Fed Probe Into Johnson & Johnson At Zero Hour
18 CommentsBy Ed Silverman // December 3rd, 2009 // 9:03 am
Will federal prosecutors indict the health care giant for off-label marketing of its Natrecor heart drug? Lawyers for J&J are scheduled to meet next week with Assistant Attorney General Tony West and other Justice Department attorneys in Washington, D.C., for some serious haggling, Law.com reports, adding that a handful of former execs are also under scrutiny.
Unlike Pfizer, which agreed to pay $2.3 billion to settle similar charges, J&J is resisting the notion that its Scios subsidiary engaged in illegal marketing.The government hasn’t made any final decisions, but Law.com writes that lawyers familiar with the probe say a criminal charge is under serious consideration.
The implications: A felony conviction against J&J would lead to a big fine, but the bigger issue for the company is that, under federal regulations, this would mean automatic exclusion from Medicare and Medicaid. On the other hand, this would mean millions of patients would be denied its many drugs. So do you think a felony is likely? Or would you bet on a misdemeanor?
The FDA approved Natrecor in 2001 for acute heart failure, but in 2005, a whistleblower accused Scios execs of conducting a campaign to promote Natrecor for chronic heart conditions, Law.com writes, adding the lawsuit claims sales reps were instructed to discuss benefits with docs and Scios created seminars for docs to discuss off-label benefits. The Justice Department, which joined the suit, says Scios hired a consultant to create reimbursement guides for docs to bill Medicare for off-label use.
But also in 2005, reports began surfacing that repeated use of the drug caused dangerous side effects, prompting Medicare to cease reimbursement for Natrecor outside hospitals. A criminal probe subsequently began. Former marketing and business development director George Mahaffey, former vp of development Randall St. Laurent and former sales vp Kim Hillis all hired lawyers. Attorneys for Mahaffey and Hillis told Law.com their clients did nothing wrong. St. Laurent’s attorney didn’t respond.
patrons99
In this country some people and many corporations are “more equal than others”. For DOJ to ever issue the “ultimate sanction” against pharma will require political will, from the top down.
Condor
There may well be felony “no contest” pleas, by former executives, to a whole host of felony-charges — coupled with a huge fine, for the company — but in the end, only a minor criminal plea, from the company.
That result does not unduly punish patients, for what was the wrong-doing of individual executives at J&J.
I am not minimizing the culpability, here — I am simply acknowledging the extremely-difficult reality the US Attorney faces: it cannot be the right answer, from a public-policy perspective, to deny coverage to wholly innocent patients (in many cases, the victims of the “crime” itself), for other potentially life-saving drugs — due to bad acts by several company executives.
Sadly, J&J’s lawyers have certainly factored this reality into their negotiating strategy with the DoJ.
I wish it weren’t this way, but at the moment, absent a change in law (through Congress), there can be no focused, localized company-wide felony pleas, without federal program “debarment”.
Namaste
anonymous
Namaste-
I can’t think of one therapeutic area where Johnson & Johnson is the only provider of a treatment- can you? I believe that DOJ can and should as it will send a clear message and allow for exceptions only in cases where J&J is the sole provider of a therapeutic treatment in an area.
Condor/Namaste
I appreciate your perspective, Anon., but I think we all know that some (perhaps most) do much better (for whatever reason), on one kind of medication, than another — all in the same therapeutic arena. So I think your approach misses a key-element: none of these patients should be disadvantaged by various company bad acts.
And so, for example, some patients are experiencing wildly-better management outcomes in rheumatoid arthritis on Simponi, and the predessor drug, Remicade (J&J’s products, under Centocor), in the USA.
I think we need to understand that these patients are also victims of the crime (as are all taxpayers!) and not penalize them by limiting their reimbursable medication options, simply to send a message.
It is a very vexing problem, with no simple solutions — especially now that US Attorney (and health care fraud maven) Michael Loucks looks to be headed to the private practice of law, at a white-shoe firm, no doubt — and perhaps, one day, public office.
Namaste
anonymous
I don’t think I’m missing the point, I do believe that when you are looking at scarcity of resources and government funded care then the most disadvantaged is not having treatment at all.
It is unfortunate but we are quickly approaching a time at this country when we are either going to join ranks with the rest of the world and mandate pricing or make decisions on treatment that include whether or not it is cost effective to use the latest and greatest biologic for a disease such as rheumatoid arthritis.
Unfortunately, the aggressive marketing and pricing behavior of pharmaceutical companies which is for the most part no longer supporting research and development or employment here in the US (it is in Asia though) is pushing us to that point much more quickly than anticipated and the responsibility for those actions lies with the companies.
As long as it is the cost of doing business, it will keep increasing to the cost of harm to the entire public, not just a segment of patients.
Concerned Doc
Dear DOJ and AOG,
I think you should look into how Millennium and the old Schering-Plough marketed Integrilin.
CD
patrons99
Anonymous, I side with you in this discussion, especially where you state, “As long as it is the cost of doing business, it will keep increasing to the cost of harm to the entire public, not just a segment of patients.” To allow pharma’s crime spree to continue, under current federal laws, is to continue to deny all persons equal protection of the laws and equal treatment under the laws. Pharma cannot always be given a waiver for their bad acts by federal regulators, simply because pharma’s motives appear to be pure, even altruistic at times. Quite the opposite is the reality. The system encourages the bad behavior.
another concerned doc
It is a clear felony. Sales Executives scammed the US government and patients, knowingly off-label marketing natrecor, a heart failure drug supposed to be used ONLY for patients with acutely decompensated congestive heart failure who have dyspnea at rest or with minimal activity.
Justice in MI
This probably for Condor or some other “real lawyer”–
I don’t understand why Pfizer, which admitted to felony fraud in off-label marketing, was not barred from Medicare/Medicaid. While, on the other hand, if J&J is convincted, they would be barred automatically.
Is this itself part of plea bargaining, or is there some other legal principle involved? The offense in question?
Condor
Hey JiM –
Both of the Pfizer pleas/settlements (’04 and ‘09 editions) involved agreeing to felony convictions — but not at the parent company level. Legal sophistry, I know — but the subsidiaries, not Pfizer, itself — pled to felonies. In the 2004 deal, it was the Warner-Lambert subsidiary (then debarred) — but Pfizer could keep selling, and most recently, it was a Pharmacia subsidiary of Pfizer.
All along, Pfizer can keep selling to the government payors.
In each case, it was the entity that had “done the crime” that agreed to “do the [non-]time“.
To be clear, here — I do not condone this state of affairs. It just is an odd and tortured outcome dictated by the way the Congress has enacted the law in this area.
One possibility always open to the local US Attorney — in settlement/plea discussions, of this sort — is to demand that executive officers in charge of the units be fired, their stock, options and bonuses be “clawed back” — and so on. . . why we don’t see jail time for at least one or two continues to vex me. But I do understand the proof of specific intent to violate the law — is very difficult, with all the intervening layers of shrugging management.
Often, moreover, the invovled executives have long since taken their parachutes and jumped.
Perhaps that is where the DoJ should next look — even at departed executives.
Fred Hassan and Carrie Cox would appear to be near the tip-top of the list of repeat offenders (Pharmacia, then Schering-Plough), in this regard — yet Hassan landed at Warburg Pinkus (with board seats at Baush & Lomb, and Time-Warner), and Cardinal Health just added Cox to its board of directors, though she has no full time gig as of the moment. Hmmmmm. . . .
Perhaps they would be good targets for Wells notices, having been at the helm of Celebrex, Bestra and, most recently, Vytorin/Zetia.
Who knows?
Namaste
Justice in MI
Thanks, Condor. In 2004, Warner-Lambert no longer existed (it was acquired by Pfizer in 2000). So, indeed, a non-existent company was debarred. Likewise, Pharmacia in the latest round. Kind of like Congress voting to impeach Andrew Johnson _today_.
I agree that corporate crime is a whole different animal, and inevitably follows a different model, than criminal law more generally. That’s both because of the potential unjust consequences to innocents of debarring a company, as you’ve noted and with which I agree, and because malfeasance is often systemic enough that being able to identify particular perps, doing particular mischief, is often very difficult. Thus, your point about proving specific intent.
Condor
Hey JiM — Thanks and I agree with yours.
Just one additional explanatory note: in both cases, one of the Warner-Lambert (2004) and one of the Pharmacia (2009) operating subsidiaries were kept in existence, from 1999, and 2003, respectively. WHY?
One theory holds that this was done to collect later-appearing liabilities generally; another olds that the single most important reason the subs were kept in existence — post-transaction — was to serve as felony plea cannon-fodder, for the eventual DoJ pleas/settlements/consent agreements.
Like I said — pretty darn well-insulated, from the ultimate surviving post-merger parent company executive suite.
Namaste
Condor
OuchQ! — a bad typo corrected, in line two of ‘graph three, of mine above:
“. . .another HOLDS that the single most important. . .”
Namaste
Anonymous
Don’t bar the companies from Medicare/-aid, jst require that they sell their products to the agencies at cost or 2x cost for 5 years. Then require that the CEO be banned from the pharmaceutical industry - all of the industry. After all isn’t that why we have the Business Standards of Ethics.
If they lied to make more money then the punishment should be that they lose more than they could ever have possibly gained.
Oh, and by the way, employees could not be laid off during this period.
Condor
Ni-i-i-i-i-i-i-ice, Anon.!
I like the thoughts — even if they are a non-starter, in the land of trying to “speak truth to power. . . .”
[I especially like the industry-banishment, for the truly-churlish CEOs.]
Namaste
Justice in MI
Great concept (keeping the subs in existence as felony fodder).
I wish I’d kept my “baby teeth” in case I need a filling.
Concerned Party
can we hold the VA system and DOD accountable for recommending generic Neurontin be used for off label indications?
Justice in MI
CP–Not certain whether your comment is intended to be ironic, but the core point of the recent Pfizer busts was not simply off-label promotion. Particularly in the case of Bextra, it was promotion for indications that the FDA had _specfically_ rejected as unsafe.
As I recall the Neurontin case, W-L was promoting gabapentin for indications for which there were no data whatsoever–not even company sponsored studies, published in non-juried pseudo journals.
So it was pure body snatching.