical 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 thebull by the horns in her column, "Jail Time for Executives Might Stop DrugCrimes" published by BusinessWeek (below) noting that: "Pharmaceutical andmedical device companies repeatedly signal they just don't seem to care whatthe 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 forthe elderly, the medication wasn't as helpful and carried more risks thanthe 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 DrugAct, allows misdemeanor convictions without proof of intent to dowrongdoing. But until now, the FDA did not prosecute pharmaceuticalexecutives.So, the very rogue pharmaceutical companies that have pled guilty tocriminal marketing of toxic, mostly useless drugs who paid hundreds ofmillions-even over a billion dollars in fines-have continued to profiteerfrom defective hazardous products. Unless the FDA enforces the prosecutorial provisions of the FDC; unlessCongress supports health-care fraud prosecutions; and unless the Obamaadministration will prohibit taxpayer reimbursement for criminally marketeddrugs and medical devices, rogue companies will continue profit from harmproducing, hazardous drugs that pose risks of disability and death. Contact: Vera Hassner Sharavveracare212-595-8974http://www.washingtonpost.com/wp-dyn/content/article/2010/03/19/AR2010031905578_pf.htmlTHE WASHINGTON POSTWhen drug Makers' Profits Outweigh PenaltiesBy David EvansBloomberg NewsSunday, March 21, 2010; G01 Prosecutor Michael Loucks remembers clearly when attorneys for Pfizer, theworld's largest drug company, looked across the table and promised itwouldn't break the law again. It was January 2004, and the lawyers were negotiating in a conference roomon the ninth floor of the federal courthouse in Boston, where Loucks washead of the health-care fraud unit of the U.S. Attorney's Office. One ofPfizer's units had been pushing doctors to prescribe an epilepsy drug calledNeurontin 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 forunapproved uses. New York-based Pfizer agreed to pay $430 million incriminal fines and civil penalties, and the company's lawyers assured Loucksand three other prosecutors that Pfizer and its units would stop promotingdrugs for unauthorized purposes. What Loucks, who was acting U.S. attorney in Boston until November, didn'tknow until years later was that Pfizer managers were breaking that pledgenot to practice off-label marketing even before the ink was dry on theirplea. On the morning of Sept. 2, 2009, another Pfizer unit, Pharmacia & Upjohn,agreed to plead guilty to the same crime. This time, Pfizer executives hadbeen instructing more than 100 salespeople to promote Bextra -- a drugapproved only for the relief of arthritis and menstrual discomfort -- fortreatment 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 casesinvolving the off-label promotion of Bextra and three other drugs with theUnited States and 49 states. "At the very same time Pfizer was in our office negotiating and resolvingthe allegations of criminal conduct in 2004, Pfizer was itself in its otheroperations violating those very same laws," Loucks, 54, says. "They'verepeatedly marketed drugs for things they knew they couldn't demonstrateefficacy for. That's clearly criminal." The penalties Pfizer paid for promoting Bextra off-label were the latestchapter in the drug's benighted history. The FDA found Bextra to be sodangerous that Pfizer took it off the market for all uses in 2005. Across the United States, pharmaceutical companies have pleaded guilty tocriminal charges or paid penalties in civil cases when the JusticeDepartment 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 forany use. Congress banned the practice in 1962, requiring pharmaceuticalcompanies to first prove their drugs were safe and effective for specificuses. If the law is clear, why do drug companies keep breaking it? The answer liesin economics. Pharmaceutical companies spend about $1 billion to develop andtest a new drug. To recoup their investment, the companies want doctors toprescribe their drugs as widely as possible. Since May 2004, Pfizer, Eli Lilly, Bristol-Myers Squibb and four other drugcompanies have paid a total of $7 billion in fines and penalties. Six of thecompanies admitted in court that they marketed medicines for unapproveduses. In September 2007, New York-based Bristol-Myers paid $515 million --without admitting or denying wrongdoing -- to federal and state governmentsin a civil lawsuit brought by the Justice Department. The six othercompanies pleaded guilty in criminal cases. In January 2009, Indianapolis-based Lilly, the largest U.S. psychiatricdrugmaker, pleaded guilty and paid $1.42 billion in fines and penalties tosettle charges that it had for at least four years illegally marketedZyprexa, a drug approved for the treatment of schizophrenia, as a remedy fordementia in elderly patients. In five company-sponsored clinical trials, 31 people out of 1,184participants died after taking the drug for dementia -- twice the death ratefor those taking a placebo, according to an article in the Journal of theAmerican Medical Association. "Marketing departments of many drug companies don't respect any boundariesof professionalism or the law," says Jerry Avorn, a professor at HarvardMedical School. "The Pfizer and Lilly cases involved the illegal promotionof drugs that have been shown to cause substantial harm and death topatients." The widespread off-label promotion of drugs is yet another manifestation ofa health-care system that has become dysfunctional. "It's an unbearable cost to a system that's going broke," Avorn says. "Wecan't even afford to pay for effective, safe therapies." About 15 percent of all U.S. drug sales are for unapproved uses withoutadequate evidence the medicines work, according to a study by RandallStafford, a medical professor at Stanford University. As large as the penalties are for drug companies caught breaking theoff-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 andthree other drugs cited in the Sept. 2 plea agreement for off-label usesamount to just 14 percent of its $16.8 billion in revenue from selling thosemedicines from 2001 to 2008. The total of $2.75 billion Pfizer has paid in off-label penalties since 2004is a little more than 1 percent of the company's revenue of $245 billionfrom 2004 to 2008. Lilly already had a criminal conviction for misbranding a drug when it brokethe law again in promoting schizophrenia drug Zyprexa for off-label usesbeginning in 1999. The medication provided Lilly with $36 billion in revenuefrom 2000 to 2008. That's more than 25 times as much as the total penaltiesLilly paid in January. Companies regard the risk of multimillion-dollar penalties as just anothercost of doing business, says Lon Schneider, a professor at the University ofSouthern California's Keck School of Medicine in Los Angeles. In 2006, heled a study for the National Institute of Mental Health of off-label use ofdrugs, including Zyprexa. "There's an unwritten business plan," he says. "They're drivers thatknowingly speed. If stopped, they pay the fine, and then they do it again." Paying the doctorsIn pushing off-label use of drugs, companies find ready and willing partnersin physicians. Under the fragmented system of U.S. medical regulation, it'slegal for doctors to prescribe FDA-approved drugs for any use. The FDA hasno authority over doctors, only over drug companies, regarding off-labelpractices. It's up to the states to oversee physicians. "I think the physician community has to take some ownership responsibilityand do their own due diligence beyond the sales and marketing person," saysBoston's former U.S. Attorney Michael Sullivan. Doctors generally don't tell people they're prescribing drugs pitched tothem by pharmaceutical salespeople for unapproved treatments, says PeterLurie, former deputy medical director of Public Citizen, a Washington-basedpublic interest group. Most doctors don't keep track of FDA-approved uses ofdrugs, he says. "The great majority of doctors have no idea; they don't even understand thedistinction between on- and off-labeling," he says. Pfizer's marketing program offered doctors up to $1,000 a day to allow aPfizer salesperson to spend time with the physician and his patients,according to a whistle-blower lawsuit filed by John Kopchinski, who workedas a salesman at Pfizer from 1992 to 2003. "By 'pairing up' with a physician, the sales representative was able topromote over a period of many hours, without the usual problems of gainingaccess to prescribing physicians," Kopchinski says. "In essence, thisamounted 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 goalwas 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 asupplemental medication to treat epilepsy in 1993. Pfizer took in $2.27billion 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 tooff-label marketing of two drugs. Pfizer continued off-label promotions forthese medications after buying the firms, according to documents. Pfizer first stepped into an off-label scheme in 1999, when it offered tobuy Warner-Lambert, based in New Jersey. Prosecutors charged thatWarner-Lambert marketed Neurontin off-label between 1995 and 1999. Warner-Lambert admitted doing so for one year in a May 2004 guilty plea forwhich Pfizer paid $430 million in fines and penalties. When the FDA approved Neurontin in 1993 to be used only along with otherepilepsy drugs, the agency wrote that as a side effect, the drug can inducedepression and suicidal thoughts in patients. The whistle-blowerMuch of what prosecutors learned about Warner-Lambert's marketing ofNeurontin comes from a former employee, David Franklin, who holds a Ph.D. inmicrobiology. Franklin, 48, whose title at Warner-Lambert was medical liaison, says hisjob involved more salesmanship than science. He told doctors that Neurontinwas the best drug for a dozen off-label uses, including pain relief, bipolardisease and depression. "Technically, I had responsibility for answering physician questions aboutall of Parke-Davis's drugs," Franklin says. "In practice, my real job was topromote Neurontin for off-label indications heavily -- to the exclusion ofjust about everything else." Franklin says he knew such uses of the drug had no scientific support foreffectiveness and safety. "I was actually undermining their ability tofulfill the Hippocratic oath," Franklin says, referring to a physician'spledge to "First, do no harm." After working for Warner-Lambert for three months, Franklin quit and filed awhistle-blower lawsuit on behalf of taxpayers to recover money thegovernment paid for illegally promoted drugs. He stood to collect as much as30 percent of any settlement the company made with the government. Franklin had to wait four years -- until 2000 -- before the JusticeDepartment began a criminal investigation. In November 1999, Pfizer made itspublic offer to buy Warner-Lambert. In January 2000, a federal grand jury inBoston issued subpoenas to Warner-Lambert employees to testify about themarketing of Neurontin. That March, Warner-Lambert's annual report disclosed that prosecutors werebuilding a criminal case. Undeterred, Pfizer bought Warner-Lambert in Junefor $87 billion -- the third-largest merger in U.S. history. More sales than ViagraA year after the acquisition, the FDA discovered that Neurontin was stillbeing marketed off-label. In a June, 2001 letter to the company, the agencywrote that Pfizer's promotion of the drug "is misleading and in violation ofthe Federal Food, Drug and Cosmetics Act." Pfizer marketed Neurontin off-label after receiving that letter, agencyrecords show. For 2001, Pfizer reported revenue of $1.75 billion fromNeurontin sales, making it the company's fourth-largest-selling drug thatyear, ahead of impotence pill Viagra, which Neurontin topped for four years.As Neurontin sales soared to $2.27 billion in 2002, the FDA found thatPfizer was improperly claiming that the drug was useful for a broader rangeof brain disorders than scientific evidence had established. The agency sent a letter dated July 1, 2002, that said the company'smarketing practices were in violation of FDA rules. It asked Pfizer to stopusing misleading promotions. Pfizer reported $2.7 billion in revenue fromNeurontin in 2003. Overall, the drug has provided Pfizer with $12 billion inrevenue. Pfizer spokesman Chris Loder says, "Regarding the 2001 and 2002 FDA letters,we do not believe that they were suggestive of any continuing off-labelpromotion." For blowing the whistle on his employer, Franklin collected $24.6 millionunder the False Claims Act. Prosecutors Loucks and Sullivan got involved inthe case after Franklin filed his suit, relying on information from Franklinand their own investigation. Before 2004, prosecutions for off-labelmarketing were rare. "Until a couple of these cases became public,companies were probably saying, 'Everybody does it this way,' " Sullivansays. Loucks had a track record in off-label prosecutions. In 1994, he negotiateda $61 million settlement with C.R. Bard of New Jersey, which pleaded guiltyto promoting off-label use of a heart catheter that led to patient deaths. The off-label campaignIn the January 2004 settlement negotiations with Loucks, Sullivan and twoother prosecutors, Pfizer's lawyers assured the U.S. Attorney's Office thatthe company wouldn't market drugs off-label. "They asserted that thecompany understood the rules and had taken steps to assure corporatecompliance with the law," Loucks says. "We remember those promises." What Pfizer's lawyers didn't tell the prosecutors was that Pfizer was atthat moment running an off-label marketing promotion using more than 100salespeople who were pitching Bextra, according to a Pfizer sales managerwho pleaded guilty to misbranding a drug in March 2009. Pharmacia & Upjohn developed Bextra, which was approved by the FDA in 2001for only the treatment of arthritis and menstrual discomfort. P & U andPfizer had by then crafted a joint marketing agreement to sell the drug. InNovember 2001, Mary Holloway, a Pfizer Northeast regional manager, beganillegally training and directing her sales team to market Bextra for therelief of acute pain, Holloway admitted in the plea. On Dec. 4, 2001, Pfizer executives sent Holloway a copy of a nonpublic FDAletter to the company. The agency had denied Pfizer's application to marketBextra for acute pain. Clinical trials had shown Bextra could cause heartdamage 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 doctorsmore than $5 million in cash to lure them to resorts, where salespeopleillegally pitched off-label uses for Bextra, P & U admitted. In her guilty plea, Holloway said her team had solicited hospitals to createprotocols to buy Bextra for the unapproved purpose of acute pain relief. Herrepresentatives didn't mention the increased risk of heart attacks in theirmarketing. They told doctors that side effects were no worse than those of asugar pill, Holloway said. In 2003, Holloway reported her unit's off-label promotions of Bextra up thecorporate ladder at Pfizer, according to a presentencing memo to the judgewritten by Robert Ullmann, Holloway's attorney. Top managers didn't attemptto halt the illegal conduct, the memo said. By late 2004, Bextra reached blockbuster status, with annual sales of $1.29billion. Holloway promoted Bextra until the FDA asked Pfizer in April 2005to 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. Shedidn't return phone calls seeking comment. 'We regret . . . 'By 2007, the criminal and civil cases against Pfizer, its employees and itssubsidiaries had begun to mount. The tally of drugs cited by federalprosecutors for off-label promotion reached six by 2009. In April 2007, P & Upleaded guilty to a felony charge of offering a $12 million kickback to apharmacy benefit manager. Pfizer paid a criminal fine of $19.7 million. InSeptember 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 intentto defraud. After the settlement, Pfizer general counsel Amy Schulman saidthe company had learned its lesson. "We regret certain actions we've taken in the past," she said. "Corporateintegrity is an absolute priority for Pfizer." One reason drug companies keep breaking the law may be because prosecutorsand judges have been unwilling to use the ultimate sanction -- a felonyconviction that would exclude a company from selling its drugs forreimbursement by state health programs and federal Medicare. At Pfizer's Pharmacia sentencing in October, U.S. District Court JudgeDouglas Woodlock said companies don't appear to take the law seriously. "Ithas become something of a cost of doing business for some of thesecorporations, to shed their skin like certain animals and leave the skin andmove on," he said. As prosecutors continue to uncover patterns of deceit in off-labelmarketing, millions of patients across the nation remain in the dark.Doctors often choose the medications based on dishonest marketing by drugcompany salesmen. Loucks says that putting an end to the criminal off-label schemes will bedifficult. As drugmakers repeatedly plead guilty, they've shown they'rewilling to pay hundreds of millions of dollars in fines as a cost ofgenerating billions in revenue. The best hope, Loucks says, is that drug companies actually honor thepromises they keep making -- and keep breaking -- to obey the law of theland. As much as $100 million for health-care fraud enforcement is tied upin the stalled reform legislation, according to Loucks. "It will be increasingly hard for the threat of exclusion to seem credibleand thus serve as a deterrent to bad corporate behavior," he says, "unlessCongress 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 awardfor enterprise reporting and general excellence.~~~~~~~~~~ http://www.businessweek.com/news/2010-03-16/jail-time-for-executives-might-stop-drug-crimes-ann-woolner.html BusinessweekJail Time for Executives Might Stop Drug CrimesCommentary by Ann WoolnerMarch 16, 2010March 17 (Bloomberg) -- If a surgeon cuts open your chest and implants adevice meant to shock your heart into beating regularly, you are counting onthe thing not short-circuiting.You assume every aspect of its manufacture, each change in the process, hasbeen 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 awhopping fine, you figure the maker surely would never again let itsreporting lapse.Alas.This week Boston Scientific Corp. halted sales of implantable defibrillatorsbecause it hadn't told the U.S. Food and Drug Administration of changes inits manufacturing process. Not to worry. There is no reason to fear themanufacturing changes made the devices dangerous, the company assures us.But it's hard to trust an entire industry that keeps promising to do betterand doesn't. We badly want to believe those who make medical devices anddrugs because they hold lives in their hands.Boston Scientific disclosed its reporting lapses this week, little more thanfour months after pleading guilty to two misdemeanors stemming from, guesswhat? 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 itsdefibrillators were short-circuiting, and at least one patient died. BostonScientific is slated to pay a fine of almost $300 million for that, on topof $240 million to settle related civil complaints.Doing BetterMaybe the parent company is trying to do better than Guidant did. BostonScientific says it suspended defibrillator sales voluntarily this week whenit discovered a reporting lapse. There is no evidence the latestnotification failure hid a problem with the product, as happened before.The unease stems from context. Pharmaceutical and medical device companiesrepeatedly signal they just don't seem to care what the law says if they canfind a way around it.Internal documents show Johnson & Johnson planning a push for $302 millionin 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 hadclaimed, Bloomberg reported earlier this month. The New Brunswick, NewJersey-based company denies wrongdoing.Examples abound that these companies keep breaking rules and violating lawsto make and market their products, no matter how many times they are caught,fined and forced to promise to go straight.Off-Label UseOne insider at Warner-Lambert -- now part of Pfizer Inc. -- worried aboutpromoting 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 BloombergMarkets magazine.The biggest fine ever imposed in U.S. history, $2.3 billion againstrecidivist Pfizer, represented a mere 14 percent of the revenue stream fromselling the drugs at issue over seven years. So immune to criminal sanctionswas the New York-based company that it launched its off-label Bextracampaign at the same time the company was pleading guilty to doing preciselythe same thing with other drugs. The anti-inflammatory medication was lateryanked from the market because of increased risk of heart attacks andstroke.What's to be done?The government can essentially kill a company by pushing for the parent firmto be barred from government work, which would include Medicaid andMedicare.Teaching a LessonThat would teach the company a lesson. But it would also hurt the millionsof people who depend, in Pfizer's case, on products from Accupril to treatcongestive heart failure to Zyvox when you have certain pneumonias orinfections.And then there are those thousands of company employees who do good, honestwork and who would suddenly find themselves in already massive unemploymentlines.And yet, companies count on selling drugs to patients that can't benefitfrom the medications and may be harmed by them. An estimated 15 percent ofsales were prescribed for off-label uses.Through the years, companies have admitted to paying doctors kickbacks formeeting with sales people who promote off- label uses and to sponsoring golfvacations and Caribbean respites for prescribing physicians.The challenge is to find a way to make it not worthwhile to break the rules.Executives Behind BarsThrowing 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 pleadedguilty, mostly for misbranding or promoting off-label uses, according to theJustice Department.Winning felony convictions is tough to pull off because you have to provethey 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 monththat it would go that route to focus on pharmaceutical executives, the WallStreet Journal reported.The Food and Drug Act allows misdemeanor convictions without proof of intentto do wrong.That is an awesome power and it can be easily abused. The timing of the FDAannouncement suggests that it's a response to critics in Congress and abrutal Government Accountability Office report that the division operateswithout scrutiny or, well, accountability.And yet, used for the right cases, the misdemeanor prosecution of anexecutive or two who set up incentives for the sales force to push drugsillegally and withhold information about devices from regulators just mightdo the trick.Nothing else has yet.--Editors: James Greiff, Jim Rubin.To contact the writer of this column: Ann Woolner in Atlanta atawoolner.To contact the editor responsible for this column: James Greiff atjgreiff.FAIR USE NOTICE: This may contain copyrighted (C ) material the use of whichhas not always been specifically authorized by the copyright owner. Suchmaterial is made available for educational purposes, to advanceunderstanding of human rights, democracy, scientific, moral, ethical, andsocial justice issues, etc. It is believed that this constitutes a 'fairuse' of any such copyrighted material as provided for in Title 17 U.S.C.section 107 of the US Copyright Law. This material is distributed withoutprofit. =====In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

March 22, 2010

The simplest solution would be to enact laws to strip the legal fiction of personhood for corporations, giving them an expensive "corporate veil" to pierce while being considered a "person". Real people have to answer for their crimes with no "veil" to hide behind. If they aren't held to the same standards of accountability as other "people", we are like parents letting their spoiled brats run the household, (country), hit their parents, run them over, poison them, and then shield the little darlings from their inhumane crimes. Strip personhood for all corporations!!! Let each and every member of their Boards and upper staff, shareholders or whereever the evidence of knowing wrong-doing be the ones to suffer the consequences, not their victims.

Joyce M. Simmerman, J.D., Emeritus AttorneyCreighton, Nebraska