One Barely Noticed Settlement by Pfizer Suggests the Futility of Polite Protests about Health Policy
A few days ago we noticed just one more marcher in the parade of legal settlements. But it was once again a huge health care corporation, and it had aspects that demanded attention.
Pfizer Makes $94 Million Settlement of Allegations of Fraud to Delay Generic Competition
A tiny item in Becker's Hospital News on November 28, 2017, stated:
That was about it. I could find no more extensive coverage of this settlement in any source publicly available without a subscription. So this settlement, like many previous ones which suggested less than perfection on the part of the leadership of our dysfunctional health care system, was anechoic.
Also, as is typical of settlements made by big health care corporations of unethical behavior, this settlement appeared small compared to the magnitude of the revenues likely generated by alleged bad behavior; and this settlement did not impose any negative consequences on any individual who might have authorized, enabled, directed, or implemented the bad behavior, and may have benefited from that behavior (for example, by getting a bigger bonus because of the revenue brought it). Thus, it fit right in with the march of legal settlements that we have been documenting for years. It was a slap on the corporate wrists that was unlikely to deter future bad behavior, and amounted to a grant of impunity to the corporate managers who were involved in and personally profited from the bad behavior.
Furthermore, the settlement seemingly was not informed by previous bad behavior by the corporation or its managers. Pfizer, in fact, has a long and very sorry record of such behavior as documented by legal settlements, convictions and guilty pleas, and other governmental actions. In the last few years we have noted....
Pfizer Fined $106M in UK for Using Monopoly on Production of Generic Phenytoin to Overcharge National Health Service
As reported by the Wall Street Journal on December 7, 2016,
The article suggested that Pfizer took advantage of a loophole in UK law. Drug companies must negotiate prices of branded drugs with the British NHS, but
Unbranded, or generic, drugs may be freely priced, but competition between suppliers typically drives the cost down.
Pfizer Made $486 Million Settlement of Allegations It Bilked Shareholders by Concealing Research Showing the Harms of Celebrex
As reported by Reuters in August, 2016,
As usual, there were no penalties for any individuals who may have been involved with the bilking.
Note that while this particular lawsuit was about financial losses to shareholders, concealing the harms of this drug obviously had the potential of allowing harms to patients. Of course, this was just the most the second most recent settlement involving Celebrex.
Pfizer's Track Record Prior to mid-2016
Our over 100 posts on Pfizer can be found here. Since 2000, Pfizer's troubles started, according to the Philadelphia Inquirer, with the following...
- In 2002, Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.
- In 2004, Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.
- In 2007, Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.
Thereafter,
- In 2009, Pfizer paid a $2.3 billion settlement of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).
- Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here). In that year the company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).
- In early 2011, Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York (see post here).
- In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).
- In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post).
- In August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this post).
- In December, 2012, Pfizer settled federal charges that its Wyeth subsidiary deceptively marketed the proton pump inhibitor drug Protonix, using systematic efforts to deceive approved by top management, and settled charges by multiple states' Attorneys' General that it deceptively marketed Zyvox and Lyrica (see this post).
- In January, 2013, Pfizer settled Texas charges that it had misreported information to and over-billed Medicaid (see this post).
- In July, 2013, Pfizer settled charges of illegal marketing of Rapamune (see this post.)
- In April, 2014, Pfizer settled allegations of anti-trust law violations for delaying generic versions of Neurontin( see this post).
- In June, 2014, Pfizer settled another lawsuit alleging illegal marketing of Neurontin (see this post).
- In 2015, a settlement by Pfizer of a shareholders' lawsuit stemming from charges of illegal marketing was announced (see this post).
- In October, 2015, a UK judge found that the company had threatened health care professionals for using a generic competitor (see this post).
- In February, 2016, Pfizer settled a lawsuit for $785 million for overcharging the US government for Protonix (look here).
That is a stupifyingly bad ethical record stretching over about 17 years. Yet each new settlement seems to disregard all the others before. And since 2000, no top Pfizer executive has ever suffered any negative consequences for any of this behavior. All CEOs who have retired did so as rich men.
Summary
Pfizer provides an amazing example of a huge health care corporation that just marches along, settling or otherwise resolving case after case of over-charging, anti-competitive behavior, deception, sometimes fraud, bribery, and various other unethical and potentially illegal behaviors, without ever too greatly inconveniencing the managers and top executives who have been profiting from this behavior. We have again and again railed against how the US government (and actually governments of other developed countries) have use light-touch regulation on big health care corporations that allows impunity for their top leaders. For example, we wrote in 2015,
But it gets worse. Note that two of the recent Pfizer settlements were of private litigation in which the US government was not involved. One was of alleged anti-competitive behavior, and the other of alleged deceptions that could have resulted in patient harm. Both of these could have been causes of government action, but were not. So it appears that the US government is getting less inclined to do anything to challenge the impunity of top corporate leaders.
Instead, the current Trump regime and its allies in Congress seem hell-bent on further rewarding top corporate leaders. For example, while the supposed tax reform legislation that just passed Congress was pushed by Trump as a way to improve the economy, it looks like it will most benefit corporate leaders. A story in Bloomberg on November 29, 2017, stated,
In particular,
Share buybacks, like dividend increases, tend to benefit stockholders, but not workers (much less customers, or in Pfizer's case, patients),
Left unstated is that top corporate executives are now paid mainly in stock shares and stock options. So they would be major beneficiaries of increased dividends and increased stock prices.
For example, the Pfizer 2017 proxy statement lists the following share holdings of its top-paid executives:
common stock shares stock units
Group President, Pfizer Innovation Health
Albert Bourla DVM, PhD 112,489 30,653
Executive Vice President, Business Operations
and CFO
Frank A D'Amelio 342,176 76,009
President, Worldwide Research and Development
Mikael Dolsten MD, PhD 50,820 191,189
Former Group President,
Global Innovative Pharma Business
Geno J Germano 115,712 35,546
Chairman of the Board, CEO
Ian C Read 645,370 317,117
Group President, Pfizer Essential Health
John D Young 92,434 78,559
Note that Mr D'Amelio was quoted in the article above. As an owner of more than 400,000 Pfizer shares or share equivalents, he would be expected to substantially personally profit from increases in dividends and stock buybacks.
And how likely is it that the Trump regime will respond to any entreaties about tougher law enforcement and more rigorous regulation of pharmaceutical and other large health care corporations? After all, huge numbers of executive branch appointments to positions that deal with health care have been coming through the revolving door from health care corporations and their lobbying firms, etc. At the time of his appointment, the current head of the US Food and Drug Administration had huge conflicts of interest generated by his former positions in and allied with the pharmaceutical industry (look here and here). The gentleman currently nominated to be Secretary of the Department of Health and Human Services was a former top executive at pharmaceutical giant Eli Lilly (look here).
And do we really expect rigorous law enforcement from a regime whose former national security adviser just pleaded guilty to lying to the Federal Bureau of Investigation (look here); and whose former national security adviser and current nominee to be Ambassador to Singapore K T McFarland was just shown to have admitted that Russia had "thrown" the election to Mr Trump, but seemed to think that Mr Trump should then reward Russia by reducing sanctions imposed by the Obama administration (look here)?
The Sunlight Foundation has found that President Trump has over 600 conflicts of interest, and that his family has over 1100 (look here). Do we really expect his regime to improve the integrity of health care leadership?
It is now past time to expect that our polite protests about health policy and measured calls for true health care reform will have any impact on health policy, as long as the inmates are in control of the asylum. We need wholesale changes in top health care leadership in government, and wholesale changes in the top leadership of the government, if we want anything even slightly resembling true health care reform. Achieving true health care reform will require much more than polite protests.
Pfizer Makes $94 Million Settlement of Allegations of Fraud to Delay Generic Competition
A tiny item in Becker's Hospital News on November 28, 2017, stated:
Pfizer will pay $94 million to resolve allegations that it used fraudulent patents to delay generic competition for its anti-inflammatory drug Celebrex.
The lawsuit, brought by 32 direct purchasers of Celebrex in April and certified a class action lawsuit in August, claimed Pfizer attempted to revive its invalidated patent by making material misrepresentations to the U.S. Patent and Trademark Office. As a result, the U.S. PTO granted Pfizer a new patent based on this reportedly inaccurate information.
Further, the plaintiffs — including American Sales Co., Rochester Drug Co-Operative, Cesar Castillo and more — allege Pfizer filed a lawsuit against five generic manufacturers for infringing upon the fraudulently obtained patent to maintain monopoly over the drug.
That was about it. I could find no more extensive coverage of this settlement in any source publicly available without a subscription. So this settlement, like many previous ones which suggested less than perfection on the part of the leadership of our dysfunctional health care system, was anechoic.
Also, as is typical of settlements made by big health care corporations of unethical behavior, this settlement appeared small compared to the magnitude of the revenues likely generated by alleged bad behavior; and this settlement did not impose any negative consequences on any individual who might have authorized, enabled, directed, or implemented the bad behavior, and may have benefited from that behavior (for example, by getting a bigger bonus because of the revenue brought it). Thus, it fit right in with the march of legal settlements that we have been documenting for years. It was a slap on the corporate wrists that was unlikely to deter future bad behavior, and amounted to a grant of impunity to the corporate managers who were involved in and personally profited from the bad behavior.
Furthermore, the settlement seemingly was not informed by previous bad behavior by the corporation or its managers. Pfizer, in fact, has a long and very sorry record of such behavior as documented by legal settlements, convictions and guilty pleas, and other governmental actions. In the last few years we have noted....
Pfizer Fined $106M in UK for Using Monopoly on Production of Generic Phenytoin to Overcharge National Health Service
As reported by the Wall Street Journal on December 7, 2016,
The U.K.’s top antitrust regulator slapped Pfizer Inc. PFE 0.25% with a record $107 million fine, alleging it overcharged the national health-care system for an epilepsy treatment.
The Competition and Markets Authority said Pfizer and drug-distribution company Flynn Pharma Ltd. broke competition law by charging unfair prices in the U.K. for the drug, phenytoin sodium, used by about 48,000 patients in the country.
The CMA said the £84.2 million Pfizer fine was the highest it had ever imposed....
The article suggested that Pfizer took advantage of a loophole in UK law. Drug companies must negotiate prices of branded drugs with the British NHS, but
Unbranded, or generic, drugs may be freely priced, but competition between suppliers typically drives the cost down.
The regulator said Pfizer and Flynn Pharma “deliberately debranded” the drug in 2012 to raise the price and were able to do so because there were no competing suppliers.So this was the resolution of yet more anti-competitive behavior by Pfizer which allowed it to overcharge taxpayers. Like the settlement above, it allowed the Pfizer management involved impunity.
The CMA said the price of a 100-milligram pack of phenytoin sodium shot up—to £67.50 from £2.83—after Pfizer sold the rights to sell the drug to Flynn Pharma in September 2012. It said the price decreased to £54 in May 2014.
Before the agreement, Pfizer had sold phenytoin sodium capsules directly to U.K. wholesalers and pharmacies under the brand name Epanutin.
The price increase was partly because Pfizer, which continued to manufacture phenytoin sodium, sold the drug to Flynn Pharma at up to 17 times the price than it charged wholesalers and pharmacies previously, the regulator said. Flynn Pharma raised the price further still.
Pfizer Made $486 Million Settlement of Allegations It Bilked Shareholders by Concealing Research Showing the Harms of Celebrex
As reported by Reuters in August, 2016,
Pfizer Inc (PFE.N) on Tuesday said it has reached a $486 million settlement of litigation accusing it of causing big losses for shareholders by concealing safety risks associated with its Celebrex and Bextra pain-relieving drugs.
As usual, there were no penalties for any individuals who may have been involved with the bilking.
Note that while this particular lawsuit was about financial losses to shareholders, concealing the harms of this drug obviously had the potential of allowing harms to patients. Of course, this was just the most the second most recent settlement involving Celebrex.
Pfizer's Track Record Prior to mid-2016
Our over 100 posts on Pfizer can be found here. Since 2000, Pfizer's troubles started, according to the Philadelphia Inquirer, with the following...
- In 2002, Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.
- In 2004, Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.
- In 2007, Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.
Thereafter,
- In 2009, Pfizer paid a $2.3 billion settlement of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).
- Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here). In that year the company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).
- In early 2011, Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York (see post here).
- In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).
- In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post).
- In August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this post).
- In December, 2012, Pfizer settled federal charges that its Wyeth subsidiary deceptively marketed the proton pump inhibitor drug Protonix, using systematic efforts to deceive approved by top management, and settled charges by multiple states' Attorneys' General that it deceptively marketed Zyvox and Lyrica (see this post).
- In January, 2013, Pfizer settled Texas charges that it had misreported information to and over-billed Medicaid (see this post).
- In July, 2013, Pfizer settled charges of illegal marketing of Rapamune (see this post.)
- In April, 2014, Pfizer settled allegations of anti-trust law violations for delaying generic versions of Neurontin( see this post).
- In June, 2014, Pfizer settled another lawsuit alleging illegal marketing of Neurontin (see this post).
- In 2015, a settlement by Pfizer of a shareholders' lawsuit stemming from charges of illegal marketing was announced (see this post).
- In October, 2015, a UK judge found that the company had threatened health care professionals for using a generic competitor (see this post).
- In February, 2016, Pfizer settled a lawsuit for $785 million for overcharging the US government for Protonix (look here).
That is a stupifyingly bad ethical record stretching over about 17 years. Yet each new settlement seems to disregard all the others before. And since 2000, no top Pfizer executive has ever suffered any negative consequences for any of this behavior. All CEOs who have retired did so as rich men.
Summary
Pfizer provides an amazing example of a huge health care corporation that just marches along, settling or otherwise resolving case after case of over-charging, anti-competitive behavior, deception, sometimes fraud, bribery, and various other unethical and potentially illegal behaviors, without ever too greatly inconveniencing the managers and top executives who have been profiting from this behavior. We have again and again railed against how the US government (and actually governments of other developed countries) have use light-touch regulation on big health care corporations that allows impunity for their top leaders. For example, we wrote in 2015,
As long as top managers of big health care organizations can act with impunity, can avoid all responsibility for their organizations' bad behaviors, and can personally profit wildly from their companies actions, the health care death spiral will continue. Will we continue to cry out in the wilderness, or will anyone else see the writing on the wall?
But it gets worse. Note that two of the recent Pfizer settlements were of private litigation in which the US government was not involved. One was of alleged anti-competitive behavior, and the other of alleged deceptions that could have resulted in patient harm. Both of these could have been causes of government action, but were not. So it appears that the US government is getting less inclined to do anything to challenge the impunity of top corporate leaders.
Instead, the current Trump regime and its allies in Congress seem hell-bent on further rewarding top corporate leaders. For example, while the supposed tax reform legislation that just passed Congress was pushed by Trump as a way to improve the economy, it looks like it will most benefit corporate leaders. A story in Bloomberg on November 29, 2017, stated,
Major companies including Cisco Systems Inc., Pfizer Inc. and Coca-Cola Co. say they’ll turn over most gains from proposed corporate tax cuts to their shareholders, undercutting President Donald Trump’s promise that his plan will create jobs and boost wages for the middle class.
The president has held fast to his pledge even as top executives’ comments have run counter to it for months. Instead of hiring more workers or raising their pay, many companies say they’ll first increase dividends or buy back their own shares.
In particular,
Robert Bradway, chief executive of Amgen Inc., said in an Oct. 25 earnings call that the company has been “actively returning capital in the form of growing dividend and buyback and I’d expect us to continue that.” Executives including Coca-Cola CEO James Quincey, Pfizer Chief Financial Officer Frank D’Amelio and Cisco CFO Kelly Kramer have recently made similar statements.
Share buybacks, like dividend increases, tend to benefit stockholders, but not workers (much less customers, or in Pfizer's case, patients),
in testimony before the bicameral Joint Economic Committee on Wednesday, Federal Reserve Chair Janet Yellen said that the plans outlined by corporate executives to reward investors were unlikely to raise wages for workers.
'I don’t think share buybacks would increase wages,' Yellen said when asked by Michigan Democratic Senator Gary Peters about the impact of CEOs’ plans. Investment in capital and equipment, not buybacks, would raise productivity and pay, she said.
Left unstated is that top corporate executives are now paid mainly in stock shares and stock options. So they would be major beneficiaries of increased dividends and increased stock prices.
For example, the Pfizer 2017 proxy statement lists the following share holdings of its top-paid executives:
common stock shares stock units
Group President, Pfizer Innovation Health
Albert Bourla DVM, PhD 112,489 30,653
Executive Vice President, Business Operations
and CFO
Frank A D'Amelio 342,176 76,009
President, Worldwide Research and Development
Mikael Dolsten MD, PhD 50,820 191,189
Former Group President,
Global Innovative Pharma Business
Geno J Germano 115,712 35,546
Chairman of the Board, CEO
Ian C Read 645,370 317,117
Group President, Pfizer Essential Health
John D Young 92,434 78,559
Note that Mr D'Amelio was quoted in the article above. As an owner of more than 400,000 Pfizer shares or share equivalents, he would be expected to substantially personally profit from increases in dividends and stock buybacks.
And how likely is it that the Trump regime will respond to any entreaties about tougher law enforcement and more rigorous regulation of pharmaceutical and other large health care corporations? After all, huge numbers of executive branch appointments to positions that deal with health care have been coming through the revolving door from health care corporations and their lobbying firms, etc. At the time of his appointment, the current head of the US Food and Drug Administration had huge conflicts of interest generated by his former positions in and allied with the pharmaceutical industry (look here and here). The gentleman currently nominated to be Secretary of the Department of Health and Human Services was a former top executive at pharmaceutical giant Eli Lilly (look here).
And do we really expect rigorous law enforcement from a regime whose former national security adviser just pleaded guilty to lying to the Federal Bureau of Investigation (look here); and whose former national security adviser and current nominee to be Ambassador to Singapore K T McFarland was just shown to have admitted that Russia had "thrown" the election to Mr Trump, but seemed to think that Mr Trump should then reward Russia by reducing sanctions imposed by the Obama administration (look here)?
The Sunlight Foundation has found that President Trump has over 600 conflicts of interest, and that his family has over 1100 (look here). Do we really expect his regime to improve the integrity of health care leadership?
It is now past time to expect that our polite protests about health policy and measured calls for true health care reform will have any impact on health policy, as long as the inmates are in control of the asylum. We need wholesale changes in top health care leadership in government, and wholesale changes in the top leadership of the government, if we want anything even slightly resembling true health care reform. Achieving true health care reform will require much more than polite protests.
One Barely Noticed Settlement by Pfizer Suggests the Futility of Polite Protests about Health Policy
![One Barely Noticed Settlement by Pfizer Suggests the Futility of Polite Protests about Health Policy]()
Reviewed by MCH
on
December 03, 2017
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