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Church
of Scientology of Canberra presents:
Feds
found Pfizer too big to nail
By
Drew Griffin and Andy Segal,CNN Special Investigations UnitApril 2,
2010 4:44 p.m. EDT
When
Bextra was taken off the market in 2005, more than half of its profits
had come from "off-label" prescriptions
STORY HIGHLIGHTS
Pfizer sales representatives
illegally marketed painkiller Bextra
Companies convicted of major
health care fraud are excluded from Medicare, Medicaid.
Federal authorities allowed
Pfizer subsidiary to plead guilty in fraud case
CNN's
Special Investigations Unit reveals internal company documents on
Bextra and Pfizer's health care fraud. Watch at 3 p.m. ET Saturday on
CNN.
(CNN) -- Imagine being charged with a crime, but an imaginary friend
takes the rap for you.
That is essentially what happened when Pfizer, the world's largest
pharmaceutical company, was caught illegally marketing Bextra, a
painkiller that was taken off the market in 2005 because of safety
concerns.
When the criminal case was announced last fall, federal officials
touted their prosecution as a model for tough, effective enforcement.
"It sends a clear message" to the pharmaceutical industry, said Kevin
Perkins, assistant director of the FBI's Criminal Investigative
Division.
But beyond the fanfare, a CNN Special Investigation found another
story, one that officials downplayed when they declared victory. It's a
story about the power major pharmaceutical companies have even when
they break the laws intended to protect patients.
Big plans for Bextra
The story begins in 2001, when Bextra was about to hit the market. The
drug was part of a revolutionary class of painkillers known as Cox-2
inhibitors that were supposed to be safer than generic drugs, but at 20
times the price of ibuprofen.
Pfizer and its marketing partner, Pharmacia, planned to sell Bextra as
a treatment for acute pain, the kind you have after surgery.
But in November 2001, the U.S. Food and Drug Administration said Bextra
was not safe for patients at high risk of heart attacks and strokes.
The FDA approved Bextra only for arthritis and menstrual cramps. It
rejected the drug in higher doses for acute, surgical pain.
Promoting drugs for unapproved uses can put patients at risk by
circumventing the FDA's judgment over which products are safe and
effective. For that reason, "off-label" promotion is against the law.
But with billions of dollars of profits at stake, marketing and sales
managers across the country nonetheless targeted anesthesiologists,
foot surgeons, orthopedic surgeons and oral surgeons. "Anyone that
use[d] a scalpel for a living," one district manager advised in a
document prosecutors would later cite.
A manager in Florida e-mailed his sales reps a scripted sales pitch
that claimed -- falsely -- that the FDA had given Bextra "a clean bill
of health" all the way up to a 40 mg dose, which is twice what the FDA
actually said was safe.
Doctors as pitchmen
Internal company documents show that Pfizer and Pharmacia (which Pfizer
later bought) used a multimillion-dollar medical education budget to
pay hundreds of doctors as speakers and consultants to tout Bextra.
Pfizer said in court that "the company's intent was pure": to foster a
legal exchange of scientific information among doctors.
But an internal marketing plan called for training physicians "to serve
as public relations spokespeople."
According to Lewis Morris, chief counsel to the inspector general at
the U.S. Department of Health and Human Services, "They pushed the
envelope so far past any reasonable interpretation of the law that it's
simply outrageous."
Pfizer's chief compliance officer, Doug Lanker, said that "in a large
sales force, successful sales techniques spread quickly," but that top
Pfizer executives were not aware of the "significant mis-promotion
issue with Bextra" until federal prosecutors began to show them the
evidence.
By April 2005, when Bextra was taken off the market, more than half of
its $1.7 billion in profits had come from prescriptions written for
uses the FDA had rejected.
Too big to nail
But when it came to prosecuting Pfizer for its fraudulent marketing,
the pharmaceutical giant had a trump card: Just as the giant banks on
Wall Street were deemed too big to fail, Pfizer was considered too big
to nail.
Why? Because any company convicted of a major health care fraud is
automatically excluded from Medicare and Medicaid. Convicting Pfizer on
Bextra would prevent the company from billing federal health programs
for any of its products. It would be a corporate death sentence.
Prosecutors said that excluding Pfizer would most likely lead to
Pfizer's collapse, with collateral consequences: disrupting the flow of
Pfizer products to Medicare and Medicaid recipients, causing the loss
of jobs including those of Pfizer employees who were not involved in
the fraud, and causing significant losses for Pfizer shareholders.
"We have to ask whether by excluding the company [from Medicare and
Medicaid], are we harming our patients," said Lewis Morris of the
Department of Health and Human Services.
So Pfizer and the feds cut a deal. Instead of charging Pfizer with a
crime, prosecutors would charge a Pfizer subsidiary, Pharmacia &
Upjohn Co. Inc.
The CNN Special Investigation found that the subsidiary is nothing more
than a shell company whose only function is to plead guilty.
According to court documents, Pfizer Inc. owns (a) Pharmacia Corp.,
which owns (b) Pharmacia & Upjohn LLC, which owns (c) Pharmacia
& Upjohn Co. LLC, which in turn owns (d) Pharmacia & Upjohn Co.
Inc. It is the great-great-grandson of the parent company.
Public records show that the subsidiary was incorporated in Delaware on
March 27, 2007, the same day Pfizer lawyers and federal prosecutors
agreed that the company would plead guilty in a kickback case against a
company Pfizer had acquired a few years earlier.
As a result, Pharmacia & Upjohn Co. Inc., the subsidiary, was
excluded from Medicare without ever having sold so much as a single
pill. And Pfizer was free to sell its products to federally funded
health programs.
An imaginary friend
Two years later, with Bextra, the shell company once again pleaded
guilty. It was, in effect, Pfizer's imaginary friend stepping up to
take the rap.
"It is true that if a company is created to take a criminal plea, but
it's just a shell, the impact of an exclusion is minimal or
nonexistent," Morris said.
Prosecutors say there was no viable alternative.
"If we prosecute Pfizer, they get excluded," said Mike Loucks, the
federal prosecutor who oversaw the investigation. "A lot of the people
who work for the company who haven't engaged in criminal activity would
get hurt."
Did the punishment fit the crime? Pfizer says yes.
It paid nearly $1.2 billion in a criminal fine for Bextra, the largest
fine the federal government has ever collected.
It paid a billion dollars more to settle a batch of civil suits --
although it denied wrongdoing -- on allegations that it illegally
promoted 12 other drugs.
In all, Pfizer lost the equivalent of three months' profit.
It maintained its ability to do business with the federal government.
Pfizer says it takes responsibility for the illegal promotion of
Bextra. "I can tell you, unequivocally, that Pfizer perceived the
Bextra matter as an incredibly serious one," said Doug Lankler,
Pfizer's chief compliance officer.
To prevent it from happening again, Pfizer has set up what it calls
"leading-edge" systems to spot signs of illegal promotion by closely
monitoring sales reps and tracking prescription sales.
It's not entirely voluntary. Pfizer had to sign a corporate integrity
agreement with the Department of Health and Human Services. For the
next five years, it requires Pfizer to disclose future payments to
doctors and top executives to sign off personally that the company is
obeying the law.
Pfizer says the company has learned its lesson.
But after years of overseeing similar cases against other major drug
companies, even Loucks, isn't sure $2 billion in penalties is a
deterrent when the profits from illegal promotion can be so large.
"I worry that the money is so great," he said, that dealing with the
Department of Justice may be "just of a cost of doing business."
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