Pfizer, the world’s largest pharmaceutical company, pleaded guilty Thursday and agreed to pay $430 million to resolve criminal and civil charges that it paid doctors to prescribe its epilepsy drug, Neurontin, to patients with ailments that the drug was not federally approved to treat.
Oregon, one of the states to participate actively in the investigation, will receive $2 million from the settlement and will be the host state for two funds that aim to make more information on pharmaceuticals available to the public.
A former company adviser who brought a lawsuit under a federal “whistle-blower” law will receive $26.64 million from the settlement.
Pfizer will plead guilty to violating the Food, Drug and Cosmetic Act. Besides a $240 million criminal fine, the company will pay $152 million in civil fines to be shared among state and federal Medicaid agencies, of which Oregon will receive $1.3 million. Another $38 million would go to state consumer-protection agencies, including $700,000 to Oregon’s.
The agreement calls for housing two education accounts worth $28 million in Oregon. A $21 million account will award grants to government agencies, academic institutions and nonprofits. The grantees will be asked to create programs with unbiased research and information to educate consumers and doctors about pharmaceutical products. A committee of eight attorneys general, including Oregon’s, will choose the grant recipients.
Another $6 million account will go toward a national advertising campaign to give consumers and doctors fair and balanced information about Neurontin and other prescription drugs. A group of six attorneys general, including Oregon’s, will select the advertising firms involved. As much as $1 million of the $28 million in the accounts will be used later to evaluate the effectiveness of the grant programs.
Because the funds sit in Oregon and because state Attorney General Hardy Myers will be on both selection committees, organizations and advertisers in Oregon are “well-suited” to receive account funds, to be doled out during the next six years, said Kevin Neely, a spokesman for the attorney general’s office.
Formulating the process and criteria for how the fund recipients will be chosen may begin as soon as today, Neely said.
Pfizer encouraged doctors to prescribe Neurontin for patients with bipolar disorder, a psychological condition, even though a study had shown that the medicine was no better than a placebo in treating the disorder. Other disorders for which the company illegally promoted Neurontin included Lou Gehrig’s disease, attention deficit disorder, restless leg syndrome and drug and alcohol withdrawal seizures.
Although doctors are free to prescribe any federally approved drug for whatever use they choose, pharmaceutical companies are not allowed to promote drugs for nonapproved purposes.
Neurontin was initially approved to treat epileptic seizures in patients who had failed to improve using other treatments, but it has become one of the biggest-selling drugs in the world, with sales last year of $2.7 billion. Nearly 90 percent of the drug’s sales continue to be for ailments for which the drug is not an approved treatment, according to recent surveys.
“This illegal and fraudulent promotion scheme corrupted the information process relied upon by doctors in their medical decision-making, thereby putting patients at risk,” said the U.S. attorney in Boston, Michael Sullivan, in a statement Thursday. Pfizer, in a statement Thursday, said the illegal marketing had been conducted by Warner-Lambert before Pfizer acquired that company in 2000.
“Pfizer has cooperated fully with the government to resolve this matter, which did not involve Pfizer practices or employees,” the company said.
Pfizer took a $427 million charge in January against its fourth-quarter 2003 earnings to pay for the expected settlement. The government calculated that the company’s illegal promotions brought it $150 million in ill-gotten gains. A standard multiplier was used to come up with the $430 million fine.
The case is one of many undertaken in recent years by federal prosecutors in Boston and Philadelphia who are examining efforts by drug companies to market their drugs for unapproved uses and pay off doctors for prescriptions. And although the pharmaceutical industry recently adopted voluntary guidelines that have eliminated many of the gifts and payments once routinely dispensed to doctors, the industry’s aggressive promotions continue.
Although the agreement announced Thursday clears Pfizer of any further liability in the Neurontin matter, the government may still criminally charge former Warner-Lambert executives who concocted and approved the plans, according to the settlement. Documents in the case show that Warner-Lambert’s illegal marketing activities were approved by some of the company’s top executives.
The case originated in 1996 when Dr. David P. Franklin quit his job as a medical adviser to Warner-Lambert’s sales staff, after realizing that he was being asked to promote Neurontin well beyond the condition for which federal drug regulators had approved it. Franklin filed a lawsuit under a Civil War-era whistle-blower statute that allows private individuals to sue on behalf of the government, with the prospect of sharing in any financial awards.
His lawyer, Thomas Greene, said Thursday, “I hope this encourages other employees of companies that see corporate wrongdoing to come forward and expose it.”
Says practice widespread
In an interview, Franklin said he often sat in doctors’ waiting rooms with medical liaisons from other drug companies who were there to do exactly what he was doing — promote unapproved uses of medicines. “What we did was standard practice in the pharmaceutical industry,” Franklin said.
Although Franklin has been out of the pharmaceutical industry for eight years he is now a marketing executive with the medical device maker Boston Scientific — he scoffed at the notion that things have changed much in drug marketing.
“Ninety percent of Neurontin’s sales are for patients for which there is no proof that the drug works,” he said. “There’s been an explosion of off-label drug use in the years since I left.”