Catching Up: Pharma Settlements in Criminal Cases

A while back I noted that it was a lot easier to simply do these items as a fill-in-the-blank form. So I started to complete the latest announcement as follows:

Drug Company: Forest Laboratories
Drug: Celexa and Lexapro
Amount of settlement: $313M
The settlement equals what percentage of one year's sales of the drug?: 13.6% (Lexapro only)
Did the company admit wrongdoing? Yes/No: Of course not
Link to detailed news coverage: http://www.nytimes.com/2010/09/16/health/16drug.html?scp=1&sq=natasha%20singer%20forest%20celexa&st=cse

It was only in the process of reading about this settlement, that I came to realize that I had missed the news of a settlement two weeks earlier:

Drug Company: Allergan
Drug: Botox
Amount of settlement: $600M
The settlement equals what percentage of one year's sales of the drug?: 46%
Did the company admit wrongdoing? Yes/No: Of course not
Link to detailed news coverage: http://www.nytimes.com/2010/09/02/business/02allergan.html?hp

Taking the earlier case first, Allergan was accused of pushing Botox for headache, pain, and spasticity associated with cerebral palsy, all unapproved indications according to the FDA. The marketing methods included kickbacks to doctors for off-label uses and helping physicians to get insurers to reimburse for off-label uses by falsely putting in the billing code for an approved indication. (In partial defense of Allergan, British regulators recently accepted company research showing that Botox might be useful in the treatment of chronic migraines, suggesting that the current FDA label for the drug might be too restrictive--though of course legally, the company is supposed to expand its label first and market the drug for those indications second, not the other way around.) The Botox settlement may set a new record, not for the total amount--Pfizer's $2.3B Bextra settlement still holds pride of place--but for the substantial percentage of 1 year's sale of the drug in question. Still, it means that in about 6 months, Allergan will make enough revenue off the drug to pay off the total cost of the settlement.

Now to Forest. They had already pulled off a huge coup by marketing Lexapro, a minor tweak of the Celexa molecule, as a brand-new antidepressant just in time to "evergreen" Celexa as its patent was running out. The major off-label use they were promoting was the use of the drugs for children and adolescents when the FDA had approved adults-only usage. The major methods of marketing alleged by the Feds were huge bribes to docs--examples noted between 1998 and 2005 were tickets to Cardinals and Red Sox games and Broadway shows, a $1000 gift certificate for the gourmet French restaurant Alain Ducasse, and a deep-sea fishing trip off Cape Cod for a doctor and his 3 sons. What is most striking about this list is the suggestion of the effects of the 2002 PhRMA code of conduct. While less stringent than the code that went into effect in January, 2009, the 2002 code was supposed to have done away with such extreme items as sports tickets and leisure junkets (as I wrote about in HOOKED). We don't know the exact dates on the allegations in the Federal suit against Forest, but it would appear at least possible that Forest reps were handing out bribes of a sort that the PhRMA code had supposedly banned, in years after the PhRMA code was supposed to be in effect--perhaps another suggestion on how effective these voluntary codes of conduct within the industry really are.

Final note: Defenders of industry will point out, correctly, that the companies have admitted to none of these charges. The suits against the companies were all based on whistleblower disclosures, which generally lead to the discovery of extensive files of in-house company documents. So we can assume that the Federal allegations are based on the review of those company files.