Peter Rost vs. Pfizer: The Feds Back His Argument
14 CommentsBy Ed Silverman // May 13th, 2008 // 11:55 am
Last February, the controversial gadfly and former Pfizer exec cleared a hurdle in his ongoing whistleblower lawsuit against Pfizer. In a filing, Rost cited approximately 200 instances in Indiana which Genotropin, a human growth hormone, was marketed by Pharmacia (which was bought by Pfizer) for unapproved uses, such as combating aging in adults and treating short stature in children.
Providing such detail was needed for the case to proceed. And the move signaled two potentially significant developments. One is the long-term implication for Pfizer, should Rost ultimately prevail. The other is that his efforts may serve as a template for other whistleblowers who are similarly stymied by federal judges seeking details that are, otherwise, very hard to come by.
Pfizer, however, last month turned around and argued that fraud was not involved because Genotropin was listed in three major pharmaceutical compendia, such as Drugdex and the US Pharmacopeia, which meant that state Medicaid programs would likely be required to issue reimbursements anyway. (These is a lot of background reading, but if you wish to do so, please look here, here and here).
Now, though, the Department of Justice, which declined to join Rost’s case, has taken a position favorable to Rost by filing a statement of interest, citing concerns with overall interpretation of law. (Look here). The motion is significant, because the DOJ essentially rebuts the key points Pfizer is using to get the case dismissed. By doing so, this may increase the likelihood that the case will proceed toward discovery.
In its filing, the DOJ argues that, even if an off-label use is listed in a compendium, that is not the same as being supported by the compendium citation. “….in some circumstances, a use that is listed may not qualify as a medically accepted indication that is covered by law,” the DOJ attorneys write.
The DOJ makes three other arguments against Pfizer’s position: even if an off-label use is supported, there may be other grounds for a false claim; Pfizer may still be liable if the drugmaker caused a third party to make a false statement or file a false claim; and that a complaint should sufficiently provide info about the inference of fraud beyond merely the possibilities, and is not always necessary to file particular info about false claims submitted to the government for payment.
Dan
Crime and Punishment: Enough for Corporate Wrongdoing?
Corporate crime should not be a new concept to many. However, it has evolved into more troubling ways- not only in regards to its severity, but the methods of deterrence now being implemented against corporations. So it may be becoming progressively worse for U.S. citizens as a result.
Rather than speak of all corporations, what will be discussed is government health care fraud.
Fraud basically is deception with the potential to harm others. In the case of pharma companies, this may include improper promotion and marketing, meaning that such tactics are or may be deceptive misconduct that may be illegal. In addition, there are the crimes of kickbacks and lesser crimes of misbranding products. Probably more methods of wrongdoing as well do in fact exist and happen. Yet the point is that drug companies should not engage in such wrongdoing to enrich their faceless existence with profiting off those who are ill in illegal ways.
How is such conduct discovered? Typically by whistleblowers who worked for the described pharma company, and such people are rare for a number of reasons. The whistleblower then seeks legal agents and files what is called a qui tam false claims act with a district attorney’s office (Boston or Philadelphia, if you want prosecutors to take you seriously). After the case is filed, the whistleblower verbally acknowledges the charges and evidence to the chosen prosecutors and others.
Such cases usually take years for unclear reasons, yet in the past two years, the settlements from such cases has approached 2 billion dollars after investigations ended that took years, which is tax dollars returned to the American public with these settlements.
So, what has been happening once a pharma company is busted. Criminal indictment by the district prosecutor? Hardly, yet appropriate. Usually, the prosecutor’s objective is to dismiss the case, but give the impression that such activities will not be tolerated by our government. So Corporate Integrity Agreements are mandated to the pharma company, but not really taken seriously, as some have more than one of these agreements active still. It’s an invisible ankle bracelet. A pharma company can and have committed equal or worse crimes while under such an agreement. This Agreement is issued after the deferred or non prosecution agreement is sentenced to the law-breaking corporation, which basically is a pre-trial diversion. Essentialy, it’s just parole, which is supported by the DOJ and the administration. The criminals admit wrongdoing, but not guilt. And they pay a settlement in the neighborhood of hundreds of millions of dollars. Not that shocking, if you consider the income of big pharma companies. These agreements are relatively new and partially a result of suggestions from what was known as a Thompson memo, which basically was created by a DOJ guy as commandments for prosecuting corporations and variables to consider when doing so, which ultimately offered responses as to why a greater degree of punishment was not enforced.
We are one of three countries in the world with the most prisoners behind bars, yet those that do similar if not greater harm to others get out of jail free. Double standard, I would say. Is this behavior by our legal system towards corporations an effective deterrent? Most think not. It rather seems like tacit approval of their conduct. And health care fraud may be more damaging than other types in other industries, yet lack of regulation allows such crimes to continue.
Citizens should make the laws in our country. Justice would then finally exist then, perhaps. Utopic fantasy, more than likely.
“Corporations cannot commit treason, nor be outlawed, nor excommunicated, for they have no souls.”
—- Edward Coke
Marilyn Mann
Ed,
Your description of the DOJ’s last point is not quite right. Rather, they say that it is NOT always necessary to submit particular information about false claims in order for FCA pleading requirements to be met. For example, “the strength of the inference of fraud on the government” may be measured by factual or statistical evidence tending to show fraud. In order to assist the court, they state that “the United States submits that it is not aware of any billable diagnosis code for an anti-aging use that would be recognized or reimbursable by federal health care programs.”
Marilyn Mann
Marilyn Mann
Also, technically the DOJ is not siding with Rost. They do not take a position on the sufficiency of the complaint. Rather, the purpose of their brief is to provide the government’s view on the proper interpretation of the relevant provisions of the Medicaid Act and the FCA.
I agree, however, that the government’s brief is favorable to Rost’s position.
Marilyn
Ed Silverman
Hi Marilyn,
Thanks for the notes and appreciate that you pointed those out. I’ve massaged the language to clarify the DOJ points.
Regards
ed
Justice in Michigan
Excellent points on this thread. Thanks to those who have contributed.
As Dan notes, most of these suits go nowhere, even when there is substaintial, confirmed evidence of fraud. Neurontin went somewhere (don’t worry, I won’t retell the tale), but even then Warner-Lambert share price only continued to climb, and the price Pfizer was willing to pay to acquire them likewise increaed, even knowing the liability they would almost certainly inherit.
Yes, there was also Lipitor and other goodies in the franchise. But it is an example of how even the “big prosecutions” don’t impact much beyond becoming book chapters and examples invoked on Pharmalot. (!)
Pharma Expert
Justice, what you say is very true . . . but these suits appear to impact corporate behavior. And $20+ billion refund to tax payers so far based on FCA isn’t exactly chicken shit.
condor
Having counseled clients through “milestoning-out” of FDA consent decrees, and negotiating the ends to federal contracting debarment orders, I can confirm Pharma Expert’s view — corporate behavior does change.
Need we look any deeper, or wider, than Lilly? Isn’t it at least possible that Lilly’s mini-moments of “Glasnost” (see Ed’s latest, above!) are, in part, driven by wanting to avoid “a Peter Rost moment” on Forbes Magazine’s Cover Page?
I think so. Really, I do.
I also think pharma would really prefer not to have “open-ness” legislated DOWN upon them (again!). I think Lilly figures partnering in the design of the provisions is preferable to having them foist upon it.
So, yes, I think corporate behaviors change as a result of these whistle-blower actions — at least as to the meritorious actions.
Justice in Michigan
Would be interested to hear others on impact on corporate behavior - I certainly hope so.
Re: refund, I think we’d all exchange 20 bil for the people lost as a result of fraudulent promotion, itself based in chicken shit of a different kind.
Jane
Pharma Expert,
When you consider psychotropic medications alone have a $20b market share per year, 20+ billion is chicken soup.
http://www.businesswire.com/portal/site/topix/index.jsp?ndmViewId=news_view&newsId=20080513005053&newsLang=en&ndmConfigId=1000639&vnsId=41
Doc
Justice,
I’ll quote you one of my past directors at BMY when asked about a $175 million dollar fine. “Just the cost of doing business today.” There is some impact, how much it is hard to tell, marketing departments still push the envelope every chance they get.
HorusCat
Judging from the instruction we are given at our sales meetings regarding what we are allowed to say about approved clinical trials (no, can’t discuss the secondary endpoints!), I would say that corporate behavior has changed.
Judging from the fact that my company now monitors medical inquiries to be sure that they are actually initiated by a physician (sometimes calling the physician to check), I would say that corporate behavior has changed.
Judging from the fact that I cannot even give a clinician or patient group information on where their grant request is in the system (let alone what is happening to it), I would say behavior has changed.
Doc
I hope Rost eventually wins $50 million.
Truth Only
Good job Ed. Hopefully, the burning light will go around and should not spare the crooks at Novartis.
Hypocrisy rules
Truth only, what about Novartis? Oh, yes it is the only BigPharma co that is still a “virgin” when it comes to big time fines others were handed out so far. How do they do it? Hard to know but they must know and do something that others don’t, while doing the “nasty” stuff as much if not more than others.
Someone said that BP corporate behavior has changed. Maybe so. But in what way? Have they really, really changed or just adopted their ways in such a way that it is now much harder to see them do it and/or much harder to come up with evidence. The corporations can easily “pretend” they changed. They know how to do it and project the “new image” (seen some GREEN ads lately?) but in fact they continue with the same way of doing biz but the methods have changed and can not be exposed as easily as before.
There was a case of major whistle blowing at Novartis few years ago. Not in USA but done all the way to Basel. Once done, things have changed rapidly to the “better” in terms of compliance with the codes of conduct. However those who did the braking of the codes are still around, some got promoted etc. It would be hard to believe that they went completely “honest” for the “alternative” ways of doing business (offlabel, false claims, bribes etc) are so effective in bringing in huge profits that no one in BP today can give it up, cold turky. Fines, if they get caught? As the person said; Just a cost of doing business.
Novartis knows best.