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Pfizer has plead guilty and settled with the federal government for $2.3 billion. In addition, they have settled with 42 states (and D.C.) individually for a total of $33 million.
They got in trouble for promoting off label uses for the various drugs in a shady manner. By creating fake requests for information from doctors, Pfizer sales representatives sent out unsolicited details to various doctors explaining off-label uses and dosages. Those off-label uses and dosages were not approved by the FDA because they were considered unsafe.
Here’s how the fine breaks down:
- $1.195 billion, criminal fine
- $105 million, forfeited
- $1 billion, compensation to Medicaid, Medicare, and other federal healthcare programs
The actual guilty plea comes from the Pharmacia & Upjohn unit within Pfizer.
In this case it was overzealous sales reps without sufficient oversight who caused the problem, and you can be certain Pfizer will implement better controls to keep it from happening again.
All too many people have this notion that big pharmaceutical companies are evil and working against the interests of the common man. The settlement will do nothing to deter that view, but it is far from the truth. Those misconceptions derive from a lack of understanding of the drug discovery process and the high costs associated with it.
For some good perspective on this issue, lets take a look at a section from an article by Megan McArdle in The Atlantic (discussing a larger point of opposition to national healthcare):
We tend to think of innovation as a matter of a mad scientist somewhere making a Brilliant Discovery!!! but in fact, innovation is more often a matter of small steps towards perfection. Wal-Mart’s revolution in supply chain management has been one of the most powerful factors influencing American productivity in recent decades. Yes, it was enabled by the computer revolution–but computers, by themselves, did not give Wal-Mart the idea of treating trucks like mobile warehouses, much less the expertise to do it.
In the case of pharma, what an NIH or academic researcher does is very, very different from what a pharma researcher does. They are no more interchangeable than theoretical physicists and civil engineers. An academic identifies targets. A pharma researcher finds out whether those targets can be activated with a molecule. Then he finds out whether that molecule can be made to reach the target. Is it small enough to be orally dosed? (Unless the disease you’re after is fairly fatal, inability to orally dose is pretty much a drug-killer). Can it be made reliably? Can it be made cost-effectively? Can you scale production? It’s not a viable drug if it takes one guy three weeks with a bunsen burner to knock out 3 doses.
Ben Domenech, writing in the New Ledger, has this as part of a rebuttal:
The truth, as anyone knowledgeable within the system will tell you, is that private companies just don’t do basic research. They do productization research, and only for well-known medical conditions that have a lot of commercial value to solve. The government funds nearly everything else, whether it’s done by government scientists or by academic scientists whose work is funded overwhelmingly by government grants.
Derek Lowe (who actually works in the field of drug discovery) writes the following as a response to Ben in his blog, In the Pipeline:
After all, in the great majority times when we start attacking some new target, there is no drug for it, you know. We have to express the protein in an active form, work up a reliable assay using it, screen our compound collections looking for a lead structure, then work on it for a few years to make new compounds that are potent, selective, nontoxic, practical to produce, and capable of being dosed in humans. (Oh, and they really should be chemical structures that no one’s ever made or even speculated about before). All of that is “productization” research? Even when we’re the first people to actually take a given target idea into the clinic at all?
Ben continues to dig himself a hole:
So Pharma is interested in making money as their primary goal — that should surprise no one. But they’re also interested in avoiding litigation. Suppose for a moment that Pharma produces a drug to treat one non-life threatening condition, and it’s a monetary success, earning profits measured in billions of dollars. But then one of their researchers discovers it might have other applications, including life-saving ones. Instead of starting on research, Pharma will stand pat. Why? Because it doesn’t make any business sense to go through an entire FDA approval process and a round of clinical trials all over again, and at the end of the day, they could just be needlessly jeopardizing the success of a multi-billion dollar drug. It makes business sense to just stand with what works perfectly fine for the larger population, not try to cure a more focused and more deadly condition.
Derek then smacks him upside the head with some inconvenient facts:
Ummm. . .isn’t this exactly what happened with Vioxx? Merck was trying to see if Cox-2 inhibitors could be useful for colon cancer, which is certainly deadly, and certainly a lot less common than joint and muscle pains. Why didn’t Merck “stand pat”? Because they wanted to make even more money of course. They’d already spent some of the cash that would have to have been spent on developing Vioxx, and cancer trials aren’t as long and costly as they are in some other therapeutic areas. So it was actually a reasonable thing to look into. If you’re staying in the same dosing range, you’re not likely to turn up tox problems that you didn’t already see in your earlier trials. (That’s where Merck got into real trouble, actually – the accusation was that they’d seen signs of Vioxx’s cardiovascular problems before the colon cancer trial, but breezed past them). But you just might come up with a benefit that allows you to sell your drug to a whole new market.
And that might also explain why, in general, drug companies look for new therapeutic opportunities like this all the time with their existing drugs. In fact, sometimes we look for them so aggressively that we get nailed for off-label promotion. No, instead of standing pat, we get in trouble for just the opposite. Your patented drug is a wasting asset, remember, and your job is to make the absolute most of it while it’s still yours. Closing your eyes to new opportunities is not the way to do that.
Game, set, match.
People like Ben exist everywhere you go. They may actually have great intentions in mind, but they are often wrong and completely out of their element. They’re the ones who are pushing for laws to restrict your choices with a smarmy “it’s for your own good” attitude. Members of Congress are kind of like Ben, only without the benevolence and with twice the ignorance.
It is your job as a citizen to be informed of facts because merely listening to some politician run through talking points at a town hall meeting will not teach you anything. For example, take a look at this video of Barney Frank at a recent meeting, in which he discusses illegal immigrants and the proposed healthcare reform bill.
An ignorant citizen would say, “well, it is there in black and white, so I feel better about it.” The informed citizen pipes up and says, “there is nothing in the entire bill enforcing that provision, thereby making it useless and ineffective in real life.” Which citizen are you?
