Pfizer Inc: the Dots Unconnected

A number of vivid stories about Pfizer Inc., the world's biggest pharmaceutical manufacturer, quietly slipped into public view this week. Yet the dots they represented were not connected.

First of all, as reported by Reuters and the Associated Press, units of the company pleaded guilty to a criminal charge, and separately entered into a deferred prosecution agreement with the US Department of Justice. As reported by the AP,

Two subsidiaries of Pfizer Inc. have agreed to pay fines totaling $34.7 million for offering a kickback to recommend company drugs and for illegally promoting the human growth hormone product Genotropin for nonapproved uses, federal prosecutors said yesterday.

Prosecutors allege that Pharmacia & Upjohn Co. offered to overpay a subsidiary of a pharmacy benefit manager by $12.3 million in the hope the company would, in turn, recommend Pharmacia's drug products to its clients.

Pharmacia hired the pharmacy benefit manager to distribute Genotropin. Prosecutors allege the company then offered to make excess payments on the distribution contract in an effort to improperly influence the unnamed pharmacy benefit manager's decision on which drugs to include on its list of product recommendations.

Under a plea agreement filed in US District Court yesterday, the company has agreed to plead guilty to one count of offering a kickback and to pay a criminal fine of $19.7 million.

Another Pfizer subsidiary, Pharmacia & Upjohn Co. LLC, has agreed to pay $15 million to settle allegations that it illegally promoted Genotropin for uses not approved by the Food & Drug Administration. [Note that as mentioned below, this was actually not the settlement of a civil charge, but entry into a deferred prosecution agreement - Ed]

Prosecutors allege that Pharmacia & Upjohn promoted Genotropin for antiaging, cosmetic use, and athletic performance enhancement.

Sullivan [not further identified in this version of the story, but actually US Attorney Michael J Sullivan of Massachusetts] noted that New York-based Pfizer, which acquired Pharmacia in April 2003, acted responsibly when it disclosed Pharmacia's unlawful promotion of human growth hormone to various federal government agencies in May of that year.

There is a considerable back-story here. Some is in Brandweek, particularly regarding the arrangements Pfizer made with the pharmacy benefits manager.

In the plea agreement, the vendor is not named. However, the agreement describes how Pharmacia awarded a contract to a pharmacy benefit manager in return for that company recommending that its customers purchase other Pharmacia products. The vendor got the contract, despite a competing bid that was “$12 million less expensive” than the vendors’ bid.

The settlement’s description of the kickback scheme matches a series of allegations reported by Brandweek last year. (Bad Medicine, March 20, 2006).

Two Pharmacia executives, ex-marketing vp Peter Rost and former senior director of U.S. marketing Carl Worrell, told Brandweek that Express Scripts managed the Genotropin patient assistance program even though other companies had offered to handle the business for much less money.

Rost said that when he tried to move the contract to the cheaper vendor he was told that it was balanced out by an advantageous relationship Pharmacia had with Express regarding its much bigger drug, the painkiller Celebrex. 'There was some setup in accounting so the Celebrex team reimbursed us $2 million,' Rost said at the time.

Both Pfizer and Express have repeatedly disclosed to the Securities and Exchange Commission that they were under investigation by the DOJ for this type of issue. Express declined comment at press time.

Pfizer distanced itself from the probe in today’s release. 'Pfizer’s marketing and promotion practices are not involved in the settlement,' said Pfizer svp-general counsel Allen Waxman in a statement.

The settlement ends the DOJ’s interest in Pfizer, but it does not end Pfizer’s legal entanglements with Genotropin—Pfizer remains a defendant in two legal cases related to the fiasco. In both cases, Rost sued Pfizer alleging he was wrongly fired for complaining to Pfizer prior to its acquisition of Pharmacia that the company was engaged in off-label marketing. His federal whistleblower complaint is currently being heard by an appeals court in Massachusetts; his wrongful termination suit is pending before New York State Supreme Court in Manhattan.

The Corporate Crime Reporter (a legal newsletter) had some pithy comments on the case, and how it was (or wasn't) reported,

Pfizer’s Pharmacia & Upjohn Company Inc. unit pled guilty yesterday to offering a kickback in connection with the sale of its human growth hormone product.

The Wall Street Journal, New York Times, and Washington Post ignored the story. [Actually, the Wall Street Journal ran the AP version.]

Why is unclear.

A second Pfizer unit, Pharmacia & Upjohn Company LLC, entered into a deferred prosecution agreement for illegally promoting its human growth hormone Genotropin for such off-label uses as anti-aging, cosmetic use and athletic enhancement.

U.S. Attorney Michael Sullivan [that is who the "Sullivan" mentioned above apparently is - Ed] said Pfizer 'acted responsibly' for voluntarily and fully self-disclosed the off-label promotion of Genotropin.

This ticked off Peter Rost.

Rost was a vice president at Pfizer when he discovered the criminality and blew the whistle.

Rost has two lawsuits pending against Pfizer.

One lawsuit accuses Pfizer of violating the False Claims Act. That lawsuit is pending on appeal to the First Circuit Court of Appeals in Boston.

The other – for wrongful dismissal – is in discovery.

How come the Justice Department is praising Pfizer and not Rost?

'The Justice Department praised Pfizer for self-reporting,' Rost told Corporate Crime Reporter. 'But Pfizer would have done nothing if I didn’t twist its arm. I was floored when I read the press release. They have one guy who lost his career, lost his job for doing the right thing. That would be me. And they praised the company that fired me?'

In fact, the U.S. Attorney’s criminal investigation was triggered by the filing of Rost’s False Claims Act case.

Rost documents the history of the case in his book – The Whistleblower: Confessions of a Healthcare Hitman.

And Rost testified twice before the federal grand jury in Boston that investigated the Pfizer criminal wrongdoing.

And yet the federal government refused to join Rost in his False Claims Act case.

Note that Health Care Renewal mentioned Rost's firing here. Further note that Rost is now a prolific blogger, and he has quite a bit more to say about the settlements and how they were reported on his blog, Question Authority.

One would think that it would be big news when the world's largest pharmaceutical company pleads guilty to one criminal charge, and enters into a deferred prosecution agreement regarding another such charge. But so far, as of today, only 33 media outlets have run any version of this story. No major newspaper has done any original reporting on it so far. Very few large market outlets have run the story at all (and the Los Angeles Times ran a very short version that omitted mentioning that the settlements were of criminal, not civil charges.) None of the wire service versions of the story noted that the second "settlement" was a deferred prosecution agreement, instead leaving the impression that it was a settlement of a civil dispute. And I have found no editorial commentary in the main stream media about it at all.

Thus, given the severity of the issue, this seems to be a prime example of what we have called the "anechoic effect." Surely this story merited more and more complete coverage than it received. And given how much ongoing concern there is about rising health care costs, declining access, and stagnant quality, this sort of story deserved some editorial attention outside of the blogsphere.

That was the largest dot. But there were others.

Also this week, Newsday reported that Pfizer is trying to get doctors to counter any attempts by managed care organizations or pharmacies to get patients to switch from Lipitor (atorvastatin) to generic simvastatin for the treatment of high cholesterol.

Pfizer, faced with the potential loss of billions of dollars as patients with high cholesterol switch from Lipitor to generic Zocor, has been helping doctors wage a letter-writing campaign to slow the tide.

Lipitor's U.S. patent doesn't expire until March 2010, but health plans are encouraging patients and doctors to switch to the cheaper generic Zocor, or simvastatin.

Pfizer sent doctors a CD containing two letters, one to health plans, one to pharmacists. The letters argue that switching from Lipitor to a generic statin "for cost reasons alone will undermine the clinical judgment that went into the decision to prescribe Lipitor for this patient."

'They're using doctors as a human shield to protect them from losing business,' said Sidney Wolfe, director of the Public Citizen Health Research Group. 'I would say it's unethical.'

I would add that it would not be unethical for Pfizer to try to persuade physicians not to switch their patients to a generic medication. But what Pfizer is doing sounds more like another variant of stealth lobbying.

And there was one more dot.

Oh, also this week, Reuters reported that the UK Office of Fair Trading is probling Pfizer's new policy of striking deals with specific drug distributors, rather than making drugs available to competing wholesalers. The OFT noted that Pfizer's new policy "caused 'great concern' to many in the market and the investigation was an important study of a 'priority sector'. 'The study will consider the likely impact of such changes on competition, the NHS (National Health Service) and patients...."

We have posted about how pharmaceutical executives worry about their companies' negative images (see relevant post here). I would suggest that a good first step to better images would be avoiding conduct for which guilty pleas become necessary. Another good step would be to have the industry make its own arguments, and end the stealth marketing and stealth lobbying. Finally, avoiding business practices that might be seen as anti-competitive would help.

The leaders of the main stream media have been worrying about their declining readership. Maybe if they were able to connect some of the dots like the ones above, they might get more peoples' attention.