Pfizer Agrees To Settle Neurontin Whistleblower Lawsuit for $430 Million

Federal prosecutors on Thursday announced that Pfizer has agreed to plead guilty to criminal wrongdoing and pay a settlement of $430 million in a whistleblower lawsuit alleging that the Parke-Davis unit of Pfizer subsidiary Warner-Lambert illegally encouraged physicians to prescribe the epilepsy drug Neurontin to treat conditions other than those approved by FDA, USA Today reports (Farrell, USA Today, 5/14). The suit charged that Parke-Davis, which Pfizer acquired as part of its purchase of Warner-Lambert in 2000, greatly increased sales of Neurontin for off-label uses by suppressing and manipulating study results. Physicians can write prescriptions for medications for uses not approved by FDA, but pharmaceutical companies cannot market treatments for unapproved uses. FDA rules allow pharmaceutical companies to provide physicians with educational information about off-label uses of medications. A federal investigation and similar actions by states and the District of Columbia, both of which resulted from the whistleblower suit, sought to recoup Medicaid expenditures for Neurontin prescriptions that resulted from the allegedly illegal promotional practices. According to court documents, Parke-Davis concealed and misstated some clinical information about Neurontin's ability to treat conditions that were not included in its FDA approval and paid physicians millions of dollars to promote Neurontin for off-label uses (American Health Line, 5/13). Justice Department officials said that Parke-Davis "aggressively marketed" Neurontin to treat attention deficit disorder, bipolar disorder, drug and alcohol withdrawal seizures, Lou Gehrig's disease, migraine headaches and restless leg syndrome (USA Today, 5/14). About 90% of prescriptions for Neurontin -- which accounted for $2.7 billion, or 6%, of Pfizer's total revenue last year -- were for off-label uses, the Washington Post reports.

Under the settlement, which was negotiated by the U.S. attorney in Boston and all 50 states' attorneys general, Pfizer will pay $240 million in criminal fines, the second-largest criminal fine in history for a health care fraud case (Mayer, Washington Post, 5/14). Pfizer also agreed to plead guilty to two counts of violating the Food, Drug & Cosmetic Act. The violations are felonies because Warner-Lambert had a prior conviction for failing to report a problem at one of its manufacturing plants to federal regulators; a second offense triggers a felony, the Boston Globe reports (Kowalczyk, Boston Globe, 5/14). For Neurontin-related financial losses incurred in the Medicaid program, Pfizer will also pay $83.6 million in civil damages to the federal government and $68.4 million in civil damages to be distributed among all 50 states and the District (Armstrong/Wilde Mathews, Wall Street Journal, 5/14). In addition, Pfizer will pay $38 million to state consumer-protection agencies (AP/St. Petersburg Times, 5/14). Associate Attorney General Robert McCallum said that Pfizer, which cooperated with the investigation, will not be banned from participating in government-run health care programs as a result of the guilty plea (Rowley, Bloomberg/Providence Journal, 5/14). In addition, the agreement clears Pfizer of any further liability regarding Neurontin, but the government can still criminally charge former Warner-Lambert executives who devised and approved the promotion of off-label uses for Neurontin. In January, Pfizer took a $427 million charge against its fourth-quarter 2003 earnings to pay for the expected settlement (Harris, New York Times, 5/14).

"Warner-Lambert's promotional efforts were a highly organized and deliberate attempt to circumvent federal restrictions on marketing," McCallum said (Reuters/Los Angeles Times, 5/14). Michael Sullivan, the U.S. attorney in Boston, said, "This illegal and fraudulent promotion scheme corrupted the information process relied upon by doctors in their medical decision making, thereby putting patients at risk" (Washington Post, 5/14). Sullivan added that pharmaceutical companies "will not be allowed to profit from violating federal rules" and by subjecting "the poor, the elderly and others to experimental drug use" (Bloomberg/Providence Journal, 5/14). Thomas Greene, the attorney for the whistleblower, said, "We believe we have exposed an illegal practice in the pharmaceutical industry that caused the Medicaid program to pay tens of millions of dollars for off-label prescriptions that were not eligible for reimbursement under the Medicaid program" (AP/St. Petersburg Times, 5/14). In a statement released Thursday, Pfizer said that the illegal marketing of Neurontin had occurred before the company acquired Warner-Lambert in 2000, the New York Times reports. "Pfizer has cooperated fully with the government to resolve this matter, which did not involve Pfizer practices or employees," the statement said (New York Times, 5/14). The Pfizer statement added that the company "is committed to compliance with all health care laws and FDA requirements and to high ethical standards in all aspects of its business practices" (AP/St. Petersburg Times, 5/14).

The Neurontin case and other similar cases currently under investigation "signal federal regulators' heightened interest in cracking down on overt promotion of off-label drug use," the Journal reports. According to the Journal, some studies have found that off-label use accounted for 40% to 50% of all prescriptions in 2003 (Wall Street Journal, 5/14). Vermont Attorney General William Sorrell (D), who took a lead role on behalf of the states in the Pfizer settlement, said, "Increasing pharmaceutical prices are a huge issue for federal and state government, insurance companies and consumers, so governmental entities are looking at actions that have caused drains on state and federal budgets and added greatly to the increased cost of health care for Americans" (Washington Post, 5/14). McCallum said, "There should be no doubt that the Justice Department is fully committed to combating health care fraud," adding that it is a "top white-collar criminal priority" (Bloomberg/Providence Journal, 5/14). Thomas Crane, a Boston lawyer who represents drug companies and hospitals in health care fraud cases, said that the Pfizer settlement "is a huge wake-up call about the potential liability of aggressive promotion of unapproved products" (Boston Globe, 5/14). Greene said, "Every taxpayer in the country has been paying for these [off-label] prescriptions for minimal benefit to a huge majority of patients." However, many doctors contend that in some cases, off-label prescriptions are "good medical practice," according to the Journal. In addition, the Journal reports that "[n]ow that doctors are in the habit of issuing such prescriptions, no one expects them to change their practices" (Wall Street Journal, 5/14).

In related news, USA Today on Friday examined David Franklin, the Parke-Davis employee who in 1996 filed the whistleblower lawsuit. Franklin said that during his four months of work at Parke-Davis, he was "the individual paid to lie to doctors." However, Franklin said that he "hated what he was advocating," so he began gathering documents and other information that would show that Parke-Davis "was trying to get around the law by promoting" off-label uses of Neurontin, USA Today reports. Franklin said that the $26.6 million he will receive as part of the Pfizer settlement "won't change my life" and he will continue to work (O'Donnell, USA Today, 5/14).

Several broadcast programs reported on the settlement:

• CBS' "Evening News": The segment includes comments from Dr. William Comanor, professor of health services the University of California-Los Angeles School of Public Health, and Dr. Jerome Kassirer, professor of medicine at Tufts University School of Medicine and former New England Journal of Medicine editor-in-chief (Axelrod, "Evening News," CBS, 5/13). The complete segment is available online in RealPlayer.
  


• MPR's "Marketplace Morning Report": The segment includes comments from Wall Street Journal reporter David Armstrong (Scott, "Marketplace Morning Report," MPR, 5/13). The complete segment is available online in RealPlayer.
  


• NPR's "All Things Considered": The segment includes comments from Richard Evans, an analyst with Sanford Bernstein & Company; Franklin and McCallum (Prakash, "All Things Considered," NPR, 5/13). The complete segment is available online in RealPlayer.