Corporate Drugs

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Each of 11 settlements listed

GlaxoSmithKline - Paxil, Wellbutrin, Avandia

July 2, 2012

Company: GlaxoSmithKline
Settlement amount: $3 billion
Drugs: Paxil, Wellbutrin, Avandia
Year: 2012

In not only the largest pharma settlement, but the largest healthcare fraud settlement in history, GlaxoSmithKline ($GSK) agreed to pay a whopping $3 billion to wrap up its Justice Department probes. The deal requires GSK to plead guilty to three counts and pay a $1 billion criminal penalty, plus another $2 billion to wrap up civil claims.

One reason the settlement is so large is that it's so comprehensive. It not only includes the off-label marketing and kickback allegations we've grown accustomed to reporting, but also pricing and rebate claims other drugmakers have settled separately.  Glaxo's deal also covers allegations that it downplayed the safety risks of its controversial diabetes drug Avandia.

While the Justice Department crowed about the settlement--"unprecedented in size and scope," Deputy Attorney General James M. Cole said--Glaxo referred to the "difficult, long-standing matters" the settlement resolves.

Since he took over the company in May 2008, CEO Andrew Witty has taken pains to distance his own governance from past reigns. His statement about the settlement was no different. "Whilst these originate in a different era for the company, they cannot and will not be ignored," Witty said, going on to list changes he's made at GSK to forestall misconduct, including revamping sales-rep pay incentives and reporting payments to doctors. "I want to express our regret and reiterate that we have learnt from the mistakes that were made," he said.

According to the Justice Department, GSK agreed to plead guilty to two misbranding charges The third count: failing to report Avandia safety data to the FDA. The company touted Paxil for off-label use in children and adolescents, despite data that failed to show it was effective for kids, the government says. Meanwhile, Glaxo marketed its antidepressant Wellbutrin for a litany of off-label uses, including weight loss, substance abuse and sexual dysfunction, Justice alleges. The civil settlement covers allegations of mismarketing 5 other drugs, including the asthma drug Advair and the seizure drug Lamictal.

On Avandia, Glaxo allegedly failed to report safety data to FDA, the government says, including two studies specifically designed to gauge the diabetes drug's safety. The drugmaker withheld data from the agency from 2001 to 2007, the statement says. After that, studies raised red flags about Avandia's risks to the heart, and the drug was slapped with two black-box warnings; its use has since been severely curtailed by FDA. The Avandia false-claims allegations--wrapped up on the civil side--include exaggerating the drug's benefits, including, ironically, its cardiovascular benefits.

In all this morass of misbehavior, there's one bit of solace for Witty: Glaxo's $1 billion criminal fine doesn't top Pfizer's. That penalty amounted to $1.2 billion.


Pfizer - Bextra, Geodon, Zyvox and Lyrica

June 25, 2012

Company: Pfizer
Settlement amount: $2.3 billion
Drugs: Bextra, Geodon, Zyvox and Lyrica
Year: 2009

Pfizer's 2009 settlement with the Justice Department wasn't the first to top $1 billion. But this very different kind of blockbuster was at the time--and remains, at least for now--the biggest healthcare fraud settlement ever. The $1.3 billion in criminal penalties also set a record.

There's a reason for that: In 2004, Pfizer's (
$PFE) Warner-Lambert unit settled similar claims about its Neurontin marketing for $430 million. The company also signed a corporate integrity agreement, a more-or-less standard piece of these government settlements. Details vary, but the one common feature is a promise to never do it again. And Pfizer had done it again, the Justice Department said.

"[A]t the very same time Pfizer was in our offices negotiating and resolving the allegations of criminal conduct by its then newly acquired subsidiary, Warner-Lambert, Pfizer was itself in its other operations violating those very same laws," U.S. Attorney Michael Loucks said in announcing the deal.

The Justice Department detailed a variety of marketing infractions. For instance, sales reps were rewarded with junkets and cash for pushing
Bextra as a multi-purpose pain reliever when it was approved for arthritis pain. "Sales employees explained that off-label promotion was tolerated and no big deal, even though they knew it was illegal," government lawyers said in a sentencing memo. Two of those employees ended up with criminal penalties of their own; one now-former sales manager was sentenced to six months of home confinement with an electronic ankle bracelet.

We'd be remiss if we didn't put the settlement in some kind of Pfizer-sized context. Bextra was withdrawn in 2005 after its fellow Cox-2 inhibitor,
Vioxx. The previous year it had racked up $1.4 billion in sales. Geodon, an antipsychotic, topped $1 billion in 2008 after several years above the $500 million mark. The antibiotic Zyvox brought in more than $1 billion in 2008, too, on top of more than $3 billion for the 7 previous years. Lyrica, an epilepsy and pain drug, also beat $1 billion in 2008, and it continues to grow.



Johnson & Johnson - Risperdal, Invega, Natrecor, Levaquin, Procrit

June 25, 2012

Company: Johnson & Johnson
Settlement amount: Reportedly between $1.6 billion and $2.2 billion
Drugs: Risperdal, Invega, Natrecor, Levaquin, Procrit, according to press reports
Year: 2012

You might call Johnson and Johnson's ($JNJ) Risperdal settlement an omnibus deal. It is expected to cover federal probes about off-label Risperdal marketing, state claims of Medicaid fraud (also related to Risperdal), kickback allegations involving the nursing home pharmacy provider Omnicare and several other drugs besides Risperdal. It would also settle litigation over marketing practices involving Invega, another antipsychotic, and Natrecor, a congestive heart failure treatment. The company had already pleaded guilty to misbranding Natrecor and agreed to pay an $85 million fine.

What it doesn't cover, according to media sources: Lawsuits filed by several states that either have their own individual deals or jury verdicts, or are holding out for one or the other. Texas, for instance, which settled its off-label marketing claims against J&J for $158 million. Arkansas, where a jury found the company guilty of fraudulently marketing Risperdal--and a judge ordered the company to pay a $1.2 billion penalty. (That award is under appeal.)

J&J's settlement would wrap up some 8 years of government investigations and whistleblower lawsuits. From 2003 to 2010, Risperdal brought in more than $24 billion worldwide; in the U.S. alone, the drug ginned up $20 billion before it lost patent protection in 2007. Much of that revenue came from off-label sales, investigators have said.


Abbott Laboratories - Depakote

June 25, 2012

Company: Abbott Laboratories
Settlement amount: $1.6 billion
Drug: Depakote
Year: 2012

Dementia patients were a target market for drugmakers in the late '90s and into the new millennium, if off-label marketing settlements are any indication. Like Eli Lilly ($LLY) and Johnson & Johnson ($JNJ), Abbott ($ABT) promoted a product--the seizure drug Depakote--for off-label use in elderly dementia patients who became agitated or aggressive. A specialized, specially trained Abbott sales force pushed Depakote in nursing homes to help control these patients, even though it had no credible evidence that the drug was safe or effective for that use. In fact, the company had to stop a clinical trial in elderly dementia patients because of adverse events.

Abbott also admitted that it pushed Depakote as a schizophrenia treatment. Though the drug was approved to treat mania in bipolar patients--and sometimes those patients display psychotic symptoms--clinical trials showed that Depakote added to antipsychotics didn't help schizophrenia patients any more than the antipsychotics alone. The company didn't tell Depakote sales reps about that data for two years.

To put the allegations to rest, Abbott agreed to pay a criminal fine of $500 million and plead guilty to a misdemeanor misbranding charge. It also agreed to forfeit $198.5 million in assets, and to 5 years of probation.

The civil side of the
settlement--$800 million--wrapped up lawsuits alleging that its marketing tactics triggered false claims to government health programs, including Medicare and Medicaid. Abbott also agreed to pay $100 million to wrap up consumer-protection claims at the state level. And then there's the corporate integrity agreement, a 5-year pledge that Abbott's board and top executives will get involved in the company's compliance efforts.


Eli Lilly - Zyprexa

June 25, 2012

Company: Eli Lilly
Amount: $1.4 billion
Drug: Zyprexa
Year: 2009

When Eli Lilly ($LLY) announced its $1.415 billion settlement with the Justice Department, it was the largest amount ever paid by any one defendant. It would keep that record for only 8 months, till Pfizer's Bextra deal went public. But at the time, Justice officials bragged about the historic nature of the agreement: "the largest criminal fine for an individual corporation ever imposed in a United States criminal prosecution of any kind," the department's release crowed.

More than $1.4 billion may seem like a lot less today,
with an impending settlement of up to $2.2 billion from Johnson & Johnson ($JNJ) and a forthcoming $3 billion agreement with GlaxoSmithKline ($GSK). But in January 2009, it outranked the previous top pharma settlement--TAP Pharmaceuticals, $875 million, 2001--by more than $500 million.

Among the allegations: That Lilly pushed
Zyprexa for children and for elderly dementia patients, both off-label uses. That it made particular efforts to push Zyprexa in long-term care facilities and nursing homes. And that Lilly aimed to make Zyprexa a primary care drug, despite the fact that it was only approved to treat two disorders--schizophrenia and bipolar disorder--typically not handled by primary-care doctors.

Lilly pleaded guilty to a misdemeanor misbranding charge for promoting Zyprexa off-label between 1999 and 2001, and for that charge it paid a fine of $515 million and forfeited $100 million. The civil wrap-up included $438 million for the feds and $362 million to states that agreed to settle.

In announcing the
settlement, Lilly CEO John Lechleiter--fairly new on the job at the time--pledged personal commitment to "the highest standards of conduct" for everyone at Lilly and promised new programs to make sure everyone followed the rules. One visible result of the settlement: As required by the corporate integrity agreement, Lilly posts on its website information about payments or perks provided to doctors, in the original physician sunshine database



Merck - Vioxx

June 25, 2012

Company: Merck
Settlement amount: $950 million
Drug: Vioxx
Year: 2011

Vioxx had been a notorious drug for at least 7 years when Merck ($MRK) agreed to pay $950 million to resolve its set of marketing allegations. The dubious distinction of this settlement isn't its size, though $950 million isn't petty cash. Nor is it the claim that Merck hawked Vioxx for an unapproved use--rheumatoid arthritis, in this case. Nor are the allegations that the drugmaker exaggerated the drug's safety and downplayed its risks. Many of the other settlements on this list share those hallmarks.

What sets the Merck settlement apart is the fact that Vioxx can't be sold anymore. The drugmaker pulled the drug in 2004, after data linked Vioxx to increased risks of heart attack and stroke. The Department of Justice says that Merck reps misled doctors about Vioxx's cardiovascular safety to boost sales and that the company lied to state Medicaid programs about the drug's risks. Merck has never admitted wrongdoing in any Vioxx-related legal dispute. But it is the only company among this top 10 that allegedly downplayed a drug's risks--and then pulled the drug for safety reasons.

"We believe that Merck acted responsibly and in good faith in connection with the conduct at issue in these civil settlement agreements, including activities concerning the safety profile of Vioxx," Merck General Counsel Bruce Kuhlik said in a statement at the time. In that same statement, the drugmaker pointed out that Justice officials saw "no basis for a finding of high-level management participation in the [misbranding] violation."

The Vioxx settlement included a $321.6 million criminal fine--for a misdemeanor misbranding violation--and a $628.4 million payment to wrap up civil claims, including those filed by 40 states attorneys general. While that $950 million total looms large enough in the settlement universe, it's less than one-sixth the amount Merck has paid to settle liability lawsuits and other litigation. And it's even smaller fraction of Merck's Vioxx sales. Those revenues amounted to more than $11 billion during the drug's four-plus years on the market.


Serono - Serostim

June 25, 2012

Company: Serono (now Merck Serono, owned by Merck KGaA)
Settlement amount: $704 million
Drug: Serostim
Year: 2005

At the time that Serono pleaded guilty to two felony charges in 2005 for marketing misbehaving with the growth hormone used to treat wasting in HIV patients, it was the largest settlement of its kind. It has clearly been eclipsed since then. The settlement, which says the company played loose with the rules from 1996 through 2004, came ahead of a $13.2 billion acquisition of the Swiss company in 2006 by Merck KGaA ($MRK).

Part of the Serono deal was a "conspiracy" loop with RJL Sciences, which made a device for measuring body cell mass, to help each other boost business. But more egregious was its offer to cover the expenses to a medical conference in Cannes, France, for doctors who wrote 30 new prescriptions. At $21,000 per course for the drug, the deals could generate $630,000 per doctor.

One of the features of the settlement noted at the time was that the agreement allowed Serono to continue to sell to U.S. government programs, including Medicaid; the program was accused of cheating. It did that by limiting the criminal plea to one U.S. subsidiary, Serono Laboratories.



Purdue Pharma - OxyContin

June 25, 2012

Company: Purdue Pharma
Settlement amount: $634.5 million
Drug: OxyContin
Year: 2007

Purdue pleaded guilty to one felony count of fraudulently misbranding Oxycontin for suggesting it was less addictive and less abused than other painkillers, an obvious disconnect with the reality. It also had sales representatives saying users could stop using the drug, often referred to as hillbilly heroin, without withdrawal, also a big lie. The New York Times reported at the time that sales representatives were allowed to draw "fake scientific charts," on the drug's safety, which they passed out to physicians as proof of their claims.

Three executives also were roped in on the settlement. Chief Executive Michael Friedman, general counsel Howard Udell and former Chief Scientific Officer Paul D. Goldenheim each pleaded guilty to one misdemeanor count of misbranding a pharmaceutical, although they did not admit any wrongdoing. They were held responsible based on their positions in the company and to serve as a deterrent to other companies, something that clearly has worked.

The men were also banned from doing business with federal health programs for 12 years. But they later took issue with the government's prosecution of them as "responsible corporate officers" rather than on charges that they themselves had participated in the illegal behavior. A court upheld their exclusion, but the three appealed last fall. Goldenheim, meanwhile, has joined the board of
Momenta Pharmaceuticals.



Allergan - Botox

June 25, 2012

Company: Allergan
Settlement amount: $600 million
Drug: Botox
Year: 2010

Like its bigger rivals that found themselves in off-label trouble, Allergan ($AGN) pled guilty to a misdemeanor violation of the Food, Drug and Cosmetic Act, and paid fines and penalties for pushing a big product for unapproved indications. The wrinkle that sets this case apart? According to the Justice Department, Allergan smoothed the way for physicians to buy into those off-label uses.

Allergan paid doctors $1,500 to sit through presentations about the wrinkle drug's versatility, the government said, and instructed sales reps to help doctors with the paperwork required to get Botox covered for unapproved use. Allergan made off-label sales of Botox "a top corporate priority," the DOJ said.

Allergan submitted to a $375 million criminal penalty, and it agreed to pay $225 million to wrap up civil claims, including three whistleblower lawsuits. Its Corporate Integrity Agreement--like Eli Lilly's ($LLY) and Pfizer's ($PFE), among others--requires the company to report its payments to doctors, including speaking fees and travel, in a publicly available database on its website.


AstraZeneca - Seroquel

June 25, 2012

Company: AstraZeneca
Settlement amount: $520 million
Drug: Seroquel
Year: 2010

As with some of the other marketing investigations, the case against U.K.-based AstraZeneca (
$AZN) began with a whistleblower lawsuit. Once Justice Department investigators started digging into the company, they found it pursued a host of tried-and-true ploys to get doctors to write off-label prescriptions for its psychotropic drug, like paying them fees for articles and studies ghostwritten by others.

Seroquel had been approved for treatment of a number of psychiatric uses, such as schizophrenia, but investigators found that AstraZeneca was trying to get physicians to write prescriptions for a long list of uses for which the drug was not approved. That included everything from Alzheimer's disease and attention deficit hyperactivity disorder to sleeplessness and  post-traumatic stress disorder. It is still often prescribed off-label for PTSD,
something the Armed Forces is now studying.

The DOJ says AstraZeneca targeted "doctors who do not typically treat schizophrenia or bipolar disorder, such as physicians who treat the elderly, primary care physicians, pediatric and adolescent physicians."

To get untangled from legal complications, it signed a 5-year Corporate Integrity Agreement that, among other things, required it post any financial relationships it has with doctors. The result has been that AstraZeneca has the best disclosure system in the industry with a searchable database that gives all the dope on cash payments, royalties and even payments made through third-party organizations.


Bristol-Myers Squibb - Abilify

June 25, 2012

Company: Bristol-Myers Squibb
Settlement amount: $515 million
Drug: Abilify
Year: 2007

And finally... There is Bristol-Myers ($BMY) and its bad behavior. Its 2007 settlement covered a number of violations, such as gaming the system to jack up prices on Serzone. But the main focus was Abilify, an atypical antipsychotic in the same class as Eli Lilly's ($LLY) Zyprexa, Johnson & Johnson's ($JNJ) Risperdal and AstraZeneca's ($AZN) Seroquel.

The FDA had approved Abilify for adult schizophrenia and bipolar disorder, but not for children and adolescents, and not for geriatric patients suffering dementia. In fact, the agency explicitly warned against using it for dementia.

So what did BMS do? According to the Justice Department, it zeroed in on child psychiatrists and other pediatric specialists. Then it created a SWAT team to exclusively call on nursing homes, where dementia-related psychosis is more prevalent than schizophrenia or bipolar disorder. When it was found out, the company
cooperated with the feds and signed a Corporate Integrity Agreement.