Drugmaker Admitted Fraud, But Sales FlourishAug 16, 2004 | USA TODAY What happens to drug companies that commit federal crimes? For the nation's No. 1 drug company, the answer is: some pain, more gain.
In mid-May, Pfizer's (PFE) Warner-Lambert division pleaded guilty to illegally marketing a drug called Neurontin to treat ailments for which it was not approved. Pfizer, which did not own Warner-Lambert when the government said the wrongdoing happened, paid a $430 million fine to settle charges that included defrauding Medicaid.
Pfizer's confession that the success of one of its top drugs was built partly on fraud may have been humbling, but it isn't hurting the bottom line. Neurontin sales last quarter rose 32% from a year ago, and 2004 sales should pass last year's $2.7 billion. With few exceptions, state Medicaid programs pay for Neurontin just as before and so do major insurers.
The tale of Neurontin shows how hard it is to stop the momentum of a blockbuster drug, absent evidence that it is unsafe, and to control health care costs.
"They (Warner-Lambert) made their money, and they got off cheap," says Larry Sasich, a doctor of pharmacy at the consumer-oriented Public Citizen Health Research Group based in Washington, D.C. Without prosecution of Warner-Lambert executives, he says, the $430 million fine is an inexpensive "cost of doing business." (Related story: Whistle-blower started scrutiny)
In addition to the fine, Pfizer agreed to tighter rules to ensure compliance with drug-marketing laws. It will also contribute millions of dollars to states to educate doctors about Neurontin.
Approved for two conditions
Warner-Lambert's offense was marketing Neurontin to doctors for purposes other than as a supplemental anti-seizure medication for epileptics. That was the only use approved by the Food and Drug Administration during Neurontin's early years, when prosecutors say Warner-Lambert's illegal marketing took place.
In 2002, the FDA said Neurontin also could be used for nerve pain related to shingles.
Doctors can prescribe FDA-approved drugs for other purposes, so-called off-label uses. But federal law forbids pharmaceutical companies to market drugs for treatments not FDA-approved.
The Justice Department says that's what Warner-Lambert did from shortly after introducing Neurontin in 1994 until 2000. Prosecutors alleged that Warner-Lambert lied to doctors about the drug's effectiveness, paid doctors to allow a sales representative to sit in on sessions with patients and paid doctors, some up to $250,000, to unethically talk up Neurontin to other doctors.
In fact, the list of ailments that Warner-Lambert claimed Neurontin alleviated was so long covering pain, headaches, bipolar disorder, attention deficit disorder, alcohol detoxification that some Warner-Lambert employees dubbed it the "snake oil" list, government documents say.
The strategy worked. In 2002, 94% of Neurontin's sales were for off-label uses, up from40% in 1995, the government estimates, citing company documents and independent market research. Wall Street firm Lehman Bros. estimates that 90% of Neurontin sales are currently off-label.
Doctors consider the drug relatively safe with few side effects. But prosecutors said Warner-Lambert's actions caused Medicaid to pay for prescriptions it should not have. They also said patients could have been harmed by taking a drug not proved safe and effective for their condition.
"The aggressive marketing campaign by Warner-Lambert resulted in real increased costs to the states, insurers and consumers," Vermont Attorney General William Sorrell said the day of the settlement. He noted a 30-day supply of Neurontin at a common dose costs $205.
Angry at the company
Steve Borcherding, 42, is a former Neurontin user. The father of three runs a home-repair business in Portland, Ore. He has bipolar disorder, an illness often called manic depression. People who have the disorder often cycle from euphoria to deep depression. Borcherding has hit psychotic states. If not on medication, he says, he might do things such as try to drive through a brick wall because he believes he'll pass through.
In 2001, his psychiatrist suggested he try Neurontin. He knew it wasn't FDA-approved for his illness. That didn't worry him, because many drugs for his condition are not FDA-approved.
He says he didn't know that two studies published in 2000 including one sponsored partly by Warner-Lambert had shown Neurontin was no more effective than a placebo for his disorder.
He says he began taking Neurontin along with another drug he'd been taking before. His wife, Karla Wolf, says Neurontin didn't seem to make a difference for her husband at first. She recalls his mania then increased, and he was hospitalized for five days.
Borcherding was then taken off Neurontin.
He isn't suing anyone. Since the government's settlement, the New York-based law firm of Finkelstein & Partners has filed at least five lawsuits alleging Neurontin caused suicides or attempted suicides. Borcherding says there's no way to prove that Neurontin caused his downward spiral. He'd had similar spirals before taking Neurontin and had been hospitalized while on other drugs.
He considers drug researchers "heroes" and trusts the doctor who prescribed Neurontin for him.
But he's angry at the company's promotion of the drug for his illness. "They had the data that this was not an effective drug, and they ignored that data," he says. "I really have faith in the scientific process and Western medicine and empirical evidence, and they hijacked that process. They betrayed it."
Pfizer says that the company will vigorously defend itself against all lawsuits and that it knows of no individual harmed by Neurontin. It also says that many drugs are used off-label, including cancer drugs, and that the government did not allege illegal conduct after Pfizer bought Warner-Lambert in 2000.
As part of the settlement, Warner-Lambert pleaded guilty to conduct before Aug. 21, 1996, only, even though prosecutors alleged illegal actions occurred later, too. The settlement made it possible for the company to continue to participate in federal health care programs such as Medicaid, despite an Aug. 21, 1996, health care fraud law that might have led to its exclusion. Pfizer would not make an executive available to be interviewed for this story.
Used by millions
Almost 12 million people have used Neurontin since 1994, Pfizer says. Sixty countries allow it to treat pain. Even though the U.S. has approved it for only two conditions, Neurontin's popularity has snowballed. For the past three years, it has been the third-biggest drug cost for Oregon's Medicaid program. That occurred despite a lack of strong scientific support for its off-label uses.
In 2003, the Journal of Managed Care Pharmacy published a literature review of Neurontin studies. The author, Alicia Mack, a doctor of pharmacy, concluded Neurontin was not the "optimal" treatment for the majority of off-label uses except nerve pain related to diabetes and for frequent migraines.
One rigorous study published in 2002 dubbed it an expensive anti-migraine option: $138 per migraine prevented.
Assistant U.S. Attorney Thomas Kanwit in Boston, one of the chief prosecutors on the Neurontin case, says his biggest hope is that the case changes drug industry marketing practices.
As far as affecting Neurontin's momentum, Kanwit acknowledges the case may have little impact. Among the reasons:
•Insurers have a hard time controlling drug prescriptions. Insurance companies and Medicaid programs can require doctors to get their approval before prescribing a specific drug. But it's rarely done with Neurontin, even though the allegations about fraudulent marketing became public in 2000.
Only four of 50 state Medicaid programs require preapproval of Neurontin prescriptions, USA TODAY found when it surveyed all of them after Pfizer's government settlement. Among major health insurers, only Aetna says it's considering preapproval.
Preapproval can hurt sales. Florida expects its July 1 decision to require preapproval for Neurontin will save more than $7 million in its $2.1 billion Medicaid drug program. Neurontin prescriptions in Maine's Medicaid program dropped 19% despite a 9% increase in eligible Medicaid clients after preapproval took hold in October. Massachusetts and Oregon also started requiring preapproval last year.
Other states and insurers are wary because restricting Neurontin's availability could hurt consumers who really need it. Preapproval rules are also costly and time consuming to administer. What's more, lower-cost generic competitors may become available in the USA as soon as next year. To require preapproval for Neurontin prescriptions now may cost more than it saves, says Robert Seidman, chief pharmacy officer for WellPoint Health Networks, parent of Blue Cross of California.
"We have to make sure the payoff is worth the hassle factor," agrees Nancy Nesser, pharmacy director of the Oklahoma Health Care Authority.
The authority decided it wasn't in 2002 after its own study suggested that fewer than 10% of its clients on Neurontin suffered from epilepsy or shingles, Neurontin's two FDA-approved uses. "You don't want to put a roadblock on an epilepsy drug," Nesser says.
Oklahoma's Neurontin costs surpassed $5 million in 2003, up from $4.2 million the year before.
•Medicaid laws fuel off-label prescribing. To ensure that Medicaid patients had good access to drugs, Congress in the early 1990s decreed Medicaid should pay for a drug for a use that is FDA-approved or supported by citations in one of three medical directories.
One directory, Drugdex Information System, owned by Canada's Thomson Corp., says Neurontin is effective or possibly effective in treating 46 ailments. Often, that judgment is based on case studies of a small number of patients or studies in which patients knew they were taking the drug, which can skew results. The FDA requires more rigorous testing for approval.
The other directories cite Neurontin for FDA-approved conditions and six pain conditions.
Nicotine withdrawal is one condition Drugdex says Neurontin is "possibly effective" in treating. That is based on the 2001 case of a 54-year-old man who had also been alcohol-dependent and who was being treated for depression. While on a daily dosage of 2,400 milligrams a day, costing about $8 to $12 a day based on today's online prices, he abstained from nicotine for 10 weeks. The study's author suggested further study.
Medicaid could refuse to pay for Neurontin for nicotine withdrawal, says Barbara Dean, head of Texas' Medicaid drug program. But it "would be taking its chances," she says, because drug companies can argue that Medicaid laws stipulate it pay.
Drugdex editor Michael Soares says Drugdex hasn't changed its criteria for what it includes in decades. Drugdex became one of the three directories in 1997. "I realize there's implications for (Medicaid) reimbursements," he says.
But Drugdex's No. 1 goal is to inform pharmacists and doctors about a drug's use and how it works, he says. The nicotine study was published in a reputable medical journal, and Drugdex's review board, which includes doctors, included it because "people might be talking about it." Drugdex notes support for Neurontin for nicotine withdrawal is poorly documented.
•Doctors want to help patients. They'll try drugs if they think they might work, even if the FDA hasn't sanctioned them for a particular treatment.
Jim Moorman, CEO of Taxpayers Against Fraud, spends his life working on ways to reduce fraud, thus taxes. He applauds the Justice Department's action against Pfizer.
Yet he also takes Neurontin because "it seems to work" in alleviating his restless-leg syndrome. Neurontin is not FDA-approved to treat RLS, in which legs inadvertently jerk. No drugs are, but there is some evidence that Neurontin can help RLS patients.
"Let's recognize this: There are off-label uses for Neurontin that are valid," Moorman says. "But (Warner's) marketing department didn't care if the uses were valid or not."
Thomas Turek, medical director of the Oregon Health Plan, also says a drug that may not work for many may work for an individual, even if it has only a placebo effect.
Should onus be on doctors?
Despite Pfizer's fraud settlement, psychiatrist Suzanne Vogel-Scibilia remains sold on Neurontin. She has 1,000 patients in her Pennsylvania practice. A board member for the National Alliance for the Mentally Ill, she says the bipolar studies on Neurontin are not exhaustive enough.
She prescribes Neurontin, always with another drug, to ease anxiety and sleep disorders in mild bipolar cases. As a bipolar patient, she takes it, too. "As a doctor, I want the freedom to prescribe what I think works," she says.
She says doctors should check the validity of drug studies and decide prescriptions case by case.
But Jerome Avorn, author of an upcoming book, Powerful Medicines, says time-pressed doctors turn most often to drug representatives for drug information. Avorn, a doctor with Harvard Medical School and Brigham and Women's Hospital, also says doctors too often attempt to learn whether a drug works for a patient by trying it. "We ought to have a better system than that." He advocates more studies and easier access to data.
Even Oregon, with new preapproval rules, will continue to pay for Neurontin for existing bipolar users. "It doesn't fit with the science ... but people aren't machines, so we have to use some of the art (of medicine) as well as the science," Turek says.
Janet Marquez, 25, doesn't pay much mind to studies. She looks at her life. Several years ago, Marquez spent four months in a psychiatric hospital. Diagnosed as bipolar, she tried other drugs. They didn't work, she says. About four years ago, she started Neurontin. She's now in college, living on her own and volunteering at a local library.
When Oregon last year threatened not to pay for her Neurontin, her doctor wrote a letter for her.
Oregon still pays for Marquez's Neurontin. "If it doesn't work, then why do I feel better?" she says.