Pfizer to Pay $420 Million in Illegal Marketing Case
May 14, 2004
By GARDINER HARRIS
Pfizer, the world's largest pharmaceutical company, pleaded
guilty yesterday and agreed to pay $430 million to resolve
criminal and civil charges that it paid doctors to
prescribe its epilepsy drug, Neurontin, to patients with
ailments that the drug was not federally approved to treat.
Of that settlement, $26.64 million will go to a former
company adviser who brought a lawsuit under a federal
The company encouraged doctors to use Neurontin in patients
with bipolar disorder, a psychological condition, even
though a study had shown that the medicine was no better
than a placebo in treating the disorder. Other disorders
for which the company illegally promoted Neurontin included
Lou Gehrig's disease, attention deficit disorder, restless
leg syndrome and drug and alcohol withdrawal seizures.
Although doctors are free to prescribe any federally
approved drug for whatever use they choose, pharmaceutical
companies are not allowed to promote drugs for nonapproved
purposes. Neurontin was initially approved to treat
epileptic seizures in patients who had failed to improve
using other treatments, but it has become one of the
biggest-selling drugs in the world, with sales last year of
$2.7 billion. Nearly 90 percent of the drug's sales
continue to be for ailments for which the drug is not an
approved treatment, according to recent surveys.
"This illegal and fraudulent promotion scheme corrupted the
information process relied upon by doctors in their medical
decision-making, thereby putting patients at risk," said
the United States attorney in Boston, Michael Sullivan, in
a statement yesterday.
Pfizer, in a statement yesterday, said that the illegal
marketing had been conducted by Warner-Lambert before
Pfizer acquired that company in 2000.
"Pfizer has cooperated fully with the government to resolve
this matter, which did not involve Pfizer practices or
employees," the company said.
Pfizer took a $427 million charge in January against its
fourth-quarter 2003 earnings to pay for the expected
settlement. The government calculated that the company's
illegal promotions brought it $150 million in ill-gotten
gains. A standard multiplier was used to come up with the
$430 million fine.
The case is one of many undertaken in recent years by
federal prosecutors in Boston and Philadelphia who are
examining efforts by drug companies to market their drugs
for unapproved uses and pay doctors for prescriptions. And
while the pharmaceutical industry recently adopted
voluntary guidelines that have eliminated many of the gifts
and payments once routinely dispensed to doctors, the
industry's aggressive promotions continue.
Companies continue to underwrite physician education
seminars where unapproved uses of their drugs are
discussed. They continue to hire advertising agencies to
conduct clinical trials and ghostwriters to write up the
studies for experts listed as authors. And they often hire
physicians as consultants, arrangements that call into
question a physician's independence in deciding what drugs
to prescribe for patients.
Other companies that have been fined for drug marketing
abuses include TAP Pharmaceuticals, which in 2001 paid $875
million - the largest such fine so far. Last year, Bayer
paid $257 million. Schering-Plough is currently under
investigation for its sales practices.
While the agreement announced yesterday clears Pfizer of
any further liability in the Neurontin matter, the
government may still criminally charge former
Warner-Lambert executives who concocted and approved the
plans, according to the settlement. Documents in the case
show that Warner-Lambert's illegal marketing activities
were approved by some of the company's top executives.
The case had its origins in 1996 when Dr. David P. Franklin
quit his job as a medical adviser to Warner-Lambert's sales
staff, after realizing that he was being asked to promote
Neurontin well beyond the condition for which federal drug
regulators had approved it. Dr. Franklin filed a lawsuit
under a Civil War-era whistleblower statute that allows
private individuals to sue on behalf of the government,
with the prospect of sharing in any financial awards.
His lawyer, Thomas Greene, said yesterday, "I hope this
encourages other employees of companies that see corporate
wrongdoing to come forward and expose it."
In an interview, Dr. Franklin said that he often sat in
doctors' waiting rooms with medical liaisons from other
drug companies who were there to do exactly what he was
doing - promote unapproved uses of medicines. "What we did
was standard practice in the pharmaceutical industry," Dr.
And although he has been out of the pharmaceutical industry
for eight years - he is now a marketing executive with the
medical device maker Boston Scientific - he scoffed at the
notion that things have changed much in drug marketing.
"Ninety percent of Neurontin's sales are for patients for
which there is no proof that the drug works," he said.
"There's been an explosion of off-label drug use in the
years since I left."
It is only after careful examinations of the results of
expensive clinical trials that federal drug regulators
approve treatments for specific medical conditions. While
doctors can freely prescribe approved drugs for any
treatment, drug companies must carefully restrict their
communications about these so-called off-label uses,
limiting themselves to handing out scientific articles, for
example, or hiring experts to give lectures to physicians
about the unapproved uses.
Warner-Lambert went beyond those strictures by flying
doctors to Hawaii, the 1996 Olympics in Atlanta and
Florida, paying them consulting fees and providing
expensive dinners at which unapproved uses of Neurontin
were discussed. The company also paid some doctors to allow
sales representatives to sit with them as they saw
The patient visits were the last straw for Dr. Franklin, he
said. He recalled that the company distributed a voice mail
message from a sales representative who described the day
he had spent with a physician and his patients. "The sales
representative said he explained to the physician with the
patient right there on the table why Neurontin was the best
possible medicine," Dr. Franklin said. "That's practicing
medicine without a license."
These marketing practices, though, were extremely
effective, according to internal company documents. Doctors
who attended dinners given by the company to discuss
unapproved uses of Neurontin wrote 70 percent more
prescriptions for the drug than those who did not attend,
one memorandum showed.
Generic versions of the drug could be introduced later this
year. Pfizer is hoping to gain approval soon for a
successor medicine called Lyrica, or pregabalin, as a
treatment for epilepsy and neuropathic pain. Internal
company documents show that Warner-Lambert executives
decided against seeking approval from federal drug
regulators for other uses of Neurontin for fear that
generic versions would one day undercut sales of Lyrica.
Part of the government's rationale for bringing the case
was that Warner-Lambert's marketing schemes led physicians
to prescribe to Medicaid patients who should not have
received the drug, costing federal and state governments
millions of dollars. Of the $430 million fine, $106 million
will go to the 50 states, which share with the federal
government the costs of the Medicaid program.