Congresswoman: Deny Pfizer Any Federal Funding
30 CommentsBy Ed Silverman // October 19th, 2009 // 5:24 pm
Now that Pfizer agreed to pay $2.3 billion for illegally marketing several drugs, including Bextra, Zyvox, Geodon and Lyrica, over several years, one Congresswoman wants to punish stop such behavior - at least among those that do business with the federal government (background is here).
And so Betty McCollum, a Democrat from Minnesota, has introduced a bill that prohibits companies with a felony conviction from receiving any federal funding for five years after a conviction; prohibits corporate felons from making federal campaign contributions for five years, and limits the lobbying the corporation can do during that period to $1 million.
She calls her legislation the ACORN Act, or Against Corporations Organizing to Rip-off the Nation Act of 2009. Why? A significant target of recent Congressional action is the better-known ACORN, a non-profit that trains and advocates for poor and working-class Americans. Over the past 15 years, ACORN has received $53 million in federal funds. By contrast, Pfizer won $73 million in federal contracts in 2007, as The Nation notes, but has largely escaped Congressional wrath.
In her view, corporate felons rip-off taxpayers, shower contributions on congress and continue to cash in on federal contracts. So she wants to ‘defund corporate cooks.’ And she singles out Pfizer. In her bill, the section listing ‘Additional Definitions’ notes that any company “includes Pfizer, Pharmacia & Upjohn Company Inc. and any Pfizer-related affiliate.” And the bill specifically mentions any felony of the Food, Drug & Cosmetic Act as an example of a felony violation by a company. Hint, hint.
“Why are companies that break the law as a business strategy allowed to receive taxpayer funds?” McCollum tells the mag. “A government contract is a privilege, not a right. If a company commits a felony against the people of the United States, then that privilege must end.”
Justice in MI
As Atlex noted in the drug pricing thread, the loss of federal contracts in the event of future defrauding was part of the corporate integrity agreement that accompanied the Neurontin settlement.
But I don’t know what this means in practice. Would Medicare no purchase drugs like Xalatan?
Jaynesday
Betty McCollum gets it! She is a politician’s politician. Bravo!
In past discussions here on PharmaLittle we’ve debated – What can cause rogue pharmaceutical companies to abandon their “drive by promotion” of dangerous products. Products that are poorly designed and tested, heavily marketed on and off label and then sold to make large profits before the FDA and the consumer realize that serious adverse events call into question their safety. In some cases we find out later, usually in litigation, that the company knew far more about their product’s dangers than they let on.
Ms. McCollum realizes that the only way around this mentality is to apply enough external force to generate the internal desire to change.
She states –
“Why are companies that break the law as a business strategy allowed to receive taxpayer funds?” McCollum tells the mag. “A government contract is a privilege, not a right. If a company commits a felony against the people of the United States, then that privilege must end.”
I would take this a step further and ask -
Why are companies that break the law as a business strategy allowed to sell products to the public? Participation in the free market system is a privilege, not a right. If a company commits a felony against the people of the United States, then that privilege must end.
Condor
Okay — I am about to tread where angels fear, here. . . .
Most here know me to be generally fairly-skeptical of big pharma’s motives, means and ends. . . and for good reason.
So — it might surprise many to read that I actually think the otherwise very bright Congresswoman from Minnesota. . . is simply WRONG, here.
Her passion is admirable, but her policy sense leave much to be desired.
The most vexing problem prosecutors [and, increasingly, with some REAL reform underway, legislators] face in these pharma-felony cases is that “debarring” as a five-year punishment for the crime — ends up jeapardizing literally hundreds of thousands of wholly-innocent patient-lives.
But first: Does Pfizer have some clunker-meds in its collective bags? Certainly.
Second: Are there generics, or competing products available for some of them? Equally certainly.
But Third (or perhaps “FIRST”, here): Pfizer (and now, combined with old Wyeth) does make some truly novel, life-saving, exclusively marketed medicines. Medicines without which people would die — or would suffer entirely needlessly.
Saying to many that they must purchase these meds “out-of-pocket” (if otherwise they would be reimbursed by a federal program) is the same as denying them needed medical care. I submit it is simply immoral to visit the sins of Pfizer upon the very patient population it earlier defrauded with off-label, or unbalanced claims.
Thus, laws refusing to allow Medicaid to purchase these meds, or to allow the VA Hospitals to stock them, MAKE NO SENSE.
I want Kindler and Pfizer punished — but this, THIS — plainly is NOT the way.
Anyone who sits still and thinks about it for a moment will come to the same conclusion.
I submit that this is something upon which reasonable people, when apprised of the situation, will NOT differ — as to outcome.
We may argue about whether certain meds ought to be sold under a “constrctive escrow/trust” system — and the profits set aside, so that Pfizer does not benefit — but in PRACTICE, I’ve never seen a workable version of that idea, laudable though the theory may seem.
It simply creates new opportunities for corporate chicanery and cost-shifting.
Namaste
Condor
Errata:
“Her passion is admirable, but her policy sense leaves much to be desired. . . .”
And “constructive” was misspelled. I am sure ther are others. Forgive me, it is late, but I think you get the gist of my point, above.
Namaste
Condor
IF we are to read her bill as one that simply restricts all NIH funding, for example, then I have to ask — did Pfizer’s scientists commit any violation?
Or more broadly — do we really believe we can afford to defund Some of Pfizer’s ground-breaking research, simply to make a point?
What if that delays a cure for cancer by five years?
Is that a cost that we should expect humanity to pay, for the sins of a few?
I am unconvinced of the wisdom of such legislation — in practice, in parma settings.
In rare cases, the debarment rules already exist, and are appropriate — but only in rare cases — not this one.
Namaste
Doc
If you want illegal marketing to stop, the executives and marketers that are in charge during that time period and are linked via emails and other documentation to the schemes, need to go to jail and be fined personally. Then you will see a change in behavior. As it currently exists, they have only upside with these schemes and no personal risk.
Jaynesday
Whatever the punishment is it must be enough to establish true internal corporate regulation. Otherwise we will continue to have some companies in effect preying on the public and then in their defense saying - look at all the good we do.
I understand that these same companies do much good, but I also think they can do much better. They have become lazy and gluttonous because of unbridled profit.
atlex
JiM, just to be clear, I didn’t say that the losss of government business was specifically part of the Neurontin settlement. I said that the threat of losing government business forces pharma companies to settle rather than fight a court battle. The risk is simply too high. If it was only the $73M described in the article that would be one thing. Unfortunately, it could include all sales to government programs–Medicare, Medicaid, VA, etc.
By the way, the article has a number of facts wrong, including Pfizer’s profits. I’m relatively confident that it didn’t have $40B in profits last year. I think the author meant sales.
Atlex
BP Watch
Doc,
You’ve hit the nail squarely on the head! What is sorely needed in Big Pharma is real punishment for misdeeds. It seems that almost always there is no admission of wrongdoing, big fines paid by the shareholders, and the executives laugh all the way to the bank with their huge multimillion dollar bonuses. They’re not held accountable. Until they are, nothing will ever change. As in the case of Pharmacia, repeat offenders are common. They collect their money and run frequently to do the same thing somewhere else, over and over again!
harpy
I know Condor is right, but the thought of it still made me laugh.
Now Halliburton/KBR is a different story….
pharmavet
Of course the congresswoman says nothing about preventing Pfizer or other felons from contributing to HER campaign.
Justice in MI
I agree with Condor, which is really why I asked my initial question. I’d go further–besides undue harm to patients, there are the thousands of Pfizer employees who had nothing to do with the malfeasance, who are dedicated people doing good work, and who don’t need more lay-offs.
So I also agree that the key is to punish those responsible. As related in earlier threads, there are precedents for including those who “should have known” even if they didn’t. So there is no necessary reason not to go to the senior management level as well.
Re: Altex’s clarification, also concur. What I recall–and I probably read it in another context–is that there was a proviso in the Neurontin settlement that more Neurotin-like episodes could, indeed, lead to a suspension of fed. contracts. So the prosecutors pulled back on that one.
Jaynesday
Alex,
You do seem to know your stuff. Thanks for taking part in these discussions. As you might have ascertained I am no pharma insider, just someone who finds it very interesting shall we say.
Not to put you on the spot but do you have any general ideas on how to improve the…(tough choice of words here) performance of pharma from a product safety, ethics, compliance and cost point of view? Specifically from the perspective of the consumer. After all that is the only perspective that counts.
Or do you feel that there is not an especially big problem or that the current environment is OK, or that there isn’t much we can do?
I understand if you choose not to answer, I am just very curious and concerned that our pharmaceutical industry could do things a lot better.
Thanks
Nathan
Jaysnesday writes: “I understand that these same companies do much good, but I also think they can do much better. They have become lazy and gluttonous because of unbridled profit.”
Is it these “unbridged” profits that are leading Pfizer to shed tens of thousands of jobs? About 10,000 have been lost over the last year (10%) and an additional 20,000 are expected to be lost over the coming year. This hardly seems like “unbridled profits” to me…
Nathan
By the way, Jaynesday and company: You could easily slap Pfizer with another fine for a few $billion. What good would it do? Well, a few more thousand layoffs would happen. Do you really think that would solve the problem? Seriously.
Corporate crime will continue to go unbridled unless it starts hitting the PERSONAL (not corporate) pocketbook of the execs. Maybe a punative taxation of their compensation for a few years after a felony conviction?
Jaynesday
Nathan, you understand what I’m saying. There’s a problem with management practices. What’s the best way to fix it? I like your idea but it doesn’t seem like it would have a very strong affect. The executive could just go to another company or “work arounds” could be arranged.
Concerning profits. I hate to see layoffs especially layoffs due to corporate mismangement. Economic downturn is always an issue but that goes for all industries.
Salmon
It’s not only loss of sales to the government.
Repeated convictions also means that a company can’t submit any New Drug Applications to the FDA for 5 years.
Salmon
Doc
Fines are a joke to pharma execs, “just the cost of doing business” to quote one I know. The profit made from illegal activities far outweighs the fines.
Besides, who pays the fines? Patients and insurers, through price increases.
Amy Philo
First of all, thanks for this article and welcome back Ed.
Second - boo hoo poor Pfizer. They got singled out. The largest drug company on the planet.
Third - I am confused as to why Pfizer needed Federal money of any kind.
Fourth - I am disgusted that a penny of my money ever went to Pfizer the same company that nearly wiped out my entire family.
May they rot in peace.
atlex
(Sorry for the long post, but Jaynesday asked)
Jaynesday stated, “Not to put you on the spot but do you have any general ideas on how to improve the…(tough choice of words here) performance of pharma from a product safety, ethics, compliance and cost point of view? Specifically from the perspective of the consumer. After all that is the only perspective that counts.”
Jaynesday, focusing on the compliance and ethics issue (I’ll save cost and product safety for another day), I don’t have a good answer. I know at my company (a large pharma) and probably every other large company, there is a genuine commitment to being fully compliant. It only makes sense. First of all, the vast vast majority of employees, including senior management, are fully-upstanding and ethical. Second, for financial purposes, there is added motivation to be compliant at the senior management level. I know the skeptics will say that the fines never match the gains from illegal activity. That is arguable. However, corporate integrity agreements place many restrictions on a wide variety of activities putting companies at a competitive disadvantage in the marketplace. That leads to real losses from a financial perspective.
The problem isn’t about senior-management focus on the issue or training. We hear about compliance all of the time and go through hours of training each year. Believe it or not, when senior management does learn of noncompliance, people do get fired. Moreover, there is actually motivation for us to turn ourselves in rather than have a whistleblower do it. And, that actually happens. There’s also a very robust effort to ensure that everything emanating from HQ is thoroughly reviewed. And, every email that is sent through our email system is captured and placed in a database. While some mistakes have been made at HQ, the vast majority of the illegal activity occurs at the field level where it becomes very hard to exercise control over every activity. Of course, while all companies are renewing their efforts to exercise a stronger hand over the field, it will remain a very tough problem to control.
Bottom line…I think that at my company and at other large companies (some smaller companies can be “cowboys” and push the envelope), there is a commitment to compliance. However, where the are thousands of employees and millions of interactions in the marketplace, a few miscreants can do a great deal of damage to everyone. Of course, as it should, the company (as it should) takes responsibility and pays dearly for it.
My view is that the best way to control it is to have fewer layers of management so that the lowest level person in the field actually hears and understands management’s commitment to compliance. By being closer to the field, senior management can regularly see the situations that are ripe for abuse and directly address them in a timely manner. This won;t stop everything, but it will make a significant impact.
Atlex
harpy
I don’t think senior management is as innocent as you portray them, Atlex, but I think your suggestions are good. Seems to me many companies have communications issues in the middle-management section of the organization. Senior management may be all gung-ho, but if that attitude isn’t pushed down to the field, well, you’re gonna have problems. The head of Boeing, McNerney?, gave a really good speech on just that subject after Boeing got nailed for conflict of interest or something.
But what we should all remember here is that the OIG guidelines came out all of, what?, six years ago? There’ve definitely been some growing pains and a LOT of reeducation. These things take time.
Justice in MI
Atlex was responding to Jaynesday, but what he writes also responds to a question I asked him.
I appreciate what he says. In my class, I describe being in pharma (at least at some levels and arenas) as being like a priest in Amsterdam (with apologies to priests and Dutch people)–the temptations to trespass are enormous, one’s obligation to resist is greater than in most other professions. Said more simply, nobody cares if a sociologist messes up.
On a terrific thread in Pharmalot I, many industry people remarked on a trend toward ncreasingly pushing the ethical/regulatory envelope, or breaking it, that they had observed during their time in the industry–often twenty years or more. They gave a range of compelling reasons, and offered a number of insightful solutions. I’ll try to retrieve that.
What we public respond to, of course, are the released emails, meeting notes, etc.. And so we hear, in their own words, managers at varous levels talking about “burying studies,” deliberate misinformation, etc., as well as the rationale that “everyone is doing it.” It is very difficult, for outsiders to put such releases within the wider context of what’s going on in companies and in the industry as a whole.
Justice in MI
just this p.s., which may be relevant to industry folks who feel embattled.
With some exceptions, most of us who are often critical are not “anti” industry. We _want_ to be fair and reasonable, just as most industry people do.
What happens in that moments of greater confidence are interrupted by the “next bad thing,” and there is a recurring oscillation between rebuilt confidence and its dissolution. Each time, it becomes easier to anticipate, perhaps assume, that one’s trust was misplaced. I understand that media, politics, and a range of cultural trends play into the cycle. But that cycle is a key part of what needs to change for everyone’s benefit. It will take a lot of time and, I believe, pretty radical change of incentive structure.
Jaynesday
Thanks alex.
atlex
JiM,
Thank you for your comments. One thing I’ll add is that I truly believe that the actual abuses are far less now than in the past for many reasons. I hope that increased transparency will make abuses even more rare.
Atlex
Justice in MI
Thanks, Atlex. That’s great to hear, and it parallels my “outsider” sense of the way things are going.
JaT
This woman is doing her job for her constituants. She is right. She was elected to represent the people in her district. As a legislator it is also her job to redirect the conversation in congress if she finds that existing language does not resolve inapproprate conduct under appropriations or whatever.
Honestly I don’t get Pfizer needing tax payer dollars either. Sink or swim, baby, you are not the only kids on the block. We should want companies with the highest moral standards creating the things we ingest. I have nothing against the Pfizer employees on a personal level. But try to understand…
Amy has it right- the people who have been harmed by any repeatedly offensive company should not have their tax dollars supporting that company. Injustices are nearly impossible to get past as it is. It should never be that our government snub their noses at us and continue to support wrongdoing.
That said, criminal prosecutions are fine by me.
Welcome back everyone.
Justice in MI
Hi JaT,
By “federal money,” we’re not talking bail-outs here. As Salmon pointed out, it could involve the right to submit an NDA to the FDA for some period of time. It could also involve Medicare, Medicaid, Tricare (armed forces) not buying–and thus not dispensing–Pfizer drugs.
As someone who has relied on at least one Pfizer drug–and for whom other drugs in that class are not options, and it is not generic–it would be very bad news if I were relying on Medicare or the Army formulary and couldn’t get it.
I assume there are many such people. To my mind, punishing them in the interest of “justice” is not justice.
JaT
As a person who once took a drug a Pfizer drug that had kept me well, and who has yet to find another, I do understand your point JiM.
I won’t go into the whole long reason for how I feel the way I do AGAIN. It’s all here in other threads. I would like an explanation for why my situation was flat ignored (rhetorical, I already know). It would be fun to hear the reasoning from those who can put a dog medication higher on the list of importance. I love dogs too, btw, but really. Nah, I’m no longer pissed, just… what went down is rediculous, dangerous, and evidently excusable.
I want government to put the people first (all people) and to do their job in handling our money. And while you all have a very valid point, something is missing. So good for her for bringing the conversation.
Justice in MI
Agree there’s a lot missing, JaT. I guess we can only cover so many issues in one thread.
You won’t need to hear me say again that, in Michigan, the right to bring suit against a drug company–regardless of negligence or fraud–has not existed for 15 years. Thus, my moniker here and elsewhere. So that is one thing missing.
Personally, I believe that for most of the last forty years–I include the Carter, Reagan, Clinton, and both Bush administrations–corporate crime has been tacitly facilitated through “deregulation,” “reinventing government” (Gore), and a variety of sweet deals that involved both major parties, and public officials at all levels. This goes way beyond pharma.
I have not yet come to my own conclusion about the current Congress and administrations, but I cannot say I am sanguine.