Pfizer pays record $2.3 billion in off-label drug marketing settlement

A drugmaker's subsidiary pleads guilty to misbranding Bextra.

By — Posted Sept. 14, 2009

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A $2.3 billion settlement with Pfizer Inc. over off-label drug promotion has industry observers wondering whether the record-breaking deal will deter drugmakers from talking up unapproved medication uses with doctors.

A Pfizer subsidiary, Pharmacia & Upjohn Co., agreed to plead guilty in early September to a felony violation of the Food, Drug and Cosmetic Act for misbranding its COX-2 inhibitor, Bextra, for off-label uses. The company agreed to pay $1.3 billion in criminal fines for systematically promoting off-label Bextra use to physicians through marketing materials, drug rep talking points and more.

Pfizer will pay another $1 billion to settle whistle-blower lawsuits filed under the False Claims Act that alleged the company promoted off-label uses of Bextra, Geodon, Zyvox and Lyrica from 2001 to 2008. According to whistle-blower lawsuits and the settlement, Pfizer allegedly used tactics such as ghostwritten articles and drug rep-falsified doctor requests for off-label information.

From 2001 to 2004, Pfizer allegedly violated a federal anti-kickback statute by making illegal payments and providing entertainment and travel gifts to doctors and other health professionals to "induce them to promote and prescribe" nine of the company's medications, the settlement said.

Pfizer denied nearly all these civil allegations, though it did admit to failing "to provide adequate guidance to its sales force" about the FDA's objections to claims used in promoting the antibiotic Zyvox.

The deal is the largest settlement with a single defendant in Justice Dept. history, breaking the $1.4 billion mark set in January by drugmaker Eli Lilly and Co., for allegedly promoting Zyprexa off-label. But despite the big payouts, experts are split over whether the Justice Dept.'s aggressive legal tactics will stop drugmakers from touting their products to doctors for uses that have not been FDA-approved.

"Every time that we think the price of misbehavior goes up, these companies come up with something equally egregious," said Jerome P. Kassirer, MD, professor of medicine at Tufts University School of Medicine in Massachusetts and former editor-in-chief of The New England Journal of Medicine. He authored the 2004 book, On the Take: How Medicine's Complicity with Big Business Can Endanger Your Health.

Amy W. Shulman, Pfizer's general counsel, said in a statement, "We regret certain actions taken in the past but are proud of the action we've taken to strengthen our internal controls and pioneer new procedures so that we not only comply with state and federal laws, but also meet the high standards that patients, physicians and the public expect from a leading worldwide company dedicated to healing and better health." The settlement agreement calls for strict outside monitoring of Pfizer's marketing activities.

Zero-tolerance approach

With the Pfizer settlement, federal authorities tried to send a strong message to drugmakers.

"Pfizer violated the law over an extensive time period," Michael K. Loucks, the acting U.S. attorney for the District of Massachusetts, said in a statement. The $2.3 billion payout "demonstrates that such blatant and continued disregard of the law will not be tolerated."

Some legal experts said the Pfizer settlement will make drugmakers take notice.

The crackdown on off-label promotion "has put a scare into people about what they're going to do in this area," said Peter S. Reichertz, leader of the Food and Drug Law Group at the law firm of Sheppard, Mullin, Richter & Hampton LLP, in Washington, D.C. "The size of the [Pfizer] award alone and the attention it's getting will have some effect."

Drugmakers' marketing practices have changed significantly since the early 2000s, when most of the alleged Pfizer wrongdoing took place, Reichertz said. A May 2003 guidance issued by the Dept. of Health and Human Services Office of Inspector General detailed what kinds of payments and physician consulting arrangements were off-limits to drugmakers.

"Part of the reason this was happening is that everyone was doing it and getting away with it, and that made it easier for everyone to say, 'If they are doing it, then why can't we?' " Reichertz said. "My experience in 30 years of drug regulation is that a little bit of enforcement goes a long way. If drug companies see that the government is going to enforce a specific provision, then they prefer not to be the poster boy as the bad actor, especially if the competition is being forced to abide by the same rules."

Marketing experts said drugmakers may get the message, but it may be difficult to rein in renegade drug reps chasing incentive payments. Pfizer drug reps allegedly entered bogus requests for drug information in order to send journal reprints highlighting off-label uses to physicians who never asked for them, according to a federal criminal complaint that led to the settlement.

"In terms of the amount, [the Pfizer settlement] is a breakthrough, and it does send a message. It's a pretty big number that makes people's eyes open up," said John Mack, a former marketing executive who consulted for drug companies and now is publisher of the monthly Pharma Marketing News. "But it's very hard to control people when there's money involved, especially when you have a bonus system based upon the number of sales or new scripts. That's always going to be an incentive for people to push the envelope to make those numbers."

Many drugmakers have taken steps to protect themselves from future allegations of improper off-label marketing, said Chris Wright, managing principal for the consulting firm ZS Associates' U.S. Pharmaceuticals Practice. The company designs the drug rep incentive programs for half of U.S. pharmaceutical makers.

By examining prescription data, companies can identify physicians who are prescribing their drugs off-label in risky ways, Wright said.

"What the pharmaceutical companies then do is flag that doctor and remove him from the system and remove them from the rep's call list," he said. "They make it so that there's no incentive for that salesperson to encourage that behavior from the doctor."

Regardless of the legality of drugmakers' marketing tactics, physicians should turn elsewhere for drug education, Dr. Kassirer said.

"There are plenty of other sources of unconflicted information now, especially on the Web," he said. "Unfortunately, the drug rep with a pizza or free samples can trump all of that."

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Off-label, in trouble

Pharmaceutical companies repeatedly have run into legal difficulties over allegations that they marketed their medicines for unapproved uses, a violation of federal law. Here are some of the bigger settlements with federal and state authorities related to off-label marketing:

Company Drugs Amount
2009 Pfizer Inc. Bextra, Geodon, Zyvox, Lyrica $2.3 billion
2009 Eli Lilly and Co. Zyprexa $1.4 billion
2008 Cephalon Inc. Provigil, Actiq, Gabitril $444 million
2008 GlaxoSmithKline plc Wellbutrin, Paxil $400 million
2006 Schering-Plough Corp. Temodar $435 million
2004 Pfizer Neurontin $430 million

Source: News accounts

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External links

Pfizer Inc. settlement agreement with U.S. Dept. of Justice, in pdf (link)

Pharmacia & Upjohn Co. Inc. plea agreement with U.S. Dept. of Justice, in pdf (link)

Pfizer Inc. corporate integrity agreement with Dept. of Health and Human Services Office of Inspector General, in pdf (link)

Whistle-blower lawsuit filed by former Pfizer Inc. drug rep John Kopchinski, in pdf (link)

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