Recentparmasettlement1_10.indd

�������������� ������������������������� Over the past five years, the Department of Justice has exacted substantial criminal and civil penalties through settlements with several of the nation’s largest pharmaceutical companies arising from wide-ranging allegations of heathcare fraud. A few notable themes emerge from these settlements: • They involve a relatively narrow range of statutes; • Most require that the company enter into a corporate integrity agreement; • The company agrees to pay substantial fines and/or remediate losses to government payers; and • A vast majority are entered with the United States Attorney’s Office for the District of Several of the most significant agreements are discussed below. Most recently, in September, Pfizer and Pharmacia Upjohn Company, Inc. agreed with the US Attorney’s Office in Boston to plead guilty to felony misbranding in connection with Pfizer’s off-label promotion of its pain drug, Bextra. Pfizer marketed Bextra at unapproved dosages and for acute pain notwithstanding that the FDA had explicitly rejected that indication. Pfizer agreed to pay the largest criminal penalty ever for a healthcare fraud violation–$1.195 billion in fines and a forfeiture of $105 million. It paid an additional $1 billion plus interest to resolve civil liability to government payers under the False Claims Act. Finally, Pfizer agreed to enter into a five-year Corporate Integrity Agreement with the Department of Health and Human Services that required it to implement policies, procedures and practices to ensure compliance with federal healthcare program requirements and FDA requirements.
Earlier in 2009, Eli Lily agreed with the US Attorney’s Office for the Eastern District of Pennsylvania to plead guilty to misdemeanor misbranding in connection with Lily’s off-label marketing of its anti-psychotic drug, Zyprexa. The FDA approved Zyprexa for treatment of bipolar disorder and short-term treatment of schizophrenia. Lily admitted marketing Zyprexa in elderly populations for non-indicated uses including Alzheimer’s dementia. The government alleged in an Information that Lily trained its sales force to disregard the law and promote Zyprexa for off-label uses, and that Lily created marketing materials promoting those uses. Lily agreed to pay a $500 million criminal fine and forfeit $100 million. It additionally agreed to pay $800 million to resolve civil liability to federal and state payers under the False Claims Act.
There is no obvious explanation for why Pfizer pled to felony misbranding while Lily only pled to a misdemeanor violation of the statute. Perhaps the result can be attributed to the exercise of prosecutorial discretion by two separate US Attorneys’ Offices. The consequence of the different dispositions is substantial: Lily is not barred from participating in federal healthcare programs. Pharmacia Upjohn, which entered the plea for Pfizer, is subject to such a ban. ���������������������������������������������������������� Few significant Pharma settlements over the past few years have involved individuals. One notable exception is the settlement between the US Attorney’s Office for the Western District of Virginia and Purdue Frederick Company in May 2007. Purdue Pharma agreed to plead guilty to felony misbranding, while its President, Chief Legal Officer and Medical Affair Director pled to misdemeanor misbranding. The agreement arose out of Purdue Pharma’s understatement of the safety risks for its drug, OxyContin. Although the company’s internal documents explicitly acknowledged its concern over the drug’s “abuse potential,” the company promoted OxyContin as less addictive, less subject to abuse and less likely to cause withdrawal than other pain medications. Purdue and the individual defendants agreed to pay $635K in criminal and civil fines. Purdue Pharma also entered into a five–year corporate integrity agreement with the Department of Health and Human Services.
In March 2007, the US Attorney’s Office for the District of Massachusetts in Boston entered into an agreement with Pharmacia Upjohn to resolve kickback allegations regarding, and off-label promotion of, Genotropin, approved by the FDA to treat a limited range of hormonal deficiencies. Pharmacia Upjohn pled guilty to a felony violation for offering payments to induce physicians to recommend the purchase of, or themselves order, Genotropin. The government specifically declined to prosecute Pfizer with respect to Genotropin because of Pfizer’s self-disclosure of wrongdoing within one month of acquiring Pharmacia Upjohn. The company paid a criminal fine of $19 million and entered into a deferred prosecution agreement for 36 months.
Other Recent Settlements
US Attorney’s Office
If you wish to discuss any of these matters further, Joseph Zwicker can be reached by telephone at (617) 248-5065 or by email at jzwicker@choate.com.
Copyright 2010 CHOATE HALL & STEWART LLP Information contained herein should not be construed as legal advice or legal opinions on specific facts. The enclosed material is provided for education and information purposes by Choate, Hall & Stewart LLP to clients and others who may be interested in the subject matter.

Source: http://www.choate.com/uploads/113/doc/zwicker-cbi-recent-pharma-settlements.pdf