Healthy Skepticism Library item: 17553

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Electronic Source

Silverman E
Who Really Suffers If Pfizer Is Too Big To Fail?
Pharmalot 2010 Apr 5
http://www.pharmalot.com/2010/04/who-really-suffers-if-pfizer-is-too-big-to-fail/

Full text:

In the wake of the settlement last September in which Pfizer paid $2.3 billion for off-label marketing for the Bextra painkiller and other meds, former US Attorney Mike Loucks said the “enormous fine demonstrates that such blatant and continued disregard of the law will not be tolerated.” But it wasn’t that simple, because companies convicted of a major health care fraud are automatically excluded from Medicare and Medicaid.
As CNN notes, convicting Pfizer would have prevented the drugmaker from billing the federal programs for its meds, and prosecutors worried such a move would have penalized Pfizer employees and shareholders, and prevented Medicare and Medicaid patients from receiving helpful drugs. This is not a new revelation, which explains why the major consequence of such deals is a big fine, which some – including Loucks – fret is a cost of doing business. The tough talk is, well, tough talk.
Here’s what happened. Instead of charging Pfizer with a crime, CNN reports the feds charged a Pfizer subsidiary, Pharmacia & Upjohn Co. Inc., which was created to plead guilty. Pfizer owns Pharmacia Corp., which owns Pharmacia & Upjohn LLC, which owns Pharmacia & Upjohn Co. LLC, which owns Pharmacia & Upjohn Co. Inc. This unit was incorporated in Delaware on March 27, 2007, the same day Pfizer agreed to plead guilty in a kickback case against a company Pfizer had acquired previously.
And this subsidiary, was excluded from Medicare, but never actually sold any drugs. Meanwhile, as CNN aptly notes, Pfizer continues to do business with Medicare and Medicaid. And so last fall, this shell company again pleaded guilty. “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,” Lewis Morris, chief counsel to the inspector general at the US Department of Health and Human Services, tells CNN. “If we prosecute Pfizer, they get excluded,” Loucks adds. “A lot of the people who work for the company who haven’t engaged in criminal activity would get hurt.”
Such concerns help explain why there is debate about pursuing penalties against individual executives, not just corporations. Of course, that would require proving culpability. Such efforts do occur; Purdue Pharma execs were an example (involving only fines). And last fall, an InterMune exec was convicted of wire fraud for issuing what was called a misleading press release that contributed to off-label sales of a drug. A Justice Department official recently warned there will be more criminal enforcement against senior execs over bribery with foreign governments (see here), but whether prosecutors will go after still bigger fish over off-label marketing remains an open question.
chart thanks to CNN