“A billion here, a billion there, sooner or later it adds up to real money.” ~ Everett Dirksen, Congressman
What Senator Dirksen knew about government spending is these days being applied to drug company fines. And it seems these penalties are, indeed, finally adding up to some ‘real money.’ 2012 saw three of the biggest lawsuits against pharmaceutical companies–and the billions are coming in.
2012 wasn’t a good year for the makers of certain psychiatric drugs.
After making millions, if not billions, on a mood stabilizer, an antipsychotic, and two antidepressants, with misguided promises of the wonders they could work, the truth–and the government–caught up with three major pharmaceutical companies, and took their practices surrounding their psych meds down a steep peg.
Landmark lawsuits against Johnson and Johnson and its subsidiary Janssen Pharmaceutica, Abbott Laboratories Inc, and the largest settlement ever against GlaxoSmithKline found the states and federal government cracking down on illegal practices surrounding and misrepresentation of of psychotropic medications.
After years of drug-makers successfully–and profitably–promoting off-label uses of drugs, exaggerating medications’ effectiveness, and often hiding safety data, the gold mine appears to be shutting down.
Johnson and Johnson
This is “a big win for Arkansas,” said Arkansas Attorney General Dustin McDaniel. “These two companies [Johnson and Johnson and subsidiary Janssen] put profits before people, and they are rightfully being held responsible for their actions.”
In one of the largest penalties ever for a state fraud case involving a drug company, Johnson and Johnson (J&J) got slapped with over $1.1 billion in fines by an Arkansas judge in April for marketing that violated Medicare fraud laws and Arkansas deceptive trade practice statutes.
J&J was accused of promoting its antipsychotic drug Risperdal for unapproved uses, and of misrepresenting the safety and relative effectiveness of the drug.
Risperdal is approved by the FDA to treat schizophrenia and bipolar disorder, as well as behavior problems in teenagers and children with autism.
However, argued the state, J&J marketed the medicine ” for “unapproved uses, including various symptoms in children and the elderly,” despite being warned by the government to stop.
But J&J’s underhandedness didn’t end there. There are risks associated with the drug, risks J&J was accused of hiding. Weight gain, increased likelihood of diabetes, and increased risk of stroke in the elderly are all possible adverse side effects of Risperdal.
Additionally, asserted persecutors, J&J claimed Risperdal was a superior drug and worth its hefty price tag, when in reality it was not better than the cheaper generic alternatives.
As a result, the state said, public funds were improperly used to pay for Risperdal through programs like Medicaid.
It wasn’t as if J&J hadn’t been warned. Three separate times, in 1994, 1999 and once again in 2004, the FDA ordered Janssen to stop making false and misleading claims about the superiority of Risperdal.
The 12-person jury deliberated for only three hours before deciding in favor of the state.
The jury found J&J and its Janssen unit guilty of “false or deceptive acts,” and in particular pointed to letter J&J sent to over 6000 doctors in 2003 asserting Risperdal was safer than other drugs.
Then the judge stepped in and found J&J had committed more than 238,000 violations of the state’s Medicaid fraud laws by illegally marketing Risperdal starting in 2002. Each violation carries a $5,000 fine, pushing the total to more than $1.1 billion. He also fined the company another $11 million for violations of the state’s deceptive practices act.
This was hardly the beginning of trouble for J&J, the second-biggest maker of health products, and its Rispderdal. It was just January of this year when Texas settled a similar case with Janssen for $158 million, in 2011 a South Carolina judge penalized it to the tune of $327 million, and in 2010 a Louisiana jury close to $258 million in damages.
This is already the fifth state jury trial over claims that J&J hid Risperdal’s diabetes risks and tricked Medicaid regulators into paying millions of dollars more than they should have, for equally effective and less dangerous medicines.
Even worse for J&J, numerous other states have lawsuits filed against it, awaiting hearings.
Just this past week J&J announced that it had an “agreement in principle” with the US Department of Justice to pay close to $2.2 billion in fines for its mis-marketing of medications, mainly Risperdal but also antipsychotic Invega and cardiovascular drug Natrecor. That sum would include
and would help the company avoid a felony charge.
If the details of the deal can be hammered out, other lawsuits and state investigations–including an investigation into whether J&J paid Omnicare to buy its drugs and then sell them to nursing homes–will be wrapped up on the agreement.
However, despite J&J’s optimism about the agreement, it is not at all clear that the fines will satisfy state attorneys general who have cases pending against the company.
Monday, May 7, 2012:
Abbott Labs to Pay $1.5 Billion to Resolve Criminal & Civil Investigations of Off-label Promotion of Depakote (Company Maintained Specialized Sales Force to Market Drug for Off Label Purposes; Targeted Elderly Dementia Patients in Nursing Homes)
. . . Abbott Laboratories Inc. has pleaded guilty and agreed to pay $1.5 billion to resolve its criminal and civil liability. . . The resolution – the second largest payment by a drug company – includes a criminal fine and forfeiture. . .” [emphasis mine]
Two of Depakote’s FDA-approved uses are well-known to those familiar with them medication: as an anti-seizure medication, and as a mood stabilizer. In fact, it is often the second-line mood stabilizer treatment for bipolar disorder after an initial trial of lithium, the old standard. It is additionally approved for treatment of migraines.
The above approvals glaringly do not include use in Alzheimer’s patients for controlling behavioral disturbances in dementia patients.
It’s not because Abbott didn’t try to get such approval. Hoping for just such a nod from the FDA, they ran clinical trials using Depakote to manage dementia, but in 1999 they had to discontinue a trial of Depakote for dementia due to adverse effects in the elderly subjects, ranging from sleepiness to dehydration to anorexia. The drug wasn’t safe enough to even continue to test in that population.
But that didn’t stop Abbott from aggressively marketing just such off-label uses of its drug for dementia patients.
Acting Associate Attorney General Tony West asserted, “Not only did Abbott engage in off-label promotion, but it targeted elderly dementia patients and downplayed the risks apparent from its own clinical studies. As this criminal and civil resolution demonstrates, those who put profits ahead of patients will pay a hefty price.”
However, Abbott wasn’t done with its off-label promotion (see the legal document “Agreement of Facts“). They marketed Depakote as a schizophrenia drug–again, not approved–from 2001-2006. Although they could never show a significantly different outcome between antipsychotic drugs used alone and those used in combination with Depakote, it took Abbott researchers almost two years to publish the results indicating the lack of effectiveness, during which time the company continued promoting the drug for schizophrenia.
Abbott will pay back big time. They pleaded guilty to a criminal misdemeanor for mis-marketing Depakote. Under the plea deal they will have to:
1. pay a criminal fine of $500 million,
2. forfeit assets of $198.5 million,
3. submit to a term of probation for five years,
4. pay $1.5 million to the Virginia Medicaid Fraud Control Unit,
5. agree that during probation they won’t pay sales representatives for off-label sales, and
6. design policies to ensure that clinical trials are “approved by the company’s medical or scientific organizations and published in a consistent and transparent manner.”
It’s not a pretty picture for Abbott, but the situation is, if anything, worse for GlaxoSmithKline.
“Today, I am pleased to announce that the Justice Department and our law enforcement partners have reached an historic $3 billion resolution with the pharmaceutical manufacturer GlaxoSmithKline, LLC, to resolve multiple investigations into the company’s sales, marketing, and pricing practices. This action constitutes the largest health care fraud settlement in United States history.” ~ Deputy Attorney General James M. Cole (emphasis mine)
Along with Johnson and Johnson for its Risperdal and Abbott for its Depakote, GlaxoSmithKline (GSK) got in trouble for practices surrounding its own psychiatric drugs–and for a diabetes drug to boot.
GSK was found guilty of illegally marketing antidepressants Paxil and Wellbutrin and downplaying safety risks of diabetes drug Avandia.
This put GSK in hot water–times three.
Under the criminal indictment alone, the company was accused of the following:
a. Paxil: Antidepressant Paxil was never approved for treating depression in children. Yet from from April 1998 to August 2003, according to the criminal complaint filed in Massachusetts, GSK promoted Paxil for treating depression in patients under age 18.
Apparently GSK went so far as to sponsor dinner, lunch, and even and spa programs for doctors to promote the use of Paxil in children and adolescents.
Caught with their hand in the cookie jar, GSK agreed to plead guilty.
b. Wellbutrin: In the early 200s, the FDA had approved Wellbutrin only for use in Major Depressive Disorder.
That didn’t stop GSK from promoting Wellbutrin for weight loss, the treatment of sexual dysfunction, substance addictions and Attention Deficit Hyperactivity Disorder.
In a truly elegant touch, the Wellbutrin sales reps referred to the drug as ’the happy, horny, skinny pill’ to remind doctors of its possible (unapproved) uses.
GSK pleaded guilty to misbranding Wellbutrin, agreeing that its labeling did not bear adequate directions for these off-label uses.
- For the Paxil and Wellbutrin misbranding offenses, GSK will pay a criminal fine of $757,387,200.
c. Avandia: From 2001 to 2007 GSK –how shall I put this?–failed to be fully forthcoming in its reports to the FDA about Avandia. They neglected to include data about two studies concerning the cardiovascular safety of the drug. This was a serious omission.
The data, when found out, was dangerous enough to warrant two black box warnings on the Avandia label–one about the risk of congestive heart failure and the other, heart attack. It’s so easy to forget these small little points.
The upshot? GSK agreed to plead guilty to failing to report data to the FDA and to pay a criminal fine in the amount of $242,612,800 for its unlawful conduct.
The rest of their $3 billion fine is made up of the civil settlement agreement, covering:
1. Off-label promotion and kickbacks. This one’s wide and deep, including promoting its asthma drug Advair for mild asthma patients even though it wasn’t medically approved for that, promoting mood-stabilizing drug Lamictal for pain management, and promoting Zofran, approved for post-operative nausea, for treatment of morning sickness in pregnant women. Further, GSK paid kickbacks to healthcare providers to ‘encourage’ them to prescribe these drugs–and drugs Latronex, Flovent and Valtrex.
These little tricks cost GSK $1.043 billion in fines.
2. Promoting Avandia to health care providers with false and misleading representations about Avandia’s safety profile, causing false claims to be submitted to federal health care programs. The fine for that one is $657 million, of which the federal share is $508 million and the state share is $149 million.
3. False drug price reporting, which led to GSK’s underpaying rebates owed under the Medicaid Drug Rebate Program. GSK will pay $300 million to resolve these allegations, including $160,972,069 to the federal government, $118,792,931 to the states, and $20,235,000 to certain Public Health Service entities who paid inflated prices for the drugs at issue.
That’s just about how you get to the largest healthcare settlement–ever.
So far, that is.