Health Care in America - Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry - 1st Published 3/6/2012

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The Broken American Health Care System

Rapidly Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry: 1991 to 2010

Sammy Almashat, M.D., M.P.H, Charles Preston, M.D., M.P.H, Timothy Waterman, B.S., Sidney Wolfe, M.D.

Public Citizen’s Health Research

Group EXECUTIVE SUMMARY

Background

U.S. spending on prescription drugs has increased from $40 billion in 1990 to$234 billion in 2008. In this era of rapidly rising drug costs, the illegal pharmaceutical company activities that have contributed to such inflated spending have garnered a significant amount of media attention. Recent billion-dollar settlements with two of the largest pharmaceutical companies in the world, Eli Lilly and Pfizer, provide evidence of the enormous scale of this wrong doing.  However, the total size, varied nature, and potential impact of these illegal and potentially dangerous activities have not been previously analyzed. This study examined trends from 1991 to the present in federal and state criminal and civil actions against pharmaceutical companies in order to address these questions.

Analysis

The purpose of this study was to compile a comprehensive database of all major criminal and civil settlements between federal and state governments and pharmaceutical companies. Press releases from both federal and state governments, in addition to existing online databases, were used to identify all settlements of at least $1 million during the past 20 years.

Main Findings

Of the 165 settlements comprising $19.8 billion in penalties during this 20-year interval, 73 percent of the settlements (121) and 75 percent of the penalties ($14.8 billion) have occurred in just the past five years (2006-2010).

Four companies (GlaxoSmithKline, Pfizer, Eli Lilly, and Schering-Plough) accounted for more than half (53 percent or $10.5 billion) of all financial penalties imposed over the past two decades. These leading violators were among the world’s largest pharmaceutical companies.

While the defense industry used to be the biggest defrauder of the federal  government under the False Claims Act (FCA), a law enacted in 1863 to prevent defense contractor fraud, the pharmaceutical industry has greatly overtaken the defense industry in recent years. The pharmaceutical industry now tops not only the defense industry, but all other industries in the total amount of fraud payments for actions against the federal government under the False Claims Act.

The practice of illegal off-label promotion of pharmaceuticals has been responsible for the largest amount of financial penalties levied by the federal government over the past 20 years. This practice can be prosecuted as a criminal offense because of the potential for serious adverse health effects in patients from such activities.

Deliberately overcharging state health programs, mainly Medicaid fraud, has been the most common violation against state governments and is responsible for the largest amount of financial penalties levied by these governments. This type of violation is also the main factor in the considerable increase in state settlements with pharmaceutical companies over time.

Former pharmaceutical company employees and other “whistleblowers " have been instrumental in bringing to light the most egregious violations and have been responsible for initiating the largest number of federal settlements over the past 10 years. From 1991 through 2000, qui tam (whistleblower) cases made up only 9 percent of payouts to the government, but from 2001 through 2010, they comprised 67 percent of total payouts.

Conclusion

Over the past two decades, especially during the past 10 years, there has been a marked increase in both the number of government settlements with pharmaceutical companies and the size of the accompanying financial penalties.  The reasons for these increases are likely related to a combination of increased violations by companies and increased enforcement on the part of federal and state governments.  The danger to public safety and the loss of state and federal dollars that comes with these violations require a more robust response than the government’s current practices. Given the relatively small size of current financial penalties when compared to the perpetrating companies’ profits, both increased financial penalties and appropriate criminal prosecution of company leadership may provide a more effective deterrent to unlawful behavior by the pharmaceutical industry.

Worst Offenders and Largest Settlements

Individual Companies: Total Penalties, 1991-2010

There are 20 pharmaceutical companies that paid a total of at least $100 million each in financial penalties over the past 20 years. The four worst offenders, with at least $1 billion in penalties each, were GlaxoSmithKline, Pfizer, Eli Lilly, and Schering-Plough. Together they accounted for more than half (53percent) of all financial penalties paid out by pharmaceutical companies.

Twenty Largest Settlements, 1991-2010

The 20 largest settlements over the past two decades follow. In the largest settlement of the past 20 years, GlaxoSmithKline agreed to pay the federal government $3.4 billion in 2006 for failing to pay required taxes over a 17-year period.

The second and third largest settlements included the two largest criminal fines ever levied by the federal government against any company. In January 2009, Eli Lilly was forced to pay $515 million (the largest criminal fine ever received by a corporation at that time) and Pfizer, later that year, was fined$1.2 billion (the largest criminal fine ever imposed in the U.S.). Both companies were fined for illegal off-label promotion.

The majority (14) of the 20 largest settlements have occurred within the past five years (2006-2010), consistent with the dramatic increase in pharmaceutical industry financial penalties in recent years.  Of note, almost all cases (16 of 20) involved violations of the federal FCA, at least in part. Multiple blockbuster drugs (i.e., those with sales exceeding $1 billion per year), such as Neurontin (gabapentin), were involved in these settlements. For example, in the Pfizer case of 2004, the company was charged with illegal off-label promotion of Neurontin, a drug which in 2002 generated 94 percent of its $2.27-billion revenue from off-label use.

Table 2. Pharmaceutical Company Penalties: Worst Offenders

Company - Fine in millions of dollars - Percent of Total

GlaxoSmithKline                                     4501              22.7

Pfizer                                                            2935             14.8

Eli Lilly                                                        1712               8.6

Schering-Plough                                      1339               6.8

Bristol-Myers Squibb                             890                4.5

AstraZeneca                                               883                4.5

TAP Pharmaceutical Products            875                4.4

Merck                                                           806                4.1

Serono                                                          704                3.6

Purdue                                                         620                3.1

Allergan                                                      600                3.0

Novartis                                                       524                2.6

Cephalon                                                     425                 2.1

Johnson & Johnson                                353                 1.8

Forest Laboratories                                313                 1.6

Sanofi-aventis                                           310                 1.6

Bayer                                                            301                 1.5

Mylan                                                           267                 1.3

Teva                                                              181                 0.9

King Pharmaceuticals                          167                 0.8

Other                                                           595                 3.0

*Parent company names are current names without corporate (e.g. inc. or plc) designations. If company is non-existent now, name at time of most recent settlement was used.**Data for 2010 include only the first 10 months of the calendar year (through Nov. 1, 2010)***Percent of $19.813 billion in overall penalties. Percents do not add up to 100% as some cases were excluded due to inability to determine individual company share in settlement.

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Health Care Reform - When does it start? When does the hemorrhaging end?

Here in the United States we already pay far more per capita for health care than any other country in the world yet our health care system ranks far down the list in terms of quality of care.  Doesn't that seem odd to you?

For the past six years our political system has ground to a halt because of the partisan bickering between political parties over Obamacare.

And the many candidates running for the House and Senate in this year's midterm elections are all over the place in terms of whether they support Obamacare, want to fix Obamacare or want to dump Obamacare.

Obamacare is really called the Affordable Care Act and there is nothing affordable about it.  In terms of the health care industry, the cost of nothing has gone down but the premiums, profits, bonuses and kickbacks have sure gone up.

If we were really interested in hearing the truth the story would be a whole lot different. You see, Obamacare did nothing to fix the health care system, it only extended an already broken system to the millions of Americans who are uninsured.

The truth is far more brutal than worrying about the consequences of Obamacare.  The truth consists of the following:

Nothing is being done in Washington to improve the quality of health care service.

Nothing is being done in Washington to reduce the criminally high cost of health care.

Nothing is being done in Washington to stop the unnecessary and excessive amount of patient testing to determine the cause of health problems, many of which are never confirmed.

Nothing is being done in Washington to stop the millions of dollars in kickbacks to doctors for prescribing their drugs for patient treatment.

Nothing is being done in Washington to stop the corrupt influence of hundreds of millions of dollars being spent by the current health care system to legally bribe our politicians through campaign contributions.

Nothing is being done in Washington to stop the insurance companies from denying coverage for many types of health care treatment that could drastically lower the cost through alternative health techniques.

Nothing is being done in Washington to stop the FDA, our federal regulatory agency, from favoring applications for New Drug Approval from super rich pharmaceutical companies over a host of low cost and time proven techniques to improve health that are being kept off the American market.

Nothing is being done to stop the runaway cost of court litigation relating to medical malpractice and class action health cases.

In the meantime billions of dollars are being wasted every year paying for the nonsense we call health care.  If we need more proof of the incompetence of our health care providers and corrupt nature of our health care system just look at the Veterans Administration scandal that is just beginning to unfold.

The Obama Administration claims to have done more to reform the health care system than any president since George Washington (that is a joke), at least it wants to be given such credit, yet for six long years the very people Obama sent to war have been cheated, lied to, ignored and killed by the very same saviors of health care, the Obama administration.

What is the logic in that?  We can  reduce the cost of health care by killing off those who were sent to risk their lives fighting for our country?  America needs to wake up.  Our federal government, all of it, is under the control of the White House, not just the parts that seem to work.

If our federal government knew how to provide better health care then why did thousands of veterans get cheated for the past six years.  Thanks in large part to the health care and related industries Obama spent over $2 billion to get elected two times.

It seems to me the only health care insurance that works in America was the investment by the health care providers, big pharmaceutical corporations, Wall Street, big banks, the insurance industry, the trial lawyers and financial institutions of $2 billion in the Obama campaign because they are the only ones financially benefiting from the health care fraud and abuse sanctioned by the Obama Administration and Congress.

People have got to wake up, demand more from their elected officials, throw out those who protect the status quo and encourage those with no strings attached to find ways to make it work.  In short, people deserve a return on their investment in so called democracy and holding all those responsible for our broken system accountable is the first step.

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The thin blue line of thread that holds together the fabric of America, the protector of the people, buries latest martyr in NYC

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Saturday was a solemn yet amazing gathering of our nation's finest, the police, to bury the latest martyr who gave his life protecting the public.  NYC police officers Rafael Ramos and his partner Wenjian Liu were gunned down in NYC just one week ago today, the latest of the 114 police in America who died in the line of duly this year, 2014.

Over 25,000 fellow officers from all across America came to the funeral.  NYC has over 50,000 police officers.  JetBlue offered to fly officers from around the nation to NYC at no expense. 

After months of protests and violence regarding the deaths of two blacks in police shootouts, and the escalation of violence to looting, arson, and assaults on police that followed, two innocent police officers were murdered for doing nothing but wearing a police uniform in NYC.

What a strange irony.  Black protests erupt across the nation over the treatment of blacks by white police in two high profile shootings.  Arsonists and anarchists call for the murder of police in response.  Even politicians, the media and preachers fan the flames of racism for some inexplicable reason.

By all accounts, these were two wonderful men, loving parents, inspirational leaders, and spiritual counselors whose dedication, fairness, and actions were exemplary in every way possible.   

A black man murders two NYC cops doing nothing more than sitting in their car.  Then comes the irony, one was a Hispanic and the other was oriental.  So that is the result of fanning the fires of racism.

Crime statistics indicate over 95% of black murders were committed by other blacks.  The murder of a Hispanic and an Oriental seems a real stupid response to targeting white police officers.

Great strides were made in race relations since the 1950's and 1960's culminating with the election of Barack Obama six years ago.  It is a shame there are still people who exploit tragic events by turning peaceful protests into crime scenes.

If the so called experts would just shut up the people would continue to work out their differences without politicians and preachers.

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Health Care in America - Illegal "Off-Label" Conspirators - 1st Published March 21, 2010

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The Broken American Health Care System

Big Pharma Promotes Illegal “Off-Label” Drug Uses

When Drug Makers’ Profits Outweigh Penalties

By David Evans

Washington Post

Originally Published in Bloomberg News

Sunday, March 21, 2010; 

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/19/AR2010031905578.html

On the morning of Sept. 2, 2009, another Pfizer unit, Pharmacia agreed to plead guilty to the same crime. This time, Pfizer executives had been instructing more than 100 salespeople to promote Bextra — a drug approved only for the relief of arthritis and menstrual discomfort — for treatment of acute pain of all kinds.

For this new felony, Pfizer paid the largest criminal fine in U.S. history: $1.19 billion. On the same day, it paid $1 billion to settle civil cases involving the off-label promotion of Bextra and three other drugs with the United States and 49 states.


“At the very same time Pfizer was in our office negotiating and resolving the allegations of criminal conduct in 2004, Pfizer was itself in its other operations violating those very same laws,” Loucks, 54, says. “They’ve repeatedly marketed drugs for things they knew they couldn’t demonstrate efficacy for. That’s clearly criminal.”


The penalties Pfizer paid for promoting Bextra off-label were the latest chapter in the drug’s benighted history. The FDA found Bextra to be so dangerous that Pfizer took it off the market for all uses in 2005.


Across the United States, pharmaceutical companies have pleaded guilty to criminal charges or paid penalties in civil cases when the Justice Department finds that they deceptively marketed drugs for unapproved uses, putting millions of people at risk of chest infections, heart attacks, suicidal impulses or death.


It used to be legal for companies to promote drugs in the United States for any use. Congress banned the practice in 1962, requiring pharmaceutical companies to first prove their drugs were safe and effective for specific uses.


If the law is clear, why do drug companies keep breaking it? The answer lies in economics. Pharmaceutical companies spend about $1 billion to develop and test a new drug. To recoup their investment, the companies want doctors to prescribe their drugs as widely as possible.


Since May 2004, Pfizer, Eli Lilly, Bristol-Myers Squibb and four other drug companies have paid a total of $7 billion in fines and penalties. Six of the companies admitted in court that they marketed medicines for unapproved uses. In September 2007, New York-based Bristol-Myers paid $515 million — without admitting or denying wrongdoing — to federal and state governments in a civil lawsuit brought by the Justice Department. The six other companies pleaded guilty in criminal cases.

In January 2009, Indianapolis-based Lilly, the largest U.S. psychiatric drugmaker, pleaded guilty and paid $1.42 billion in fines and penalties to settle charges that it had for at least four years illegally marketed Zyprexa, a drug approved for the treatment of schizophrenia, as a remedy for dementia in elderly patients.


In five company-sponsored clinical trials, 31 people out of 1,184 participants died after taking the drug for dementia — twice the death rate for those taking a placebo, according to an article in the Journal of the American Medical Association.


“Marketing departments of many drug companies don’t respect any boundaries of professionalism or the law,” says Jerry Avorn, a professor at Harvard Medical School. “The Pfizer and Lilly cases involved the illegal promotion of drugs that have been shown to cause substantial harm and death to patients.”


The widespread off-label promotion of drugs is yet another manifestation of a health-care system that has become dysfunctional.


“It’s an unbearable cost to a system that’s going broke,” Avorn says. “We can’t even afford to pay for effective, safe therapies.”


About 15 percent of all U.S. drug sales are for unapproved uses without adequate evidence the medicines work, according to a study by Randall Stafford, a medical professor at Stanford University.


As large as the penalties are for drug companies caught breaking the off-label law, the fines are tiny compared with the firms’ annual revenue.


The $2.3 billion in fines and penalties Pfizer paid for marketing Bextra and three other drugs cited in the Sept. 2 plea agreement for off-label uses amount to just 14 percent of its $16.8 billion in revenue from selling those medicines from 2001 to 2008.


The total of $2.75 billion Pfizer has paid in off-label penalties since 2004 is a little more than 1 percent of the company’s revenue of $245 billion from 2004 to 2008.


Lilly already had a criminal conviction for misbranding a drug when it broke the law again in promoting schizophrenia drug Zyprexa for off-label uses beginning in 1999. The medication provided Lilly with $36 billion in revenue from 2000 to 2008. That’s more than 25 times as much as the total penalties Lilly paid in January.


Companies regard the risk of multimillion-dollar penalties as just another cost of doing business, says Lon Schneider, a professor at the University of Southern California’s Keck School of Medicine in Los Angeles. In 2006, he led a study for the National Institute of Mental Health of off-label use of drugs, including Zyprexa.


“There’s an unwritten business plan,” he says. “They’re drivers that knowingly speed. If stopped, they pay the fine, and then they do it again.”

Paying the doctors


In pushing off-label use of drugs, companies find ready and willing partners in physicians. Under the fragmented system of U.S. medical regulation, it’s legal for doctors to prescribe FDA-approved drugs for any use. The FDA has no authority over doctors, only over drug companies, regarding off-label practices. It’s up to the states to oversee physicians.


“I think the physician community has to take some ownership responsibility and do their own due diligence beyond the sales and marketing person,” says Boston’s former U.S. Attorney Michael Sullivan.


Doctors generally don’t tell people they’re prescribing drugs pitched to them by pharmaceutical salespeople for unapproved treatments, says Peter Lurie, former deputy medical director of Public Citizen, a Washington-based public interest group. Most doctors don’t keep track of FDA-approved uses of drugs, he says.


“The great majority of doctors have no idea; they don’t even understand the distinction between on- and off-labeling,” he says.


Pfizer’s marketing program offered doctors up to $1,000 a day to allow a Pfizer salesperson to spend time with the physician and his patients, according to a whistle-blower lawsuit filed by John Kopchinski, who worked as a salesman at Pfizer from 1992 to 2003.


“By ‘pairing up’ with a physician, the sales representative was able to promote over a period of many hours, without the usual problems of gaining access to prescribing physicians,” Kopchinski says. “In essence, this amounted to Pfizer buying access to physicians.”


Pfizer spokesman Chris Loder says the company stopped what it calls “mentorships” in 2005. He says Pfizer paid doctors $250 a visit. The goal was clear: Get doctors to prescribe a new drug as widely as possible.


Pfizer’s Neurontin is a case in point. The FDA approved the drug as a supplemental medication to treat epilepsy in 1993. Pfizer took in $2.27 billion from sales of Neurontin in 2002. A full 94 percent — $2.12 billion — of that revenue came from off-label use, according to the prosecutors’ 2004 Pfizer sentencing memo.


Since 2004, companies that are now Pfizer divisions have pleaded guilty to off-label marketing of two drugs. Pfizer continued off-label promotions for these medications after buying the firms, according to documents.


Pfizer first stepped into an off-label scheme in 1999, when it offered to buy Warner-Lambert, based in New Jersey. Prosecutors charged that Warner-Lambert marketed Neurontin off-label between 1995 and 1999.


Warner-Lambert admitted doing so for one year in a May 2004 guilty plea for which Pfizer paid $430 million in fines and penalties.


When the FDA approved Neurontin in 1993 to be used only along with other epilepsy drugs, the agency wrote that as a side effect, the drug can induce depression and suicidal thoughts in patients.
The whistle-blower


Much of what prosecutors learned about Warner-Lambert’s marketing of Neurontin comes from a former employee, David Franklin, who holds a Ph.D. in microbiology.


Franklin, 48, whose title at Warner-Lambert was medical liaison, says his job involved more salesmanship than science. He told doctors that Neurontin was the best drug for a dozen off-label uses, including pain relief, bipolar disease and depression.


“Technically, I had responsibility for answering physician questions about all of Parke-Davis’s drugs,” Franklin says. “In practice, my real job was to promote Neurontin for off-label indications heavily — to the exclusion of just about everything else.”


Franklin says he knew such uses of the drug had no scientific support for effectiveness and safety.


“I was actually undermining their ability to fulfill the Hippocratic oath,” Franklin says, referring to a physician’s pledge to “First, do no harm.”


After working for Warner-Lambert for three months, Franklin quit and filed a whistle-blower lawsuit on behalf of taxpayers to recover money the government paid for illegally promoted drugs. He stood to collect as much as 30 percent of any settlement the company made with the government.


Franklin had to wait four years — until 2000 — before the Justice Department began a criminal investigation. In November 1999, Pfizer made its public offer to buy Warner-Lambert. In January 2000, a federal grand jury in Boston issued subpoenas to Warner-Lambert employees to testify about the marketing of Neurontin.


That March, Warner-Lambert’s annual report disclosed that prosecutors were building a criminal case. Undeterred, Pfizer bought Warner-Lambert in June for $87 billion — the third-largest merger in U.S. history.

More sales than Viagra


A year after the acquisition, the FDA discovered that Neurontin was still being marketed off-label. In a June, 2001 letter to the company, the agency wrote that Pfizer’s promotion of the drug “is misleading and in violation of the Federal Food, Drug and Cosmetics Act.”


Pfizer marketed Neurontin off-label after receiving that letter, agency records show. For 2001, Pfizer reported revenue of $1.75 billion from Neurontin sales, making it the company’s fourth-largest-selling drug that year, ahead of impotence pill Viagra, which Neurontin topped for four years.


As Neurontin sales soared to $2.27 billion in 2002, the FDA found that Pfizer was improperly claiming that the drug was useful for a broader range of brain disorders than scientific evidence had established.


The agency sent a letter dated July 1, 2002, that said the company’s marketing practices were in violation of FDA rules. It asked Pfizer to stop using misleading promotions. Pfizer reported $2.7 billion in revenue from Neurontin in 2003. Overall, the drug has provided Pfizer with $12 billion in revenue.


Pfizer spokesman Chris Loder says, “Regarding the 2001 and 2002 FDA letters, we do not believe that they were suggestive of any continuing off-label promotion.”


For blowing the whistle on his employer, Franklin collected $24.6 million under the False Claims Act.


Prosecutors Loucks and Sullivan got involved in the case after Franklin filed his suit, relying on information from Franklin and their own investigation. Before 2004, prosecutions for off-label marketing were rare.


“Until a couple of these cases became public, companies were probably saying, ‘Everybody does it this way,’ ” Sullivan says.


Loucks had a track record in off-label prosecutions. In 1994, he negotiated a $61 million settlement with C.R. Bard of New Jersey, which pleaded guilty to promoting off-label use of a heart catheter that led to patient deaths.

The off-label campaign


In the January 2004 settlement negotiations with Loucks, Sullivan and two other prosecutors, Pfizer’s lawyers assured the U.S. Attorney’s Office that the company wouldn’t market drugs off-label.


“They asserted that the company understood the rules and had taken steps to assure corporate compliance with the law,” Loucks says. “We remember those promises.”


What Pfizer’s lawyers didn’t tell the prosecutors was that Pfizer was at that moment running an off-label marketing promotion using more than 100 salespeople who were pitching Bextra, according to a Pfizer sales manager who pleaded guilty to misbranding a drug in March 2009.


Pharmacia; Upjohn developed Bextra, which was approved by the FDA in 2001 for only the treatment of arthritis and menstrual discomfort.


Pfizer had by then crafted a joint marketing agreement to sell the drug. In November 2001, Mary Holloway, a Pfizer Northeast regional manager, began illegally training and directing her sales team to market Bextra for the relief of acute pain, Holloway admitted in the plea.


On Dec. 4, 2001, Pfizer executives sent Holloway a copy of a nonpublic FDA letter to the company. The agency had denied Pfizer’s application to market Bextra for acute pain. Clinical trials had shown Bextra could cause heart damage and death.


Pfizer bought Pharmacia from Upjohn in April 2003. From 2001 through 2003, Pharmacia operated first as an independent company and then as a unit of Pfizer, paid doctors more than $5 million in cash to lure them to resorts, where salespeople illegally pitched off-label uses for Bextra, it was admitted.


In her guilty plea, Holloway said her team had solicited hospitals to create protocols to buy Bextra for the unapproved purpose of acute pain relief. Her representatives didn’t mention the increased risk of heart attacks in their marketing.


They told doctors that side effects were no worse than those of a sugar pill, Holloway said.


In 2003, Holloway reported her unit’s off-label promotions of Bextra up the corporate ladder at Pfizer, according to a presentencing memo to the judge written by Robert Ullmann, Holloway’s attorney. Top managers didn’t attempt to halt the illegal conduct, the memo said.


By late 2004, Bextra reached blockbuster status, with annual sales of $1.29 billion. Holloway promoted Bextra until the FDA asked Pfizer in April 2005 to pull it from the market for all uses.


The agency concluded that the drug increased the risk of heart attacks, chest infections and strokes in cardiac surgery patients. In June 2009, Holloway, 47, was sentenced to two years on probation and fined $75,000. She didn’t return phone calls seeking comment.


‘We regret . . . ‘


By 2007, the criminal and civil cases against Pfizer, its employees and its subsidiaries had begun to mount. The tally of drugs cited by federal prosecutors for off-label promotion reached six by 2009. In April 2007, Pfizer pleaded guilty to a felony charge of offering a $12 million kickback to a pharmacy benefit manager. Pfizer paid a criminal fine of $19.7 million. In September 2009, Pfizer agreed to pay $2.2 billion in fines and penalties. Pfizer pleaded guilty to a felony charge of misbranding Bextra with the intent to defraud. After the settlement, Pfizer general counsel Amy Schulman said the company had learned its lesson.

“We regret certain actions we’ve taken in the past,” she said. “Corporate integrity is an absolute priority for Pfizer.”

One reason drug companies keep breaking the law may be because prosecutors and judges have been unwilling to use the ultimate sanction — a felony conviction that would exclude a company from selling its drugs for reimbursement by state health programs and federal Medicare.


At Pfizer’s Pharmacia sentencing in October, U.S. District Court Judge Douglas Woodlock said companies don’t appear to take the law seriously. “It has become something of a cost of doing business for some of these corporations, to shed their skin like certain animals and leave the skin and move on,” he said.


As prosecutors continue to uncover patterns of deceit in off-label marketing, millions of patients across the nation remain in the dark. Doctors often choose the medications based on dishonest marketing by drug company salesmen.


Loucks says that putting an end to the criminal off-label schemes will be difficult. As drugmakers repeatedly plead guilty, they’ve shown they’re willing to pay hundreds of millions of dollars in fines as a cost of generating billions in revenue.


The best hope, Loucks says, is that drug companies actually honor the promises they keep making — and keep breaking — to obey the law of the land.


As much as $100 million for health-care fraud enforcement is tied up in the stalled reform legislation, according to Loucks.

“It will be increasingly hard for the threat of exclusion to seem credible and thus serve as a deterrent to bad corporate behavior,” he says, “unless Congress supports health-care fraud prosecutions with more money.”


A version of this story originally appeared in Bloomberg Markets Magazine. It was awarded a 2010 Society of American Business Editors and Writers award for enterprise reporting and general excellence.
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