Pfizer’s Secret Friend

April 9th, 2010. By Hunter West

Mom and Dad told us not to be ‘too big for your britches.’ However in the Land of Big Pharma, that basic chestnut of moral integrity need not apply… 

Remember the debacle over Bextra? Pfizer was found to have actively marketed the drug for off-label use, for things not approved by the US Food and Drug Administration (FDA), and was called to the carpet over it, paying about $2 billion in penalties. 

However, it could have been a lot worse, according to a special investigation by CNN that found Pfizer escaped the expected death knell in such cases by being permanently excluded from Medicare and Medicaid. 

Most know the story of Bextra, the Cox-2 inhibitor that Pfizer brought to the painkiller market in 2001 with big plans. Cox-2 inhibitors were thought to be safer than generic drugs.

Also more expensive, coming in at 20 times the cost of ibuprofen. 

Nonetheless, the plan was to market Bextra for acute pain, such as that experienced by patients following surgery. 

Enter the FDA, which put a noose around Pfizer’s neck when it decreed that Bextra was not safe for patients at high risk for heart attack and stroke. Thus the approval was limited to pain treatment related to arthritis and menstrual cramps. 

Undaunted, the marketing and sales arms of Pfizer—allegedly without knowledge of top executives—set to work circumventing that regulatory authority by promoting its use off-label to anesthesiologists, orthopedic surgeons, “anyone that use[d] a scalpel for a living,” according to the words of one district manager. 

There were other lapses in marketing judgment that flew in the face of regulatory decorum. In the end, by the time Bextra was removed from the market in 2005 more than half of the $1.7 billion in profits attributed to sales of Bextra were derived from off-label use. 

Thus Pfizer, according to CNN, faced prosecution for fraudulent marketing—a serious charge. And the fallout could have been equally serious: CNN reports that any corporation convicted of a major health care fraud is automatically booted out of Medicare and Medicaid. The company would no longer be in a position to bill federal health programs. 

In an effort to avoid exclusion, Pfizer reportedly entered into an agreement with federal prosecutors that would result in charges laid against not Pfizer directly, but a Pfizer subsidiary: Pharmacia & Upjohn Co. Inc. 

Pharmacia, it should be noted, was originally Pfizer’s marketing partner that Pfizer eventually purchased. 

And so, Pharmacia & Upjohn Co. Inc. took the rap and as a result is excluded from Medicare and Medicaid. The company cannot bill the federal program for a single pill. 

A moot point, as it turns out, since Pharmacia & Upjohn Co. Inc. does not manufacture a single pill. 

CNN discovered that Pharmacia & Upjohn Co. Inc. is little more than a shell company, allegedly created to absorb the legal liability on behalf of Pfizer. 

The investigation poured through court documents and found that Pfizer owns Pharmacia Corp., which in turn owns Pharmacia & Upjohn LLC, which in turn owns Pharmacia & Upjohn Co. LLC, which in turn owns the fall guy: Pharmacia & Upjohn Co. Inc. 

The latter company, according to public records, was incorporated in Delaware March 27^th, 2007—the same day defense lawyers for Pfizer and federal prosecutors agreed that the company would plead guilty in a kickback case that dated back few years before. 

Pharmacia & Upjohn Co. Inc. pled guilty to that charge. When the Bextra case came along, it was the alleged shell company pleading guilty to that charge, too. 

Federal prosecutors agreed with Pfizer that there was no viable alternative to the scheme. 

“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,” Loucks told CNN. More than that, prosecutors believed that exclusion from Medicaid and Medicare would eventually lead to Pfizer’s overall collapse. 

That would hurt a lot of innocent people—and that’s a good point. 

However, it could be stated that the arrangement made a mockery of the exclusion requirement in the face of health fraud conviction. “They pushed the envelope so far past any reasonable interpretation of the law that it’s simply outrageous,” said Lewis Morris, chief counsel to the inspector general at the US Department of Health and Human Services 

“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. 

And even though Pfizer was handed the largest fine ever levied by the federal government—$1.2 billion—and paid an additional $1 billion to settle a collection of civil suits for which it denied any wrongdoing, the combined total represented about 3 months profit for the pharmaceutical giant. 

“I can tell you, unequivocally, that Pfizer perceived the Bextra matter as an incredibly serious one,” said Doug Lankler, Pfizer’s chief compliance officer. 

It also appears they beat the rap. It may have amounted to sound legal strategy. But was it morally right? 

CNN says Pfizer was simply “too big to nail.” It’s as if—as CNN suggested in its opening line of its April 2^nd report, “Imagine being charged with a crime, but an imaginary friend takes the rap for you.” 

We should all be so lucky.

[Editor’s Note: The building squares used in the image above are by Dado—and they’re available wherever fine children’s educational toys are sold.]

Tags: Bextra, FDA, Pfizer, Pharmacia, Upjohn

This was posted on Friday, April 9th, 2010 at 9:33 am and is filed under Drugs/Medical . Feel free to respond, or trackback. Read our comments policy.