The Pharmaceutical Industry

[jinx]

Feds found Pfizer too big to nail

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.


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."


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.


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.

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.


In all, Pfizer lost the equivalent of three months' profit.
It maintained its ability to do business with the federal government.