Tag Archives: PhRMA

Pfizer creates fake company to take rap in criminal case….and gets away with it!

Below is a story from CNN that is a must read.  It shows everything that is wrong with the pharmaceutical industry.

CNN Article

Imagine being charged with a crime, but an imaginary friend takes the rap for you.

That is essentially what happened when Pfizer, the world’s largest pharmaceutical company, was caught illegally marketing Bextra, a painkiller that was taken off the market in 2005 because of safety concerns.

When the criminal case was announced last fall, federal officials touted their prosecution as a model for tough, effective enforcement. “It sends a clear message” to the pharmaceutical industry, said Kevin Perkins, assistant director of the FBI’s Criminal Investigative Division.

But beyond the fanfare, a CNN Special Investigation found another story, one that officials downplayed when they declared victory. It’s a story about the power major pharmaceutical companies have even when they break the laws intended to protect patients.

Big plans for Bextra

The story begins in 2001, when Bextra was about to hit the market. The drug was part of a revolutionary class of painkillers known as Cox-2 inhibitors that were supposed to be safer than generic drugs, but at 20 times the price of ibuprofen.

Pfizer and its marketing partner, Pharmacia, planned to sell Bextra as a treatment for acute pain, the kind you have after surgery.

But in November 2001, the U.S. Food and Drug Administration said Bextra was not safe for patients at high risk of heart attacks and strokes.

The FDA approved Bextra only for arthritis and menstrual cramps. It rejected the drug in higher doses for acute, surgical pain.

Promoting drugs for unapproved uses can put patients at risk by circumventing the FDA’s judgment over which products are safe and effective. For that reason, “off-label” promotion is against the law.

But with billions of dollars of profits at stake, marketing and sales managers across the country nonetheless targeted anesthesiologists, foot surgeons, orthopedic surgeons and oral surgeons. “Anyone that use[d] a scalpel for a living,” one district manager advised in a document prosecutors would later cite.

A manager in Florida e-mailed his sales reps a scripted sales pitch that claimed — falsely — that the FDA had given Bextra “a clean bill of health” all the way up to a 40 mg dose, which is twice what the FDA actually said was safe.

Doctors as pitchmen

Internal company documents show that Pfizer and Pharmacia (which Pfizer later bought) used a multimillion-dollar medical education budget to pay hundreds of doctors as speakers and consultants to tout Bextra.

Pfizer said in court that “the company’s intent was pure”: to foster a legal exchange of scientific information among doctors.

But an internal marketing plan called for training physicians “to serve as public relations spokespeople.”

According to Lewis Morris, chief counsel to the inspector general at the U.S. Department of Health and Human Services, “They pushed the envelope so far past any reasonable interpretation of the law that it’s simply outrageous.”

Pfizer’s chief compliance officer, Doug Lanker, said that “in a large sales force, successful sales techniques spread quickly,” but that top Pfizer executives were not aware of the “significant mis-promotion issue with Bextra” until federal prosecutors began to show them the evidence.

By April 2005, when Bextra was taken off the market, more than half of its $1.7 billion in profits had come from prescriptions written for uses the FDA had rejected.

Too big to nail

But when it came to prosecuting Pfizer for its fraudulent marketing, the pharmaceutical giant had a trump card: Just as the giant banks on Wall Street were deemed too big to fail, Pfizer was considered too big to nail.

Why? Because any company convicted of a major health care fraud is automatically excluded from Medicare and Medicaid. Convicting Pfizer on Bextra would prevent the company from billing federal health programs for any of its products. It would be a corporate death sentence.

Prosecutors said that excluding Pfizer would most likely lead to Pfizer’s collapse, with collateral consequences: disrupting the flow of Pfizer products to Medicare and Medicaid recipients, causing the loss of jobs including those of Pfizer employees who were not involved in the fraud, and causing significant losses for Pfizer shareholders.

“We have to ask whether by excluding the company [from Medicare and Medicaid], are we harming our patients,” said Lewis Morris of the Department of Health and Human Services.

So Pfizer and the feds cut a deal. Instead of charging Pfizer with a crime, prosecutors would charge a Pfizer subsidiary, Pharmacia & Upjohn Co. Inc.

The CNN Special Investigation found that the subsidiary is nothing more than a shell company whose only function is to plead guilty.

According to court documents, Pfizer Inc. owns (a) Pharmacia Corp., which owns (b) Pharmacia & Upjohn LLC, which owns (c) Pharmacia & Upjohn Co. LLC, which in turn owns (d) Pharmacia & Upjohn Co. Inc. It is the great-great-grandson of the parent company.

Public records show that the subsidiary was incorporated in Delaware on March 27, 2007, the same day Pfizer lawyers and federal prosecutors agreed that the company would plead guilty in a kickback case against a company Pfizer had acquired a few years earlier.

As a result, Pharmacia & Upjohn Co. Inc., the subsidiary, was excluded from Medicare without ever having sold so much as a single pill. And Pfizer was free to sell its products to federally funded health programs.

Two years later, with Bextra, the shell company once again pleaded guilty. It was, in effect, Pfizer’s imaginary friend stepping up to take the rap.

“It is true that if a company is created to take a criminal plea, but it’s just a shell, the impact of an exclusion is minimal or nonexistent,” Morris said.

Prosecutors say there was no viable alternative.

“If we prosecute Pfizer, they get excluded,” said Mike Loucks, the federal prosecutor who oversaw the investigation. “A lot of the people who work for the company who haven’t engaged in criminal activity would get hurt.”

Did the punishment fit the crime? Pfizer says yes.

It paid nearly $1.2 billion in a criminal fine for Bextra, the largest fine the federal government has ever collected.

It paid a billion dollars more to settle a batch of civil suits — although it denied wrongdoing — on allegations that it illegally promoted 12 other drugs.

In all, Pfizer lost the equivalent of three months’ profit.

It maintained its ability to do business with the federal government.

Pfizer says it takes responsibility for the illegal promotion of Bextra. “I can tell you, unequivocally, that Pfizer perceived the Bextra matter as an incredibly serious one,” said Doug Lankler, Pfizer’s chief compliance officer.

To prevent it from happening again, Pfizer has set up what it calls “leading-edge” systems to spot signs of illegal promotion by closely monitoring sales reps and tracking prescription sales.

It’s not entirely voluntary. Pfizer had to sign a corporate integrity agreement with the Department of Health and Human Services. For the next five years, it requires Pfizer to disclose future payments to doctors and top executives to sign off personally that the company is obeying the law.

Pfizer says the company has learned its lesson.

But after years of overseeing similar cases against other major drug companies, even Loucks, isn’t sure $2 billion in penalties is a deterrent when the profits from illegal promotion can be so large.

“I worry that the money is so great,” he said, that dealing with the Department of Justice may be “just of a cost of doing business.”

Dr. Court’s Comments

This case sets a dangerous precedent.  It tells large pharmaceutical companies that they can get away with just about anything because the federal government is powerless to stop them.

When a company is criminally responsible for something they should have to pay the price.  While Pfizer makes many drugs that are life savers for many people, the vast majority of them are oversold and over hyped for reasons that are well illustrated above.

All too often drugs are pushed for their ‘off label’ use.  This means they are pushed by the pharmaceutical companies to be used for things they are not approved for.  Very frequently people are prescribed anti-depressants for anxiety or take an antihistamine to sleep better.  While they may work for these purposes, they are not intended or tested to be safe for those purposes.

I always ask my patients why they are taking a certain prescription even it is seems straight forward because I can never be too sure.

This is also why health care is so expensive.  Needless drugs drive up the cost for all of us.  In my opinion off label prescribing should be illegal and safer more conservative options should always be considered.

Large companies like Pfizer do not have the best track record when it comes to being ethical.  Big money leads to small minds when in terms of ethics and morality.  Billions and billions of dollars tends to cloud the mind apparently.

Until tight regulation of the pharmaceutical industry is achieved, these cases will continue to surface.  The bank collapse that occurred in the recent recession showed us that the financial industry needed tighter regulation.  I believe that, unfortunately, something terrible will have to happen before Big Pharma has someone watching over it.

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Big Pharma and Politics

Do me a favor.  Just read this quote below and think about what it says.  It is from a story published in the New York Times on February 11th, 2010.

Billy Tauzin, one of the highest paid lobbyists in Washington, is resigning as president of the pharmaceutical industry’s trade group amid internal disputes over its pact with the White House to trade political support for favorable terms in the proposed health care overhaul.

This is the first paragraph of the story and I could not believe it when I read it.  It basically says that our laws, in this case health care reform, are completely controlled by large companies.  It is not that surprising, I guess.  It has been known for a long time that most laws in this country are implemented for powerful special interest groups, and “the people” have little to say about it.

My problem with the pharmaceutical industry providing “political” support for favorable terms is that they are the largest reason that health care in this country is so expensive.  A simple example is the $175 prescription fish oil they market when high quality fish oil is available for $25-$40 through qualified health care professionals.  “Political” support is generally monetary support.  Check out the ridiculous numbers spent by the pharmaceutical industry.

  • Drug companies and their trade groups spent $155 million, lobbying on a variety of issues ranging from protecting lucrative drug patents to keeping lower-priced Canadian drugs from being imported to the United States Drug interests employed about 1,100 lobbyists to do their bidding in each of the past two years.

That is a lot of money.  Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s main trade group, has 1,100 lobbyists to do its bidding.  That’s 22 lobbyists per senator. Think about if the nutrition industry had that kind of lobby.  Don’t you think the view of health care in this country would be different?  People who turn a blind eye to this kind of thing are kidding themselves.  It is not a conspiracy and I am not a conspiracy theorist.  This is fact and available in the public domain.  Below I have posted a list of laws passed and moves made by the pharmaceutical industry from 1980 to 2008 starting with the most recent events.  This is just a small sampling of how the pharmaceutical industry controls the laws that are supposed to govern them.  They write the rules to their own game.


On Jan. 1, the administration of vaccines (in addition to the cost of the vaccine itself) is included in the coverage of Medicare Part D drugs.

In June, House Democrats announce plans to introduce legislation preventing FDA regulation from trumping medical device patients’ ability to seek damages under state law.


On Jan. 3, Speaker of the House Nancy Pelosi and House Democrats release their agenda for the first 100 hours of the legislative session, planning to enact a bill that will allow the Secretary of Health and Human Services to negotiate directly with pharmaceutical companies to negotiate lower prescription drug prices for Medicare beneficiaries. The Senate has not acted on the measure.

In mid-January, a bipartisan Congressional contingent announces plans for legislation to allow importation of prescription drugs from Canada and other foreign countries, estimating that consumers could save $50 billion over the next ten years if the measure is passed.

In April, patent reform legislation is introduced in the Senate to improve the U.S. patent system. Despite support from high-tech and communications companies, the measure is opposed by the pharmaceutical industry because of the possibility that it would weaken patent protections by reducing infringement penalties. The bill was reported out of committee but has not made it to the Senate floor.

In May, a drug-import plan that would have eased the process of importing cheaper prescription drugs into the country from Canada and other foreign countries is defeated during Senate debate on a bill designed to strengthen the FDA.

In late September, President George W. Bush signs into law the Food and Drug Administration Amendments Act (FDAAA) of 2007. The bill revises and extends the user-fee programs for prescription drugs and medical devices, enhances the postmarket authorities of the FDA with respect to the safety of drugs, requires clinical trials and research for pediatric medications, and reauthorizes multiple bills, including the Orphan Drug Act relating to medications for rare diseases, the Best Pharmaceuticals for Children Act, and the Public Health Service Act.

In November, legislation that would have prevented reverse payment, or the practice of brand-name drug companies paying generic drug manufacturers to delay market entry of generic medications, stalls in Congress.

On Dec. 21, President George W. Bush signs into law an extension of the State Children’s Health Insurance Program (SCHIP) to provide funds to states to grant health insurance to children in families with incomes that are modest but too high to qualify for Medicaid. Amidst a bitter partisan battle between Congress and the White House, the bill extends funding for eighteen months so that a compromise can be reached.


On Jan. 1, the Medicare Modernization Act of 2003 goes into effect. It gets off to a shaky start, with many consumers unable to utilize the benefit because of administrative problems. Within the first month at least half the states are forced to bypass the system, pay the bills themselves and seek federal reimbursement later.

The FDA unveils new rules that force drug makers to simplify informational inserts that come with prescriptions in an effort to make medications safer for consumers. The move comes amidst heavily publicized safety concerns from painkillers Vioxx and Bextra, both of which were removed from the market in 2005.


The pharmaceutical industry mounts a successful $83 million effort to defeat Proposition 79 in California’s November special election. The initiative would have cost drug companies millions of dollars in mandatory discounts and could have set a precedent, opening the door to such action in other states.

In August, a federal judge in Minnesota dismisses claims that several drug giants violated antitrust law by taking steps to block the importation of prescription drugs from Canada.

Thirty-three of the 40 countries that PhRMA requested be put in the U.S. Trade Representative’s Special 301 Report appear on the list. Inclusion establishes intellectual property issues — such as drug patents — as a priority in bilateral discussions between the United States and the designated countries.


American Jobs Creation Act is signed into law. The act repeals the Extraterritorial Income Act tax regime and provides for $137 billion in new corporate tax incentives over the next decade. Taking advantage of a provision in the law, Pfizer, the world’s largest drug company, is expected to repatriate nearly $17 billion it earned in profits abroad.

BioShield Act passes, providing $5.6 billion over 10 years for biodefense products.

CREATE Act passes unanimously in both houses of Congress. Allows patents for inventions researched jointly by public institutions and private entrepreneurs.

Thirty-three of the 38 countries cited in a PhRMA petition to the United States Trade Representative’s Office appear on the USTR watch list.


The Medicare Modernization Act of 2003 provides for a prescription drug benefit for Medicare recipients but prevents price negotiations with drug companies. The act partially reverses cuts in reimbursements to pharmaceutical companies.


The Best Pharmaceuticals for Children Act is signed into law. It extends “pediatric exclusivity” provision of the FDA Modernization Act of 1997 that gives prescription drug makers an additional six months of patent protection during which generic drugs cannot be sold, in exchange for the manufacturer conducting studies of the drug’s effects in children. The Congressional Budget Office estimates that, in the long run, prices for prescription drugs will increase as a result of the bill.

Trade Act of 2002 (H.R.3009) passed. The Act makes intellectual property rights and the elimination of regulatory practices (such as price controls) negotiating objectives in trade agreements.

Prescription Drug Users Fee Act renewed. Included in the legislation are industry requests to speed up product reviews and use third-party advisors recommended by the companies to assess products.

Greater Access to Affordable Pharmaceuticals Act is defeated. The Act would have weakened patent restrictions on pharmaceuticals, making way for more generic drugs.

A policy is enacted that requires warning letters sent to drug companies to first be cleared by the FDA counsel’s office. The number of warning letters sent by the FDA dramatically decreases.

The Department of Health and Human Services proposes new privacy regulations that could give FDA-regulated entities, including drug companies, access to medical records without notice to patients.

The FDA approves rule change allowing some drugs, such as vaccines against biowarfare agents, to be approved after testing in animals.

A provision to protect companies from lawsuits regarding thimerosal contained in their vaccines is a last-minute addition to the bill that created the Department of Homeland Security. In the face of popular outrage, the provision is repealed a few months later.


FDA Modernization Act is signed into law. Allows medical device makers to hire for-profit companies to review their products and promote them to the FDA. Codifies previous reforms. Allows manufacturers to disseminate journal articles describing the results of trials for unapproved uses of drugs. Reauthorizes the Prescription Drug User Fee Act. Authorizes six-month “pediatric exclusivity” patent extensions.

The FDA eases restrictions on direct-to-consumer advertising of prescription drugs, allowing ads to refer consumers elsewhere to find risk information instead of including it in the ads themselves.

The Orphan Drug Act tax credit is made permanent.


Congress reauthorizes the Orphan Drug Tax Credit for one year. The credit covers 50 percent of the cost of clinical trials for orphan drugs. Companies not yet profitable enough to pay taxes are allowed to take the tax credit at a later date.


The FDA relaxes regulations, eliminating the establishment licensing application, which required a separate application to approve the manufacturing sites of new drugs. Lot-lease approvals, a continuous review of manufacturing sites after initial approval, also end.

The US Patent Office allows companies to show potential usefulness by submitting preclinical trial data rather than data from clinical trials.

The Patent Office relaxes its criteria on awarding patents for genes.


After heavy lobbying by the industry, price control proposals that were part of the Clinton health care plan are abandoned.


Prescription Drug User Fees Act passes. Allows companies to pay a fee to the FDA in return for a faster review period.


The FDA accelerates the review of drugs for life-threatening diseases.


The Prescription Drug Marketing Act passed. (Requires distribution of samples and safeguards against the sale of substandard or counterfeit drugs.)


Hatch-Waxman Act (The Drug Price Competition and Patent Term Restoration Act of 1984) passes. One of the major loopholes in the act allows brand-name drug companies a 30 month patent extension on a drug by suing a generic manufacturer.


Orphan Drug Act passes. The law encourages development of drugs to treat rare diseases affecting fewer than 200,000 by giving incentives to companies.


Bayh-Dole Act passes. The Act promotes university-industry partnerships and allows the industry to tap research conducted at taxpayer-subsidized facilities.

Source: The Center For Public Integrity.

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