Pfizer Pays $2.3B, but Will It Change the Pharmaceutical Industry?

Sept. 3, 2009— -- At $2.3 billion, it's a record-breaking settlement that includes the largest fine ever levied in U.S. history, but drug industry experts said that the hefty sum Pfizer agreed to Wednesday will do little to curb highly profitable, unethical marketing practices by some companies.

The sum folds in civil and criminal penalties related to illegal prescription drug marketing, bringing the investigation of the pharmaceutical behemoth by the U.S. Department of Justice to a close.

The settlement includes $1.3 billion in criminal fines related to promoting the arthritis and menstrual pain drug Bextra for uses and in doses not approved by the Food and Drug Administration, putting patients at increased risk for heart attacks and strokes. Pfizer voluntarily removed Bextra from the market in 2005.

But promoting off-label drug use to physicians is commonplace. Ethics experts and policymakers say more stringent government oversight is necessary, but that as long as the profits are bigger than the penalties, drug companies are unlikely to revise their marketing models.

"This suit shows that Pfizer controlled what physicians and consumers believed to be the effectiveness and safety of Bextra in ways not supported by the real science Pfizer had done and was not approved by the FDA," said Dr. Jon Abramson, a pharmaceutical safety and ethics expert at the Harvard Medical School. "Those are the necessary ingredients of blockbuster drugs."

Pharmacia and Upjohn Company Inc., a subsidiary of Pfizer, will plead guilty to one criminal count of violating the U.S. Food, Drug, and Cosmetic Act in promoting off-label Bextra use.

Lavish Trips for Prescribing Doctors

Part of Pfizer's marketing campaign included lavish "consultant meetings" in exotic locations that physicians were paid up to $1,500 to attend, in the hopes that they might increase the number of prescriptions they wrote, according to a lawsuit filed by John Kopchinski, a former Pfizer sales representative.

"At Pfizer, I was expected to increase profits at all costs, even when sales meant endangering lives," Kopchinski said, in a statement. "I couldn't do that."

Department of Health and Human Services Secretary Kathleen Sebelius called the settlement today "historic," not only because of its size but because Pfizer agreed to a Corporate Integrity Agreement, which she said would offer some transparency in how the company researches and markets its drugs, including what kind of financial incentives the company offers doctors who prescribe Pfizer drugs.

Pfizer Agrees to $2.3B Settlement for Illegal Marketing Practices

Chris Loder, a spokesperson for Pfizer, pointed out that the company had disclosed the financial details of the settlement in January, when it also announced its purchase of rival pharmaceutical company Wyeth for $68 billion. Loder said the company does "regret certain actions taken in the past on this."

Some doctors agreed that increasing the penalties for fraudulent marketing could send a message to drug companies.

"The fact that settlements are increasing in amounts, to me, is a good thing," said Dr. Jerry Kassirer, an ethicist at the Tufts University School of Medicine. "The higher the cost to these companies of illegal marketing, the more effective it will be in deterring them from doing these things in the future."

Profit Still Outweighs the Penalties

But others are not so sure drug companies will get the message.

"They may be good medicines. ... Why not spend the money to prove they're good medicines?" said Bill Vaughan, senior health policy analyst for Consumer's Union. "There is a mind-set in this industry, because it is such a profitable industry, that cheating is OK. ... If we have to pay these penalties, tough, we'll make up for it [in sales]."

Industry insiders say drug companies often forgo legal considerations in favor of profit.

If companies, people or entities "are able to make that decision and determine that there's an economic incentive to break the law, they'll break the law," said Reuben Guttman, attorney for Glen Demott, a former Pfizer drug representative.

Change in a financially driven industry depends on whether a few billion dollars of penalty will affect the company's net profits or share costs. In 2008, Pfizer earned $48.3 billion in revenue.

"It won't make a dent if the conduct that led to the settlement is not addressed as part of health care reform," said Abramson, who was the expert consultant for the plaintiff attorneys in the Bextra case in 2007.

"The real problem is this behavior is not isolated to Bextra nor Pfizer but in essence is the way the pharmaceutical industry expands the sales of its drugs," Abramson said. "Unless health care reform can address misrepresentations, withholding science and control claims made to consumers, Americans will continue to pay too much for health care that is not as effective and is expensive."

Without Higher Penalties, the Industry Won't Change, Drug Safety Expert Says

While it may seem an unnecessary risk to prescribe a drug for off-label use, Abramson said some doctors are still naive about what pharmaceutical companies tell them and what they don't.

"Practicing physicians are busy, they have a ton of information coming at them," Abramson said. "They still hold on to the idea that they'll sort through the information they're getting and decide what's applicable to their patient. But you can't sort through information you've never seen."

Although Pfizer's settlement is the largest to date, it is only one among many such settlements made across the pharmaceutical industry each year. Drug companies have paid more than $11 billion over the last eight years in fines for illegal promotions, among other thing.

"Until there are penalties that cause shareholders to demand that officers no longer engage in this kind of behavior ... this behavior is going to continue," Abramson said.