Washington Post: Jail pharmaceutical executives?

[News and alerts from www.MindFreedom.org]

Today's _Washington Post_ article BELOW looks at idea of prison time  
for corrupt pharmaceutical executives.

For years, MindFreedom International has called for imprisoning  
criminal psychiatric drug company executives. The public appears to be  
interested.

Commented David W. Oaks, MFI director, "Prisons should be humane.  
Length of sentences fair. But serious prison time is urgently needed  
to end extreme abuse by the pharmaceutical industry. If your local  
mental health group doesn't agree, look closely at their funding."

~~~~~~~~~

Washington Post - Sunday, March 21, 2010; Page G01

original article and to comment: http://bit.ly/pharma-jail

When drug makers' profits outweigh penalties
By David Evans, Bloomberg News

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.

- end -

For the original article and to post a comment on Washington Post  
site, go to:

http://bit.ly/pharma-jail

~~~~~~~~~~~~

READY FOR JUSTICE IN MENTAL HEALTH?

READY TO UNITE *TODAY* FOR A NONVIOLENT REVOLUTION IN MENTAL HEALTH?

Join MindFreedom International now!

http://www.mindfreedom.org/join-donate

MFI: Twenty-four years of unity, independence and activism for real  
change in the mental health system.

Donate now, join, and get your new member packet with MindFreedom  
Journal #50, Truth Brochure, and MFI Brochure.

As a member you immediately get all benefits, including member-only  
web sites, MadMarket discounts, member services office, MF Shield, and  
more.

You can give online securely via PayPal, or there's info about how to  
join via phone, postal mail or fax.

Click here to join now:

http://www.mindfreedom.org/join-donate

~~~~~~~~~~~~

If you did NOT receive this public news alert directly from the  
mindfreedom-news public e-mail alert system, please add your e-mail  
address to this free no-spam service, which does not require membership:

http://www.intenex.net/lists/listinfo/mindfreedom-news

~~~~~~~~~~~~

Want to STOP getting these free public MFI news alerts?

Two easy ways:

1) UNSUBSCRIBE AUTOMATICALLY:

Send a blank email from the e-mail address you want to remove to:

mindfreedom-news-unsubscribe at intenex.net

When you get the automatic unsubscribe confirmation message in a few  
moments be sure to reply. (If you do not receive that confirmation,  
check your spam filter.)

2) ASK US:

Have trouble getting off this list? Just e-mail to office at mindfreedom.org

If you e-mail from the *SAME* address where you received this alert,  
put this in your "subject line," the message can be blank:

unsubscribe mindfreedom-news

If you have *ALTERNATE* e-mail address(es) that may be receiving this  
alert by error, let the office know the exact address(es) to remove at:

office at mindfreedom.org