http://www.yourlawyer.com/topics/overview/pharmaceutical_whistleblower Sat, 21 Nov 2009 03:09:03 -0800 pixel-app en http://www.yourlawyer.com/articles/read/12536 Wed, 14 Feb 2007 00:00:00 -0800 http://www.yourlawyer.com/articles/read/12536
FDA whistle-blowers, medical experts and members of Congress said the FDA in 2004 approved Ketek, since linked to liver failures, despite serious safety warnings from scientific reviewers and evidence of fraudulent data.

They told the House Energy and Commerce subcommittee on oversight and investigations that scientific dissent was discouraged and muzzled inside the agency regarding Ketek, and pertinent information withheld from FDA advisory committees.

"FDA approved Ketek despite knowing that it could kill people from liver damage and that tens of millions of people would be exposed to it; despite FDA knowing that the drugmaker submitted fabricated data; and despite knowing that Ketek is no better than other antibiotics, and may not even work," said David Ross, a former FDA scientist who had been one of the lead medical reviewers for Ketek.

Ross, who raised his concerns publicly last year about the Sanofi-Aventis drug and later left the agency in frustration, said the episode is emblematic of an agency culture that favors drug approvals over safety. He said "we are certain to see more Keteks" without "significant changes in our drug safety system and FDA."

On eve of the congressional hearing, the FDA withdrew its approval for two of the three main uses for Ketek, acute bacterial sinusitis and acute chronic bronchitis.

"The agency has determined that the balance of benefits and risks no longer support approval of the drug for these indications," the FDA said.

It said the drug can remain on the market for treatment of pneumonia. Last year, the FDA changed the labeling to warn of potential liver problems, and this week added a new warning that the drug should not be used in patients with myasthenia gravis, a disease that can cause life-threatening muscle weakness.

Sanofi-Aventis maintains the drug continues to be an important treatment option. The antibiotic has been prescribed nearly six million times in the United States.

The concerns about Ketek follow other highly publicized FDA problems, including the withdrawal of the painkillers Vioxx and Bextra; the slowness in providing new warnings about the dangers of widely used antidepressants and accusations the agency is too cozy with the drug industry.

An Institute of Medicine panel recently called for an overhaul of the FDA's drug safety system, saying the agency is failing to adequately protect the public.

A number of reform proposals are pending in Congress, including creating a new drug safety center inside the FDA; mandating more disclosure of clinical trial data; giving the agency authority to order rather than negotiate new labeling changes; requiring companies to carry out post-market safety studies and prohibiting ads promoting new drugs for up to two years.

Rep. Bart Stupak (D-Mich.), the subcommittee chairman, said the evidence regarding Ketek and other cases suggests that the "FDA's ability to ensure a safe drug supply has been greatly compromised" by a rush to approve new medications.

Rep. John Dingell (D-Mich.), chairman of the full Energy and Commerce Committee, added that there has been "a fundamental breakdown in policies and procedures in evaluating the safety of drugs."

The committee heard from a number of witnesses, including John Powers, a former FDA scientist, who said "Ketek was the symptom of a much larger problem" that involves a misguided review process for new antibiotics. He said this process is driven by pressure from industry, resulting in "approval of numerous antibiotics whose effectiveness is unclear."

David Graham, the FDA scientist and whistle-blower who publicly attacked the agency for its handling of Vioxx and other drugs, said "the Ketek story is about the FDA's betrayal of the public trust."

"FDA scientists were intimidated, suppressed, and ultimately compelled to leave the agency," Graham told panel. Graham added that safety issues are a second-tier concern.

"Unfortunately, Ketek is not an anomaly," said Graham. "I am here today to tell you that our nation is still at risk."
]]> http://www.yourlawyer.com/articles/read/12383 Fri, 15 Dec 2006 00:00:00 -0800 http://www.yourlawyer.com/articles/read/12383
Joel Lippman said he was terminated from his post at Ethicon in May, after working at the subsidiary for almost six years. Before that, Lippman, 52, of Warren, helped oversee clinical trials for a decade at another J&J unit, Ortho-McNeil Pharmaceuticals.

 Lippman claims he raised flags about several products that could pose risks to patients, including Ortho Evra, a skin patch that works as a contraceptive device, according to a lawsuit filed last month in state Superior Court in Middlesex County. At one point in his career, he said, his bonus was threatened when he raised safety concerns.

In a statement yesterday, J&J said Lippman's allegations are untrue.

Attorneys said the suit could be a boon for personal injury lawyers trying cases against the health-care giant, but only if Lippman has documentation to back up his claims.

More than 1,000 product liability suits have been filed so far alleging the Ortho Evra patch causes a higher risk of blood clots and stroke. Last November, the Food and Drug Administration approved an updated label for the patch that highlights a significant increase in estrogen exposure for women who use it compared to those who take ordinary birth control pills.

In the most recent incident mentioned in the lawsuit, Lippman said he raised concerns in April about a defectively designed device called an arterial cannula, which is used in heart bypass surgery. In at least one instance, part of the tip broke off during surgery, so Lippman called a meeting of Ethicon's "quality assurance board."

The board recommended a recall on April 14, according to the suit. When nothing happened for a week, Lippman said he tried to arrange a meeting with Sherilyn McCoy, the group chairman of Ethicon. No meeting was held, but on April 27, Lippman claims, he learned another executive wanted to soften the quality assurance board's assessment to justify a less sweeping recall.

In May, Lippman was summoned to a meeting with McCoy and a human resources executive, where "to his total astonishment and surprise," he was asked to resign for a "false" reason the company used as a pretext, the suit claims. The reason the company gave is not divulged in the suit. Lippman was let go a week later.

Ethicon said it could not discuss the lawsuit while it was pending.

"Our company is committed to quality and positive patient outcomes, and we will vigorously defend against his claims because we believe the allegations are not true," the company said in a statement.

Lippman could not be reached yesterday, and his attorney did not return calls seeking comment.

The suit claims the executive's total compensation was $1.15 million last year. Lippman said he has been unable to find a comparable job elsewhere.

The suit, which seeks compensatory and punitive damages, is based on two claims. One is New Jersey's Conscientious Employee Protection Act, which prohibits companies from retaliating against workers who act as whistle-blowers, including those who object to practices that could jeopardize the public health or safety.

Another is an age-based claim: Lippman said his job was eliminated and replaced with a similar position filled by a younger executive.

Joel Lippman said he was terminated from his post at Ethicon in May, after working at the subsidiary for almost six years. Before that, Lippman, 52, of Warren, helped oversee clinical trials for a decade at another J&J unit, Ortho-McNeil Pharmaceuticals.

 Lippman claims he raised flags about several products that could pose risks to patients, including Ortho Evra, a skin patch that works as a contraceptive device, according to a lawsuit filed last month in state Superior Court in Middlesex County. At one point in his career, he said, his bonus was threatened when he raised safety concerns.

In a statement yesterday, J&J said Lippman's allegations are untrue.

Attorneys said the suit could be a boon for personal injury lawyers trying cases against the health-care giant, but only if Lippman has documentation to back up his claims.

More than 1,000 product liability suits have been filed so far alleging the Ortho Evra patch causes a higher risk of blood clots and stroke. Last November, the Food and Drug Administration approved an updated label for the patch that highlights a significant increase in estrogen exposure for women who use it compared to those who take ordinary birth control pills.

In the most recent incident mentioned in the lawsuit, Lippman said he raised concerns in April about a defectively designed device called an arterial cannula, which is used in heart bypass surgery. In at least one instance, part of the tip broke off during surgery, so Lippman called a meeting of Ethicon's "quality assurance board."

The board recommended a recall on April 14, according to the suit. When nothing happened for a week, Lippman said he tried to arrange a meeting with Sherilyn McCoy, the group chairman of Ethicon. No meeting was held, but on April 27, Lippman claims, he learned another executive wanted to soften the quality assurance board's assessment to justify a less sweeping recall.

In May, Lippman was summoned to a meeting with McCoy and a human resources executive, where "to his total astonishment and surprise," he was asked to resign for a "false" reason the company used as a pretext, the suit claims. The reason the company gave is not divulged in the suit. Lippman was let go a week later.

Ethicon said it could not discuss the lawsuit while it was pending.

"Our company is committed to quality and positive patient outcomes, and we will vigorously defend against his claims because we believe the allegations are not true," the company said in a statement.

Lippman could not be reached yesterday, and his attorney did not return calls seeking comment.

The suit claims the executive's total compensation was $1.15 million last year. Lippman said he has been unable to find a comparable job elsewhere.

The suit, which seeks compensatory and punitive damages, is based on two claims. One is New Jersey's Conscientious Employee Protection Act, which prohibits companies from retaliating against workers who act as whistle-blowers, including those who object to practices that could jeopardize the public health or safety.

Another is an age-based claim: Lippman said his job was eliminated and replaced with a similar position filled by a younger executive.
]]> http://www.yourlawyer.com/articles/read/12377 Wed, 13 Dec 2006 00:00:00 -0800 http://www.yourlawyer.com/articles/read/12377
Both products have spurred numerous product liability lawsuits. Lippman says he objected to the release of the Panacryl suture, “whose use resulted in numerous adverse events,” but Ortho released it anyway and continued to receive reports of “adverse events.” He says he objected to the release of ProCeed, a “mesh product,” but Ortho released it anyway, until the FDA forced a recall. He says he told Ethicon it must inform surgeons that an endoscopic applicator leaks chromium during use, but Ethicon refused. He says he was fired less than a month after insisting that Ethicon recall a product called DFK24, used in heart bypass surgery, because its tip fell off and had to be fished out of the aorta.
 
Lippman has been an assistant professor of obstetrics and gynecology at Tufts, director of the clinical development division of medical affairs for Wyeth-Ayerst Laboratories, and worked for Ortho McNeil from 1990 to 2000, leaving that company as vice president of clinical trials.
 
He worked for Ethicon from July 2000 until May 15, 2006. He got his M.D. at New York Medical College and has a Master’s degree in public health from Harvard.
 
He claims that from 1998 to 2000, his last two years at Ortho, he “raised serious health concerns about two pharmaceutical products: Ortho-Prefest, a hormonal menopausal product, which did not have adequate safety data to prove that it protected against uterine cancer as did other therapies, and the Evra patch, which released dangerously high levels of estrogen into patients.”
 
Lippman claims, “The clinical research had revealed that the estrogen dose released by the Evra patch as a means of birth control may increase the risk of deep venous thrombosis and pulmonary embolisms.”
 
Ortho faces hundreds of lawsuits making precisely those claims – including 12 filed Tuesday in Newark Federal Court.
 
Lippman says he “advised Ortho that it should conduct further research to understand the impact of the hormones released by the patch and if necessary modify the package insert before introduction to the marketplace. (But) Ortho disregarded Dr. Lippman’s concerns and launched the product. J&J transferred Dr. Lippman to Ethicon in 2000, shortly after Dr. Lippman made his complaints about the menopausal product and the Evra patch.”
 
Soon after joining Ethicon in July 2000, Lippman says, he objected to the release of its “Corlink” device because data showed it “caused occluded arteries”. He says he also objected because of the “lack of adequate studies to justify the product’s release” and because a competing company had released a similar product, which had to be recalled and resulted in “numerous product liability suits.” Lippman says his boss told him that “if he continued to oppose the launch of Corlink, his action could affect his bonus and standing with the company.” His bonus could be as much as 50 percent of his annual salary, the suit states.
 
Lippman says that in 2002 he “insisted on the recall of a product known as Intergel” which “had caused serious injuries and was related to a number of deaths.”
 
Intergel also has been the basis of numerous product liability suits, which claim the product spreads infection during surgery, rather than prevent it.
 
Lippman says that he demanded for more than a year that Intergel be recalled, and that after “a decision to recall the product was made,” he was summoned to the officer of Michael Dormer, “Chairman of Medical Devices and Diagnostics for J&J in New York City,” where Dormer and four attorneys attacked him “for the decision to recall Intergel”.
 
Lippman claims he also objected to the release of Panacryl, “a suture whose use resulted in numerous adverse events,” and ProCeed, a “mesh product.” He says that despite his objections, Ethicon refused to recall Panacryl “and Ethicon continued to receive reports of adverse events.” And he says, “The FDA later required Ethicon to recall ProCeed.”
 
He says Ethicon ignored his advice, in late 2005, to warn physicians that a device called FS2 was not sterile because of two holes in it. In response, he says, “a member of Ethicon’s Quality Assurance Board stated that ‘surgeons are like five year olds. We need to control what is said to them.’”
 
He says he learned in April this year that an endoscopic applicator “was leaking chromium, a toxic heavy metal,” and that he “insisted that Ethicon notify physicians who had used the applicator during recent clinical usage that the applicator oozed chromium during use. (But) Ethicon ignored his objections.”
 
And in the case that he claims led directly to his illegal firing, Lippman says that by April this year he had received three complaints that an Ethicon arterial cannula called DFK24, a life-sustaining device used in heart bypass surgery, lost its tip during surgery, and had to be retrieved from the patient’s aorta. He says he and the vice president of medical operations, a cardiac surgeon, decided in April that the DFK 24 must be recalled because “the risk of serious injury or intra-operative death was very high.” Ethicon’s Quality Assurance Board decided to recall it on April 14, but Ethicon refused, and still had not recalled it when it fired him on May 15, Lippman says.
 
Lippman seeks punitive damages.]]> http://www.yourlawyer.com/articles/read/12005 Wed, 19 Jul 2006 00:00:00 -0700 http://www.yourlawyer.com/articles/read/12005
Sen. Charles Grassley, R-Iowa, asked the inspector general at the Health and Human Services Department to probe whether the Food and Drug Administration and Merck acted in concert to call into question the safety findings made by Dr. David Graham, an FDA drug safety official.

In a letter Wednesday, Grassley cited handwritten notes made by the Merck employee documenting an Oct. 13, 2004, conversation with the FDA official that suggests the two collaborated.

The FDA official mentioned an "opportunity to get (the) message out'' on Graham, a longtime employee of the agency, and provide journalists with a company critique of him, according to notes quoted in the letter.

"It is no secret that Dr. Graham was and is a critic of the FDA. However, that does not mean the FDA should scheme with drug sponsors to discredit its own employees,'' Grassley said in the letter to Inspector General Daniel Levinson. The FDA, Grassley said, must maintain a "clear, bright line between the regulated and the regulator.''

FDA spokeswoman Susan Bro had no comment.

Merck & Co. Inc. said in a statement that it has the "right to express our views when we believe information others have presented is not fair and balanced. Dr. Graham's conclusions with regard to Vioxx differed from those of the FDA and to that extent, the FDA and Merck separately expressed their scientific views to the public and scientific community.''

Merck announced the voluntary withdrawal of Vioxx in September 2004, citing a study that showed the pain medication could double risk of heart attack or stroke if taken for 18 months or longer.

Two months later, Graham testified before a Senate committee that the FDA had fumbled its handling of Vioxx, and mishandled safety problems with five other widely used drugs. The FDA defended its oversight of Vioxx before the hearing; an agency official later dismissed Graham's research as "junk science.''

The following month, 22 members of Congress signed a letter asking the FDA to investigate the "smear campaign'' against him.

Merck now faces more than 16,000 Vioxx-related lawsuits.

The meeting cited by Grassley was held two weeks after the drug was withdrawn.

FDA e-mails seen by The Associated Press indicate that the agency shared in advance with Merck details about a presentation that Graham was to make in France in August 2004 about the dangers of Vioxx. The e-mails suggested that such a practice was commonplace.

Merck then issued a statement saying it stood by the safety of Vioxx. An FDA spokeswoman at the time said removing the drug was "not on the table.''

The notes excerpted by Grassley indicate the FDA later went even further in helping Merck rebut Graham's work.

The FDA's Dr. Brian Harvey suggested to Merck's Dr. Ned Braunstein "an official rebuttal on Graham,'' according to the notes, which were admitted as evidence in a federal Vioxx trial.

Graham said he was "quite shocked'' to learn about Braunstein's notes.

"This actually demonstrates more clearly just how widespread the organized campaign to discredit and smear me was,'' according to a transcript of a sworn deposition that Graham gave May 9, 2006.
]]> http://www.yourlawyer.com/articles/read/11497 Wed, 15 Mar 2006 00:00:00 -0800 http://www.yourlawyer.com/articles/read/11497
A federal judge refused to grant a government motion to quash plaintiffs' lawyers subpoena of drug reviewer Dr. David Graham, who testified at a 2004 Congressional hearing that the Merck & Co. drug caused as many as 160,000 heart attacks and strokes.

Graham questioned the FDA's commitment to removing unsafe drugs from the market and called Vioxx a "terrible tragedy and a profound regulatory failure."

Scoring a deposition from Graham is a major victory for plaintiffs because as an FDA employee he counters part of Merck's defense: Vioxx was safe because the agency approved it, said Marc Scheineson, a former FDA lawyer who now represents drug and device companies.

"I'm sure there are a lot of sleepless Merck lawyers," Scheineson said Wednesday.

Scheineson said the FDA probably didn't want Graham to testify because his "opinions are in direct conflict with the agency in which he works."

The government, on behalf of the FDA and Graham, sought to quash the subpoena on technical grounds. The FDA also said such testimony wouldn't be in the interest of the public or agency. It further added that Graham's deposition would put the agency in the middle of a civil lawsuit and the testimony would divert time and resources, and harm the FDA's ability to fulfill its mandate.

But in rejecting the motion, U.S. District Judge Eldon Fallon said in a ruling Monday that the agency acted "arbitrarily and capriciously" in failing to provide Graham for a deposition.

He said the FDA is already in the middle of lawsuits because it allowed Graham to testify before Congress and give numerous media interviews. Fallon also said that he failed to see how Graham's testimony wasn't in the public interest because thousands of patients are suing Merck.

Fallon said it was "vitally important" that plaintiffs know the truth about Vioxx including what the FDA knew about the drug, when the agency knew it, if it had all the facts and whether the FDA concealed anything from the public.

An FDA spokeswoman, Susan Bro, said Wednesday the agency had just received the order and has not decided whether to appeal.

Graham, the FDA's associate director for science and medicine for the Office of Drug Safety, didn't return calls for comment. But Bro said he had asked the agency for guidance about what to do and asked that its lawyers represent him.

The FDA also expressed concern that if Graham testified at the plaintiffs' request, Merck would subpoena other officials. Merck lawyer Ted Mayer said it was possible but no decision has been made.

Mayer said he didn't view Graham's deposition as a plaintiff victory because he doesn't represent the mainstream views of the FDA. "We are looking forward to examining him," Mayer said.

Plaintiff attorney Russ Herman said he doesn't think jurors will care that Graham is a solo act. "He has more courage than other people (at the FDA) who just want a job at the pharmaceutical companies," Herman said. "The FDA is supposed to be a consumer watchdog but it has become toothless. Graham can explain that."

Merck withdrew Vioxx from the market in September 2004 after a study showed it doubled patients' risk of heart attacks and strokes when used for at least 18 months. It faces more than 9,600 lawsuits. So far Merck has won two cases and lost one. Two cases are ongoing.]]> http://www.yourlawyer.com/articles/read/9691 Sat, 07 May 2005 00:00:00 -0700 http://www.yourlawyer.com/articles/read/9691
Dr. David Graham is a scientist at the U.S. Food and Drug Administration. His job is to evaluate the safety of drugs after the FDA has approved them. Last year, he testified before the Senate that an FDA failure to act on research resulted in 140,000 Vioxx patients suffering heart attacks and 60,000 of them dying.

That death count "is the equivalent of the Vietnam War," he told an audience of about 250 doctors, academics and the public at the University of Michigan Hospital.

The comments resonated in Ann Arbor, home to one of Pfizer Inc.'s drug research and development hubs. Pfizer pulled Bextra, a painkiller in the same class as Vioxx, from the market in April after the FDA asked for its recall, citing inadequate information about the risks associated with its long-term use.

Vioxx is made by Merck & Co. Inc. The Vioxx deaths, Graham said, occurred because of the failure of the FDA to protect the public.

The FDA declined to respond directly to Graham's comments. But an FDA spokeswoman said the agency undertook a drug safety initiative in November to improve the way it evaluates drugs after they go public.

But Graham said it's not enough and that catastrophic drug events will happen again without a major structural change in the agency assigned the task of making sure prescription drugs are safe and effective before they are made available to the public.

"Vioxx was the single greatest drug safety catastrophe in the history of the U.S.," Graham said. "There are other catastrophes out there, they just haven't been as monumental."

And absent structural change, he said, there will be more.

Graham argues that the FDA needs two separate arms one to evaluate the benefits of using a drug and how safe it is before it is made available to the public and another to independently evaluate drug safety once it's out there.

He also said that the FDA's focus is tied too closely to serving the pharmaceutical industry instead of serving the public.

"Right now 80 percent of FDA resources are focused on reviewing and approving new drugs for the market," Graham said. At least 50 percent should be focused on making sure they're safe once they're out there, he said.

Mark Horn, medical director of the government relations group at Pfizer, said he is not convinced that there is a benefit to creating an adversarial relationship within the agency or between the agency and the pharmaceutical industry.

"Collaboration between the industry and the agency is a good thing," Horn said. "It increases our productivity; it increases our efficiency."

But Graham said there need to be independent checks and balances to ensure Americans get safe medicines.

Some of the FDA officials who approved the drug for public consumption in the first place are also responsible for regulating the drug's safety after it goes on the market, he said.

It doesn't work, Graham said, because those scientists have invested so much time and research in the approval process. By the time the drug gets on the market, they feel a parent-like ownership of the drug. Then, he said, they refuse to act or delay acting on information that indicates safety problems with drugs.

Between June 2000 and April 2002, while the FDA was negotiating with Merck about what the Vioxx label would say, Graham said, 16,000 people taking the drug suffered heart attacks. The drug was taken off the market last September.

"There's a cost to delay and it's measured in human lives," Graham said.]]> http://www.yourlawyer.com/articles/read/8916 Thu, 25 Nov 2004 00:00:00 -0800 http://www.yourlawyer.com/articles/read/8916
Sen. Charles E. Grassley (R-Iowa) cited allegations that FDA managers attempted to discredit David J. Graham, an agency safety officer who has charged that several approved prescription medications are unsafe.

"If these allegations indeed have merit," Grassley wrote to HHS's acting inspector general, Daniel R. Levinson, "it appears that these activities may have been coordinated by FDA management and may have involved the misuse of government resources, including government property and time."

The allegation that FDA managers were trying to discredit Graham was raised Tuesday by Tom Devine of the nonprofit Government Accountability Project. Devine said Graham contacted him some weeks ago about how to get word to the public about the dangers of the prescription drug Vioxx. Soon after, Devine received anonymous calls that cast aspersions on Graham's credibility.

Devine deduced he was talking to FDA managers by their telephone numbers and documents they sent him.

Vioxx was withdrawn from the market in September by its maker, Merck & Co. ]]> http://www.yourlawyer.com/articles/read/8913 Wed, 24 Nov 2004 00:00:00 -0800 http://www.yourlawyer.com/articles/read/8913
Tom Devine of the nonprofit Government Accountability Project (GAP) said the anonymous callers did not identify themselves but he is "100 percent positive" they were managers at the FDA because of their phone numbers and other identifying information. He said he initially took the callers' concerns seriously but later came to see the calls as an effort to smear the whistle-blower, Associate Director David J. Graham of the Office of Drug Safety.

Last week, Graham, a 20-year FDA veteran, said at a Senate hearing that FDA policies have left the American public "virtually defenseless" against the kind of safety problems that led to the abrupt withdrawal in September of the popular arthritis drug Vioxx.

He named five other prescription medications that he said pose serious safety risks that are not being adequately addressed by the FDA.

Although the FDA initially sharply criticized Graham's testimony one top official called him "irresponsible" and a practitioner of "junk science" the agency yesterday tightened the restrictions on one of the five drugs Graham had criticized, the acne medication Accutane.

In a statement regarding the GAP allegations, the FDA said yesterday that it "acknowledges the right of its employees to raise their concerns to oversight groups."

The agency said that it had no prior knowledge of any employee's contact with the whistle-blower group and that it is working to improve a process for ensuring that internal differences of scientific opinion are fully incorporated into its decision-making. "The agency promotes vigorous debate of the tough scientific questions it confronts every day," the statement said.

The allegation that the FDA used deceptive practices against Graham came two days after the Government Accountability Project agreed to take him on as a client.

Devine said Graham had asked five weeks ago for advice about overcoming his supervisors' opposition to the publication of his critical findings about Vioxx. The anonymous calls followed several weeks later, Devine said.

"The calls came under the guise of being anonymous whistle-blowers," Devine said. "They were clearly working together and shared allegations -- mostly that Dr. Graham's research was unreliable and that there were serious questions of possible scientific misconduct with his study. They said Graham wouldn't address their concerns, and that he was a demagogue and a bully."

Devine said that after several conversations, he persuaded the callers to provide documents to support their accusations, and Devine then challenged Graham based on what was provided.

"It became clear to me that Dr. Graham could reasonably explain any questions about the research, and that the callers were trying to smear him," Devine said. "After that, I called their bluff for more information and that was the end of it. It was all a red herring, and it made me believe Dr. Graham far more."

Devine said that, under his organization's rules, he could not identify the callers because they initially contacted GAP as whistle-blowers themselves. But he said he is certain they were supervisors at the FDA because of the details of the arguments they made and the phone numbers from which they called. In addition, he said that, after identifying the callers to his satisfaction, he referred to them by name during subsequent phone conversations. He said the callers were surprised by his identifications but did not tell him he was wrong.

The allegations follow weeks of bruising criticism of the FDA, which has been accused of being lax on drug safety and was sharply assailed in Congress over its oversight of the British plant that was supposed to produce half of this winter's U.S. supply of flu vaccine. The plant was closed by British health officials because of contamination problems.

The criticism on drug safety issues has led to calls for the creation of a more independent Office of Drug Safety within the FDA, or perhaps outside of it.

Currently, the office is overseen by the Center for Drug Evaluation and Research, which also supervises the Office of New Drugs. To critics of the current setup, the much larger and better-financed Office of New Drugs dominates the safety office, in part because drug reviewers involved in approving a new drug for marketing also play a role in deciding whether the drugs should be withdrawn when safety issues crop up.

In his Senate testimony, Graham said a more independent drug safety office is essential. His position was supported this week by the editors of the Journal of the American Medical Association.

"The drug approval process must be decoupled from the post-marketing safety and surveillance system," the editorial said. "It is unreasonable to expect that the same agency that was responsible for approval of drug licensing and labeling would also be committed to actively seek evidence to prove itself wrong."

The FDA and drug industry officials have generally opposed a more independent safety office, saying it is unnecessary and would serve to de-emphasize the benefits of medications. But the FDA recently asked the congressionally chartered Institute of Medicine to review its drug safety procedures, and top officials said the agency will consider whatever recommendations the institute makes.

Although the drug safety issue involves a number of medications, companies, patients and officials, it has increasingly revolved in recent days around Graham's personality and positions. He has been at the center of the Vioxx controversy and has touched off more heated words and debate with his congressional criticisms of five other drugs, but his impact on drug safety issues goes well beyond those.

During his 20 years in the Office of Drug Safety, he fought passionately to bring about the recall of the diabetes drug Rezulin, the diet pills Fen-Phen and Redux, the cholesterol-lowering drug Baycol, the heartburn remedy Propulsid, and the antihistamine Seldane.

Graham, 50, was trained as a physician at Johns Hopkins and Yale universities and has spent his entire career at the FDA's drug safety office. A deeply religious Roman Catholic, he has said that his faith serves as a spur to his work. Some see him as a crusading hero, while others believe he unfairly fixates on certain drugs and fails to take into account the patients who are helped by those medications.

His influence has been enormous. In his congressional testimony, Graham said that, in the course of his career, he had recommended that 12 drugs be taken off the market, and that 10 of them were subsequently removed.

The news that Graham had sought whistle-blower assistance and protection and that FDA managers had sought to undermine his credibility was first reported yesterday in the online edition of BMJ, formerly known as the British Medical Journal.

In that account, Devine said the FDA was "employing a classic law of whistleblower reprisal the smokescreen syndrome which shifts the spotlight from the message to the messenger. The agency attempted to discredit Dr. Graham rather than provide any scientific evidence contradicting his conclusions."

Graham could not be reached yesterday for comment.

One of the two drugs whose recall Graham has unsuccessfully sought is Accutane, which was approved to treat severe acne but, critics say, is widely prescribed for milder cases. The drug's distribution is restricted to prevent its use by pregnant women because Accutane can cause fetuses to die or develop birth defects. Nonetheless, some women have been getting pregnant while taking the drug.

Under an expanded monitoring program announced by the FDA yesterday, manufacturers will have to keep records of which doctors prescribe the drug, which pharmacies distribute it and which patients take it. Doctors and pharmacies will also have to inform women about the drug's risks, and pharmacists will have to see a signed proof that the patient is not pregnant before they dispense the drug, the FDA said. ]]> http://www.yourlawyer.com/articles/read/8441 Tue, 24 Aug 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8441
Thanks to a Civil War era law that offers potentially huge rewards to people who expose fraud against the government, federal prosecutors have won a series of multimillion dollar settlements with the help of insiders willing to turn the tables on their bosses in exchange for a big payout.

The biggest impact has come in the health care industry, where almost every doctor, hospital and pharmaceutical company has some dealing with federal health programs.

The drug-maker Schering-Plough Corp. agreed in July to pay $346 million to settle charges that it paid a kickback to a health insurer in an attempt to evade a law requiring it to give its lowest prices to Medicaid, the government health program for the poor.

The U.S. Attorney in Philadelphia began investigating the case after three disgruntled employees of a Schering-Plough subsidiary filed a civil lawsuit on the government's behalf, claiming their employers were committing a fraud.

Their reward for risking their careers will be rich the trio will split $31.7 million as part of the settlement.

That case came on the heels of a government suit against drug giant Pfizer Inc., which agreed in May to plead guilty to criminal charges and pay $430 million in fines to settle charges that a company it owns illegally promoted non-approved uses for a drug by flying doctors to lavish resorts.

The man who blew the whistle, a scientist, was awarded $26.6 million.

Federal prosecutors in Philadelphia are pursuing a claim against Medco Health Solutions Inc., a pharmacy benefits company that three whistleblowers claim engaged in a variety of improper practices, including sending patients fewer pills than they paid for and improperly accepting payments from drug companies in exchange for promoting their medications.

The case is expected to go to trial in 2005.

The suits are based in a law enacted during the Civil War to prevent fraud by profiteering military supply companies. The False Claims Act allows people who file the suits on behalf of the government to keep as much as 25 percent of the total recovered.

The statute largely fell out of use until 1986, when it was strengthened with the intent that it would be used against defense contractors.

Since then, its use has been on the rise.

Lawsuits filed by private-sector whistleblowers paved the way for a government investigation that ultimately recovered $1.7 billion in fines and damages from HCA Inc., the nation's largest for-profit hospital company. Prosecutors said the company had paid kickbacks to physicians and overbilled government health programs.

TAP Pharmaceutical Products Inc. agreed to pay $875 million in 2001 to resolve criminal and civil charges in connection with its pricing and marketing of the cancer drug.

The number of whistleblower cases has surged, from 82 in 1990, to more than 300 a year.

In fiscal 2003, the Department of Justice said it recovered a record $2.1 billion under the False Claims Act. About $1.48 billion of that total came directly from suits initiated by private citizens, who in return reaped $319 million in rewards.

Marilyn May, an assistant U.S. attorney who was involved in the case against Schering-Plough, said corporate canaries are worth the money.

"In the absence of direction from an insider, whether that person has filed a complaint, or come to us with information, it is difficult to find information about fraud being committed by companies," she said. "We'll still do it, but it is certainly easier when you are pointed in the right direction."

The rise in the number of cases has been of some concern to corporate attorneys, who worry that their client companies could find themselves the victim of overzealous prosecutors.

Companies that decide to fight, rather than settle, can face triple damages, plus a ban from doing business with the government.

"The government has a very big stick in the health care and government contracting arena, and the penalties and the damages can be so large that fighting these kinds of charges in court, it is a huge risk that no company wants to take," said Michael Waldman, a Washington, D.C., attorney who defends companies against False Claims Act suits.]]> http://www.yourlawyer.com/articles/read/8373 Tue, 10 Aug 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8373
Frances Hutchins, who still works at Vintage Pharmaceuticals Inc., has agreed to plead guilty Wednesday before a U.S. magistrate judge. She also pledged to cooperate with the government's ongoing investigation, prosecutors said.

Hutchins was manager of the Vintage plant, at 3241 Woodpark Blvd. in northeast Charlotte. The company makes generic versions of medications, including Levothyroxine Sodium USP, a treatment for hypothyroidism.

U.S. prosecutors say that from January 1999 to January 2001, Vintage officials sold about 57 million Levothyroxine tablets labeled with expiration dates of 12 months from the time of production.

But that labeling was an intentional error, because Vintage officials knew the pills lost their potency before 12 months, the government alleges.

Late last month, a federal grand jury in Charlotte issued an indictment against company officials alleging conspiracy, wire fraud and the introduction of misbranded and adulterated drugs into interstate commerce.

The company responded with a brief prepared statement that said, in part; "The allegations made today by the government are totally without merit."

A company spokesman declined further comment. Neither Hutchins nor her attorney could be reached for comment Monday.

Vintage, a private company, has production plants in Charlotte and Huntsville, Ala. It employs 120 people at the Charlotte plant.

Vintage's products are distributed to retail pharmacies through a sister company, Qualitest Products Inc. of Huntsville.

Vintage's problems with the government date to at least 1997, according to a narrative included in the indictment.

In 1997, U.S. Food and Drug Administration inspectors found problems at Vintage's Charlotte and Huntsville plants. The FDA said the company wasn't taking proper steps to make sure its products were safe, effective and potent for as long as product packaging indicated.

In July 1998, the government sought a court order to shut down manufacturing in Charlotte and Huntsville. The suit was settled four months later, when the company agreed to several steps, including hiring independent experts to audit and help improve plant operations.

But in October 2000, a former employee at the Charlotte plant told the FDA that problems persisted. The whistleblower said Vintage was using 12-month expiration labels on the thyroid drug, even though internal analyses showed the tablets didn't retain their strength that long.

That led to the criminal investigation and the recent indictment against the company and two individuals: William Propst Sr., president of Vintage; and William Propst Jr., assistant to the president.

In a separate but related case, U.S. Attorney Gretchen Shappert charged Hutchins with conspiracy to defraud the government and sell adulterated and misbranded drugs from state to state.

Hutchins still works for Vintage, a company spokesman said. He declined to specify her current position.

Hutchins and the Propsts are not going to comment about the legal actions, he said.

Criminal prosecutions of pharmaceutical companies are relatively unusual. In 2002, the U.S. government prosecuted only about a half-dozen drug makers.

"It is not a routine action," said Mary Lewis, spokeswoman for the FDA office in Raleigh.]]> http://www.yourlawyer.com/articles/read/8308 Thu, 05 Aug 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8308
The pharmaceutical giant, which also recently settled a lawsuit by shareholders for $300 million, still faces a criminal investigation by the Justice Department. In its settlement of the civil case with the Securities and Exchange Commission, Bristol-Myers agreed to pay a $100 million civil fine and an additional $50 million, both of which will go into a fund for shareholders. Bristol-Myers neither admitted nor denied wrongdoing but did agree to abide by a permanent injunction against future violations.

It is one of the largest SEC penalties in recent years for alleged accounting violations against a company that continues to operate. The $150 million Bristol-Myers is paying dwarfs the $10 million fine levied on Xerox Corp. in 2002, which was the largest ever at the time, to resolve allegations of accounting fraud.

Bristol-Myers is based in Manhattan, but its largest division, the U.S. Medicines Group, is located in New Jersey. Ranked No. 92 on the Fortune 500 list, Bristol-Myers had revenue of $20.7 billion last year.

The SEC sued Bristol-Myers in federal court in Newark, N.J., alleging that the company sold excessive quantities of drugs to wholesalers and improperly booked revenue from $1.5 billion of those sales to its two biggest wholesalers.

Bristol-Myers covered the wholesalers' carrying costs and guaranteed them a return on investment until they sold the products, the SEC said in the suit. In booking the $1.5 billion in revenue at the point of shipment, the company violated generally accepted accounting principles, the regulators said.

They also accused Bristol-Myers of using so-called "cookie-jar" reserves in a drive to meet its internal sales and earnings targets as well as Wall Street analysts' earnings forecasts. The SEC maintains that the use of such reserves - overstating income in some quarters and understating it in others - gives investors an inaccurate picture.

"Bristol-Myers' earnings-management scheme distorted the true performance of the company and its medicines business on a massive scale and caused significant harm to the company" and its shareholders, SEC enforcement director Stephen Cutler said in a statement. "As our investigation continues we will be focusing on, among other things, those individuals responsible for the company's failures." ]]> http://www.yourlawyer.com/articles/read/8284 Sun, 01 Aug 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8284
But because it was more expensive than a rival drug, Claritin's runaway success meant two huge HMOs suddenly were paying more to treat watery eyes and runny noses.

Faced with a profit squeeze, the health maintenance organizations gave Schering-Plough an ultimatum: Cut the price or they would stop reimbursing clients who bought Claritin.

Schering-Plough blinked.

Its sales managers offered price incentives to the HMOs to lower their costs. Deals like that are common in business, but this time there was a problem. Schering-Plough didn't tell the government.

By law, the federal government, which is the country's largest buyer of prescription drugs, must receive a manufacturer's lowest price. Because the government didn't get the same price break as the HMOs, Medicaid paid about $100 million more than it should have for Claritin between 1998 and 2002.

Now Schering-Plough is paying for its mistake.

On Friday, the Kenilworth-based drug maker agreed to pay a $345 million fine and plead guilty to a single criminal charge to settle a fraud case brought by federal prosecutors in Philadelphia.

The settlement is the most recent of 10 involving some of the nation's biggest drug makers, which over the past three years have paid nearly $2.5 billion in criminal fines and civil penalties to settle charges they defrauded the government.

The Schering-Plough case, which was outlined by prosecutors, provides a window into the aggressive sales and marketing practices of drug makers, which some critics blame for the high cost of prescription medicine a lively issue for politicians and consumers.

And it comes at a precipitous moment for the industry. Big drug makers, several of which are based in New Jersey or have substantial operations here, are battling efforts to allow the importing of cheaper medicines.

Schering-Plough and other companies that have settled similar cases say they have changed their ways. Some experts agree.

"The Wild West days of such aggressive efforts may be by the board," said Robert McNair, a Philadelphia attorney who represents many big drug makers. "These widely publicized cases and big fines have made the industry more conscious."

One Schering-Plough executive insisted the company is changing. Almost the entire senior corporate leadership has been revamped in the past 16 months, said Brent Saunders, the drug maker's senior vice president for global compliance and business practices. In addition, 40 percent of the company's 200 district sales managers nationwide are new.

But other officials said the problems won't disappear as long as drug makers still face pressure to boost sales and stock prices at a time when few blockbuster medicines are being discovered. In such an environment, wheeling and dealing becomes increasingly important.

Prosecutors developed their case against Schering-Plough after three company employees filed such a whistle-blower suit, which occurs when one or more employees claim their employer broke the law. Prosecutors can join the lawsuits and file criminal or civil charges.

By law, whistle-blowers are entitled to 15 percent to 25 percent of the money that is recovered. In this case, the three former Schering-Plough workers and their attorney will share $31.7 million.

The government, meanwhile, "continues to scrutinize pharmaceutical manufacturers' compliance," said Dana Corrigan, acting principal deputy inspector general at the U.S. Department of Health and Human Services.

The Schering-Plough case began in 1998, when its managed care unit was grappling with complaints from Cigna and PacifiCare the two big managed-care customers, or HMOs.

At issue was the price for Claritin, which had become a $2 billion a year product thanks to a groundbreaking TV advertising campaign.

Cigna complained the pill was much more expensive than Allegra, a rival drug from Aventis Pharmaceuticals. When Schering-Plough refused to lower the price, Cigna threatened to drop Claritin from its formulary a list of drugs its clients can buy.

But maintaining its relationship with Cigna was crucial to Schering-Plough.

Each year, Cigna's clients, including employers, unions and government agencies, bought more than $100 million of Schering-Plough drugs. And Claritin was at the top of the list.

In February 1999, Schering-Plough found a solution.

Instead of slashing prices, the drug maker offered Cigna an unusual package of freebies that included cash rebates, deeply discounted medicine and an interest-free loan worth more than $10 million a year.

One item, in particular, gained the attention of prosecutors. A so-called "data fee" was paid to Cigna for a report summarizing the use of Schering-Plough drugs by Cigna clients. The only problem was a similar report was already being generated by the company. Prosecutors said the fee amounted to an old-fashioned kickback.

"Schering used terms like 'data fee' and 'value added' as camouflage," said Patrick Meehan, U.S. Attorney for the Eastern District of Pennsylvania.

The goodies paid off. When it was all added up, Cigna pocketed $10 million in incentives per year from Schering-Plough and the drug stayed on the formulary.

That solved one problem but created the big one with the government, which spends about $28 billion per year on drugs.

In a statement, Cigna said it cooperated with prosecutors. The Philadelphia-based company said no criminal charges or civil claims have been brought against it and none are anticipated.

The deal with the other HMO, PacifiCare, was similar. In that case, the California-based HMO saved $25 million when Schering-Plough agreed to cover a portion of its total antihistamine costs between 1998 and 2000.

In a statement, the insurer said it cooperated and has never been implicated in any of the charges. A PacifiCare official declined further comment.

The schemes unraveled after three senior analysts at Schering-Plough working down the hall from the company's top executives discovered the deals and filed their whistleblower suits.

Over the next few years, they worked undercover and provided more than 5,000 documents to federal prosecutors.

"Hopefully we've sent a message to this industry," said Beatrice Manning, one of the three whistleblowers. "You can't count on all employers to beg off and stay silent."

Now, the question is whether the overcharging cases will attract the attention of lawmakers, who could make life more difficult for an industry already under scrutiny.

On Friday, Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, promptly wrote the nation's biggest drug makers, urging them to inform employees about the whistleblower law.

"With billions of dollars of profit at stake in the health care industry, more must be done to deter the perception that fraud settlements are the cost of doing business with the federal government," Grassley said. "Taxpayers can't continue to subsidize those drug companies that rely on ill-gotten profits." ]]> http://www.yourlawyer.com/articles/read/8282 Sat, 31 Jul 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8282
The pharmaceutical company said it would also plead guilty to a federal criminal charge concerning a payment to a managed care customer.

Federal law requires drug makers to give their lowest prices to Medicaid, but a group of whistle-blowers accused the company of giving some private health care providers better deals on its drugs by offering them kickbacks.

Federal prosecutors in Philadelphia began investigating the allegations in 1999 as part of a broad inquiry into pharmaceutical marketing practices.

The Kenilworth, N.J.-based company said that as part of the settlement it would pay a criminal fine of $52.5 million and civil damages of $293 million. Some of those damages, though, will be offset by credit the company will receive for $53.6 million in Medicaid rebates that it has previously paid.

``We are pleased that we are now putting this matter from the past behind us,'' said Schering-Plough senior vice president Brent Saunders.

The criminal charge stemmed from a $1.8 million kickback Schering-Plough offered to a health maintenance organization that was threatening to drop its drug Claritin because of its high cost. The company offered to pay a false ``data fee'' amounting to 2 percent of the annual gross sales of Schering drugs to the HMO.

Pat Meehan, U.S. Attorney for eastern Pennsylvania, said his office's pursuit of Schering-Plough should serve as an example that illegal marketing practices can be costly.

``Schering used terms like 'data fee' and 'value added' as camouflage for what was nothing more than an old-fashioned kickback,'' Meehan said in a written statement. ``This wasn't a mistake. It was a marketing strategy. The result was that programs created to provide health care to the poorest among us were actually paying more for drugs than those who have private health insurance.''

The settlement was first reported July 16 by The New York Times.

Federal investigations in Philadelphia, Boston and Washington have resulted in subpoenas to nearly every big drug maker. Bayer has paid $257 million and GlaxoSmithKline has paid $86.7 million to settle similar allegations.

Prosecutors in Boston and Washington are also investigating whether Schering-Plough paid physicians to prescribe its drugs, and whether it reported inflated wholesale prices to the Medicare program that led government health officials to pay more than necessary for its drugs, the Times reported. Over the last two years, the company has set aside $500 million to pay fines expected in those cases and the Philadelphia inquiry.

In morning trading on the New York Stock Exchange, Schering-Plough shares were down 10 cents at $19.43.]]> http://www.yourlawyer.com/articles/read/8283 Sat, 31 Jul 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8283
The suit stemmed from a 2001 announcement in which Bristol-Myers said it would invest $2 billion in ImClone to gain marketing rights for the ImClone cancer drug Erbitux.

But shareholders who sued Bristol-Myers said the company made overly optimistic statements about the drug's chances for approval by the Food and Drug Administration.

Bristol-Myers did not admit wrongdoing as part of the settlement, which still must be approved by a federal judge in Manhattan.

The FDA declined to review ImClone's application for approval for Erbitux in December 2001. Martha Stewart's sale of ImClone stock one day before that announcement led to her eventual conviction for lying to investigators.

The FDA eventually approved the drug earlier this year.

A federal judge in Manhattan dismissed the shareholder suit in March, but shareholders were appealing the dismissal to the 2nd U.S. Circuit Court of Appeals.

Bristol-Myers said in a statement it would pay the settlement out of legal reserves that it boosted earlier this year from $150 million to about $470 million.

The suit's allegations of shady accounting relate to an announcement by Bristol-Myers in 2002 that it had overstated revenue between 1999 and 2001 by $2.5 billion by offering incentives to wholesalers.

The SEC and federal prosecutors in New Jersey are still investigating the company's accounting.

Shares of Bristol-Myers rose 33 cents to close at $22.90 Friday on the New York Stock Exchange. ImClone rose 60 cents to close at $58.78 on the Nasdaq Stock Market.

On Thursday, Bristol-Myers reported its second-quarter earnings fell 42 percent because of the increased legal reserves and company writeoffs of research and development costs.]]> http://www.yourlawyer.com/articles/read/8285 Sat, 31 Jul 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8285
Their colossal payday will come out of a $345.5 million settlement the company's paying to the feds. Schering Plough, maker of Claritin, pleaded guilty to a federal criminal charge that it gave HMOs kickbacks, which lowered their drug prices, while charging Medicaid top dollar.

The whistleblowers, who were high level execs at a unit of Schering Plough, knew something was amiss when senior managers brushed aside a sexual harassment claim by a secretary.

One of the whistleblowers, Charles Alcorn, told managers his secretary complained about another exec harassing her physically and verbally. Alcorn said this exec had made similar advances to other secretaries.

"The company sought to protect" the exec who was allegedly harassing the secretary, Alcorn said. "There was a wall of secrecy around this entire fraudulent operation."

Indeed, the harasser had won the company's protection as an architect of the Medicaid scheme, Alcorn added.

Working with the Department of Justice, the whistleblowers sued the company in 1998 under the False Claims Act.

For several years, Alcorn, 40, continued to work for New Jersey-based Schering Plough, while providing information to help the government build its criminal and civil case.

During that time, the company tried unsuccessfully to pressure Alcorn and his fellow whistleblowers to approve documents that perpetuated the fraud.

For the whistleblowers, the settlement is not only a big payday, it ends a period of social isolation.

"When we refused to sign off, we were targeted and isolated," Alcorn said.

Another whistleblower, Beatrice Manning, 57, described a meeting with the U.S. attorney.

"My husband had just had surgery for a detached retina and was lying flat on his face for two weeks," said Manning. "I had to ask friends to stay with him [without any explanation] so I could go to Phili."

Alcorn is now in his second year of law school at Temple University in Pennsylvania. He wants to pursue health care litigation and patient advocacy.

Manning, meanwhile, is studying at a theological school and is specializing in business ethics.

A third whistleblower, Raymond Pironti, Jr., was on vacation and was unavailable for comment.

"I hope other people will come forward and that companies can't count on the compliance of their employees when they're doing outrageous profit-taking that's criminal," Manning said.

Both Manning and Alcorn offered some advice to would-be whistleblowers.

"I would advise someone who's thinking about being a whistleblower not to do it for the money," Alcorn said. "You won't last. It can take five to seven years" and the outcome isn't guaranteed.

The deals come as pharmaceutical companies receive increasing attention from prosecutors.

"There are literally millions of people affected on a daily basis by the cost of drugs," Patrick Meehan, U.S. attorney in eastern Pennsylvania told the Daily News. "People struggle on a day to day income to pay for these life sustaining drugs."

In the case of Schering Plough, the company figured out all kinds of clever ways to funnel money back to HMOs, including Cigna which was named in the settlement.

"Cigna has been cooperating with the investigation and doesn't expect any civil or criminal claims to be brought against it or any of its employees," a spokesman said.

At one point, Schering Plough paid a consultant $10,000 to provide research. The drug-maker then wanted to pay 10 times that price for that same piece of research from an HMO, said Manning.

Meanwhile, in a separate action, another drug-maker, Bristol-Myers Squibb, will pay $300 million to settle a securities class action suit accusing it of cooking its profits. ]]> http://www.yourlawyer.com/articles/read/8069 Wed, 19 May 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8069
The government alleged that Warner-Lambert Corp., purchased by Pfizer in 2000, flew doctors to resorts and paid them huge fees to tout and prescribe the drug as a pain reliever, a cure for bipolar disorder, other psychiatric disorders and Lou Gherigs Disease when there was no indication the medicine had any effect at all on any of those maladies.

Neurontins sales had climbed from $97.5 million in 1995, when the false advertising began, to nearly $2.7 billion by 2003.

The settlement includes a $240 million criminal fine, the second-largest criminal fine imposed in a health-care fraud prosecution, according to the Justice Department. This illegal and fraudulent promotion scheme corrupted the information process relied upon by doctors in their medical decision-making, thereby putting patients at risk, Michael Sullivan, U.S. Attorney in Boston, Mass., said in a prepared statement.

David Franklin, the whistleblower in the case and a scientist in the Boston-based Parke-Davis division of Warner Lambert, reported the marketing abuses to authorities. He will receive $24.6 million as part of the settlement.

Franklin told the Associated Press what Pfizer did was standard operating procedure in the pharmaceutical business.

Under an agreement with prosecutors, Pfizer agreed to plead guilty to two counts of violating the Food, Drug and Cosmetic Act and pay a $240 million criminal fine.

Pfizer will also pay $152 million in civil damages for losses incurred by the Medicaid program and $38 million as part of a settlement with 50 state attorneys general.

New Jersey will receive $1.8 million, with $1.55 million going to its Medicaid program and the remainder to the Division of Consumer Affairs.

Pfizer spokesman Paul Fitzhenry blamed the violations on the Warner Lambert pre-buyout and said the advertising began eight years ago, well before Pfizer bought the company.

He added those practices are banned by the companys current ethics policy.

Pfizer is committed to compliance with all health-care laws and FDA requirements and to high ethical standards in all aspects of its business practices, the company said in a statement.

The case began in 1996, when Franklin filed a lawsuit against drug maker Parke-Davis, saying it used an illegal marketing plan to drive up Neurontin sales.

Franklins lawsuit alleged the companys publicity plan included paying doctors to sign off on ghostwritten articles about Neurontin and to prescribe the drug for various uses. The company offered the doctors trips to Florida, the 1996 Atlanta Olympics and Hawaii.

According to the Justice Department, one doctor received close to $308,000 to speak at conferences about the drug.

Neurontin was shown to be less effective than a placebo for treating bipolar disorder, but the company did not publish those findings and instead told doctors the drug was highly effective for treating the disorder, according to the lawsuit.

Franklin filed his lawsuit under the U.S. False Claims Act, which allows private citizens to sue on behalf of the government and receive a portion of awards in cases where companies are defrauding the government.

The settlement was the second- largest of its kind since TAP Pharmaceutical paid an $875 in 1999. ]]> http://www.yourlawyer.com/articles/read/8071 Fri, 14 May 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8071
The settlement with the world's largest pharmaceutical company over Warner-Lambert, which Pfizer bought in 2000, includes a $240 million criminal fine the second-largest ever imposed in a health-care fraud prosecution, the Justice Department said. Pfizer also will pay $152 million in civil fines to be shared among state and federal Medicaid agencies. Another $38 million would go to state consumer-protection agencies.

Under the agreement announced Thursday by federal prosecutors, the company acknowledged spending hundreds of thousands of dollars to promote non-approved uses for the anti-seizure drug Neurontin. The company said the activity occurred years before it bought Warner-Lambert.

The case began in 1996, when scientist David Franklin filed a whistleblower lawsuit under the U.S. False Claims Act, which allows private citizens to sue on behalf of the government and receive a portion of awards in cases where companies are defrauding the government. Franklin will receive $26.6 million as part of the settlement.

Franklin's suit alleged that, to drive up sales in the 1990s, drug maker Parke-Davis and its parent company Warner-Lambert promoted the drug Neurontin for relieving pain, headaches, bipolar disorder and other psychiatric illnesses though it was approved only as an epilepsy drug. While doctors can prescribe drugs for any use, promoting drugs for so-called "off-label uses" is prohibited by the Food and Drug Cosmetic Act.

The lawsuit alleged the company's plan included paying doctors to put their names on ghostwritten articles about Neurontin and to induce them to prescribe the drug for various uses by giving them tickets to sporting events, trips to golf resorts and speakers fees. ]]> http://www.yourlawyer.com/articles/read/8072 Fri, 14 May 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8072
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.

Warner-Lambert program

"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." ]]> http://www.yourlawyer.com/articles/read/8073 Fri, 14 May 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8073
Franklin, who spent four months as a liaison to doctors for Parke-Davis Inc. now owned by Pfizer, charged the company illegally promoted off-label uses for Neurontin, an epilepsy drug.

As a whistleblower, Franklin, 42, will get $26.6 million from the settlement.

Government prosecutors eventually took up the charge and yesterday announced the settlement, which includes a $240 criminal fine.

Massachusetts will get $8.3 million through the settlement.

According to Franklin, the company urged its representatives to give misleading and wrong information to doctors to encourage them to prescribe Neurontin for ailments it hadn't been approved to treat.

Pfizer officials said yesterday that the settlement pertains to practices of Parke-Davis before Pfizer bought its owner, Warner Lambert.

Doctors are allowed to prescribe drugs for uses that haven't been approved by the U.S. Food and Drug Administration. But companies can't promote those uses.

Franklin said he should have realized during his interview for the job that there was a problem. He was asked questions about how he would handle certain ethical situations that, in retrospect, were unusual, he said.

But he wanted to use his Ph.D. in microbiology in the pharmaceutical industry. He said he liked the idea of working with doctors to give them information to help their patients.

Franklin said the company told him to tell doctors that studies showed the drug could be used to treat such things as bi-polar disorders. In reality, the company had a study showing a placebo had outperformed Neurontin in treating bi-polar conditions.

Franklin said he figured out something was wrong when a doctor confronted him.

``I realized the company was deceiving me,'' Franklin said. ``I learned that I was paid to mislead physicians and put patients at risk. It was a situation I couldn't live with.''


Franklin, who now works for Boston Scientific, said there were times when he wanted to walk away from it all.

``All it took (to hang on) was the recognition that to this day patients are being injured by this kind of practice,'' he said.

]]> http://www.yourlawyer.com/articles/read/8074 Fri, 14 May 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8074
Of that settlement, $26.64 million will go to a former company adviser who brought a lawsuit under a federal "whistleblower" law.

The company encouraged doctors to use Neurontin in 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 United States attorney in Boston, Michael Sullivan, in a statement yesterday.

Pfizer, in a statement yesterday, said that 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 doctors for prescriptions. And while 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.

Companies continue to underwrite physician education seminars where unapproved uses of their drugs are discussed. They continue to hire advertising agencies to conduct clinical trials and ghostwriters to write up the studies for experts listed as authors. And they often hire physicians as consultants, arrangements that call into question a physician's independence in deciding what drugs to prescribe for patients.

Other companies that have been fined for drug marketing abuses include TAP Pharmaceuticals, which in 2001 paid $875 million the largest such fine so far. Last year, Bayer paid $257 million. Schering-Plough is currently under investigation for its sales practices.

While the agreement announced yesterday 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 had its origins 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. Dr. Franklin filed a lawsuit under a Civil War-era whistleblower statute that allows private individuals to sue on behalf of the government, with the prospect of sharing in any financial awards.

In an interview, Dr. Franklin said that 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," Dr. Franklin said.

And although he 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."

It is only after careful examinations of the results of expensive clinical trials that federal drug regulators approve treatments for specific medical conditions. While doctors can freely prescribe approved drugs for any treatment, drug companies must carefully restrict their communications about these so-called off-label uses, limiting themselves to handing out scientific articles, for example, or hiring experts to give lectures to physicians about the unapproved uses.

Warner-Lambert went beyond those strictures by flying doctors to Hawaii, the 1996 Olympics in Atlanta and Florida, paying them consulting fees and providing expensive dinners at which unapproved uses of Neurontin were discussed. The company also paid some doctors to allow sales representatives to sit with them as they saw patients.

The patient visits were the last straw for Dr. Franklin, he said. He recalled that the company distributed a voice mail message from a sales representative who described the day he had spent with a physician and his patients. "The sales representative said he explained to the physician with the patient right there on the table why Neurontin was the best possible medicine," Dr. Franklin said. "That's practicing medicine without a license."

These marketing practices, though, were extremely effective, according to internal company documents. Doctors who attended dinners given by the company to discuss unapproved uses of Neurontin wrote 70 percent more prescriptions for the drug than those who did not attend, one memorandum showed.

Generic versions of the drug could be introduced later this year. Pfizer is hoping to gain approval soon for a successor medicine called Lyrica, or pregabalin, as a treatment for epilepsy and neuropathic pain. Internal company documents show that Warner-Lambert executives decided against seeking approval from federal drug regulators for other uses of Neurontin for fear that generic versions would one day undercut sales of Lyrica.

Part of the government's rationale for bringing the case was that Warner-Lambert's marketing schemes led physicians to prescribe to Medicaid patients who should not have received the drug, costing federal and state governments millions of dollars. Of the $430 million fine, $106 million will go to the 50 states, which share with the federal government the costs of the Medicaid program. ]]> http://www.yourlawyer.com/topics/overview/pharmaceutical_whistleblower Fri, 14 May 2004 00:00:00 -0700 http://www.yourlawyer.com/topics/overview/pharmaceutical_whistleblower Pharmaceutical Whistleblower In recent years many pharmaceutical employees have come forward to report fraudulent billing, illegal marketing techniques and undisclosed drug side effects. These courageous people known as whistle blowers have helped the federal government recover millions of dollars that were obtained illegally by the pharmaceutical companies. More importantly whistle blowers have helped save the lives of thousands of prescription drug users that were previously unaware of their medication's side effects.

Recently, a former Pfizer Microbiologist David Franklin blew the whistle on Pfizer's Warner-Lambert unit over promoting the epilepsy drug Neurontin for off-label uses. Franklin’s testimony led to the Government's recovery of over $400 million dollars from Pfizer. Franklin's reward will be about $26 million.

Franklin sued the company in 1996 under the False Claims Act. The False Claims Act is a US law that encourages employees to report illegal activities at their companies. The law was passed in 1863 to crack down on war-profiteering during the Civil War. It allows individuals to bring lawsuits on behalf of the federal Government and receive part of any settlement or judgment.

Last year, the Justice Department recovered $2.1 billion under the False Claims Act, up from $1.1 billion the previous year. Franklin's award is far from the largest. In 2001 Douglas Durand, a former vice-president of sales at TAP Pharmaceuticals, received $77 million for blowing the whistle on his employer.

If you are a current or former pharmaceutical company employee and have information on any illegal activities, please fill out the form at the right for a free case evaluation by a qualified attorney.]]>