Drugmakers pay billions in penalties for illegal marketing
Wednesday, November 11, 2009
When the U.S. Food and Drug Administration approves a drug for use in this country, it does so after examining the results of clinical trials intended to prove the drug is safe and effective for its intended use. Doctors may legally prescribe a drug to treat conditions other than those for which it has been tested, but it is against the law for drugmakers to promote “off-label” use of the drug.
Not that the law stops drugmakers. According to a Bloomberg report, phamaceutical companies have paid $7 billion in criminal fines and civil case penalties since May 2004 as a result of marketing drugs for unapproved uses.
In September Pfizer paid the largest criminal fine in U.S. history, almost $1.2 billion, after pleading guilty to promoting off-label use of Bextra. That drug is approved only for use in relieving arthritis and menstrual pain, but Pfizer executives were telling sales reps to promote the drug for treatment of any acute pain.
At that same time Pfizer paid $1 billion to settle civil cases involving promotion of off-label use for four drugs. One of them was Bextra, which the FDA made Pfizer take off the U.S. market in 2005 because of safety issues.
Pfizer has “repeatedly marketed drugs for things they knew they couldn’t demonstrate efficacy for,” prosecutor Michael Loucks told Bloomberg. “That’s clearly criminal.”
Loucks is now Acting U.S. Attorney for the District of Massachusetts. Previously he was head of that office’s health-care fraud unit. He negotiated a deal with Pfizer in 2004 in which the company agreed to pay $430 million in criminal fines and civil penalties after pleading guilty to felony charges of marketing the epilepsy drug Neurontin for unapproved uses.
Pfizer’s lawyers told Loucks the company would stop promoting off-label uses and would not break the law again. “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 told Bloomberg.
Pfizer is one of six drugmakers that has pleaded guilty to criminal charges of marketing drugs for unapproved uses.
Bloomberg reports Pfizer’s penalties have been the metaphorical drop in the bucket.
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.
Lon Schneider, professor of neurology at the University of Southern California’s Keck School of Medicine, compares drug companies to “drivers that knowingly speed. If stopped, they pay the fine, and then they do it again.” He said penalties for marketing off-label uses wind up being just a cost of doing business.
“Corporate integrity is an absolute priority for Pfizer,” according to the company’s general counsel, Amy Schulman. She said that after Pfizer agreed to pay more than $2 billion in penalties for illegal marketing.
Similarly, Eli Lilly and Company chairman and CEO John Lechleiter said, “Doing the right thing is nonnegotiable at Lilly.” At the same time he said the company “deeply regrets” its illegal marketing of Zyprexa, for which it pleaded guilty and agreed to pay more than $1.4 billion in fines and penalties earlier this year. That included what was the largest criminal fine in U.S. history, before Pfizer topped it.