Amgen Settles, Pleads Guilty to Misbranding Aranesp

Now it's Amgen's turn to settle and plead.  Per the New York Times,

The biotechnology giant Amgen marketed its anemia drug Aranesp for unapproved uses even after the Food and Drug Administration explicitly ruled them out, federal prosecutors said on Tuesday.

 The federal charges were made public as Amgen pleaded guilty to illegally marketing the drug and agreed to pay $762 million in criminal penalties and settlements of whistle-blower lawsuits.

Amgen was 'pursuing profits at the risk of patient safety' Marshall L. Miller, acting United States attorney in Brooklyn, said in a telephone news briefing on Tuesday.

David J. Scott, Amgen’s general counsel, entered the guilty plea at the United States District Court in Brooklyn to a single misdemeanor count of misbranding the drug, Aranesp, meaning selling it for uses not approved by the F.D.A.

Amgen agreed to pay $136 million in criminal fines and forfeit $14 million, with about $612 million going to settle civil litigation. 

The article noted the key charge against Amgen,

 In court on Tuesday, prosecutors charged that Amgen had promoted the use of Aranesp to treat anemia in cancer patients who were not undergoing chemotherapy, even though the drug’s approval was only for patients receiving chemotherapy.

A subsequent study sponsored by Amgen showed that use of Aranesp by those nonchemotherapy cancer patients had actually increased the risk of death, and the off-label use diminished. 

Also,

 The federal charges also say Amgen promoted using larger but less frequent injection of Aranesp than stated in the label as a way of making the drug more attractive to doctors and patients than Procrit, a rival anemia drug from Johnson & Johnson. 

As is typical of such cases, the prosecutors could not figure out how to charge any individuals who might have authorized, directed, or implemented the bad behavior,

 Mr. Miller said that the evidence in the Amgen case was not sufficient to charge individuals. However, he said, Amgen agreed to sign a corporate integrity agreement that requires executives and board members to personally certify compliance with regulations. That would make it easier to prosecute individuals should violations occur again, he said. 

The Charges in Context

In some reports of the settlement, the issue appeared to be money.  For example, Pharmalot reported that after a whistle-blower filed suit against Amgen, "a subsequent investigation by the Justice Department found that these practices induced physicians to use Amgen medications unnecessarily when lower cost alternatives were available."

However, Amgen's practices could have had much worse effects than just removing money from the US Treasury.

Consider the context.  Only a few of the not very numerous articles in the media on this case noted that the key complaint was that Amgen was pushing use of Aranesp for patients with cancer, specifically those not receiving chemotherapy.   (Reuters made this explicit, for example, but not so the Los Angeles Times, or Bloomberg's initial coverage.)

 In fact, there has been concern about the adverse effects of Aranesp for patients with cancer for a while.  In 2007, Khuri noted in a commentary in the New England Journal of Medicine(1) that "concern about a detrimental effect of ESAs [erythropoiesis stimulating agents, a class of drugs of which Aranesp is a prominent member] in patients with cancer arose" after results of a small clinical trial of epoetin beta in patients with oral, pharyngeal or laryngeal cancer receiving radiation therapy showed worse survival in patients receiving that drug.  Subsequently, in 2008, a meta-analysis of multiple randomized clinical trials showed that patients with cancer receiving ESAs, including Aranesp, had an increased risk of venous thromboembolism (drug clots) and death.(2)  In 2009,  another meta-analysis showed that ESAs lead to decreased survival in patients with cancer.(3)

Recall, though, that Aranesp is meant to improve anemia.  It was not meant to cure cancer, or even put the disease into remission.  Its use therefore was mainly adjunctive.  Thus, it appears its benefits for cancer patients (improved anemia, and possibly decrease in such symptoms as fatigue) could not outweigh its harms (including hastening death).

So the issue was not merely that Amgen was promoting a drug in an instance in which its use had not been improved by the US Food and Drug Administration (FDA), or that such use of the drug was unnecessarily costly.  The issue was that Amgen was promoting a drug that had no proven benefits for the patients, but could hasten their death.  It appears that Amgen was pursuing profits at the expense of lives.

Summary

So it is particularly disturbing that no individual apparently will be held responsible for the promotion of Aranesp for patients for whom its use might prove fatal.  The assurance that the proposed corporate integrity agreement will prevent further abuse is notably hollow.  I can recall no recent case in which the government authorities have used such an agreement to pursue charges against individuals.  The likely deterrent effect of the monetary settlement will likely be minimal.  $762 million may look just like a cost of doing business when the drug in question was bringing in over $2 billion a year (per the Los Angeles Times). 

So the legal settlements march on and on.  The government continues to extract fines from health care organizations whose actions endanger not only the federal budget, but patients' well being and lives, without even trying to hold individuals responsible.  The impunity of health care corporate executives thus also continues.

As we have said far too many times, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

References

1.  Khuri FR. Weighing the hazards of erythropoiesis stimulation in patients with cancer.  N Engl J Med 2007; 356: 2445-2447.  Link here.

2.  Bennett CI, Silver SM, Djulbegovic B et al.  Venous thromboembolism and mortality associated with recombinant erythropoietin and darbepoetin administration for the treatment of cancer-associated anemia.  JAMA 2008; 299: 914-924.  Link here.

3.  Bohlius J, Schmidlin K, Brillant C et al.  Recombinant human eryhtropoiesis-stimulating agents and mortality in patients with cancer: a meta-analysis of randomised trials.  Lancet 2009; 373: 1532-1542.  Link here.

"Phony Consulting and Royalty Agreements," "Chocolate" Bribes, a Sales Representative Doubling as a Stripper, Oh My - Three Settlements for Othrofix

On this US election day, we seem to be in a mini-squall of cases involving unethical, deceptive, and now very colorful marketing practices used to push drugs and devices. 

We recently discussed a settlement of allegations of deceptive marketing practices and kickbacks by pharmaceutical company Boehringer-Ingelheim (here), a US congressional report alleging deceptive influence by Medtronic marketers over ostensibly scholarly publications (here), a study of documents released after litigation that appear to show how Pfizer had a systemic marketing campaign that used controlled trials as deceptive marketing vehicles (here),

Now three separate settlements by device/ biotechnology company Orthofix have come to light.

Settlement 1 - "Phony Consulting and Royalty Agreements," and Prostitution as Kickbacks, and a Sales Representative as Stripper

A Bloomberg article outlined Orthofix's two latest settlements.  The newest seems the most audacious, or bodacious,

Orthofix International NV, (OFIX) a maker of spinal implants, agreed to pay the U.S. $30 million to settle claims that a subsidiary paid illegal kickbacks and provided prostitutes to doctors in return for orders.

The subsidiary, Blackstone Medical Inc., paid kickbacks to spinal surgeons in the form of phony consulting and royalty agreements, and travel and entertainment to entice them to use its products, the U.S. Justice Department said in a statement today.

This case adds to the mounting pile of evidence that many of the financial relationships among physicians and health care academics and drug, device, biotechnology and other health care corporations are not merely conflicts of interest incidental to innovation.  In particular, Bloomberg reported,

[Whistle blower Susan] Hutcheson alleged that officials of Blackstone, purchased by Orthofix in 2006, violated kickback and false-claim laws by setting up a system to compensate doctors under sham consulting agreements and phony research grants, according to court filings. The sales executive said the company also offered lavish travel opportunities to doctors who implanted its products, the filing said.

Some doctors were paid as much as $8,000 a month under the fictitious consulting agreements, Hutcheson said in her suit, filed in federal court in Massachusetts. Orthofix’s U.S. unit is based in Lewisville, Texas. Some also received phony research grants for as much as $18,000, the suit added.

Then there was this colorful detail,

Blackstone salespeople also were urged to take surgeons out for expensive dinners, escort them to strip clubs and pay for liaisons with prostitutes to get their business, Hutcheson said in the suit.

One female sales manager in Dallas agreed to disrobe and join strippers on stage at the request of two surgeons to whom she was pitching the company’s products, Hutcheson said in her suit. The sales manager was demoted, not fired, over the incident, Hutcheson said in the suit.

We often hear from drug, device, and biotechnology companies that their sales efforts are all about providing needed information to physicians, information they could not otherwise obtain.  In this case, the information appeared to be rather anatomical, but also rather personal.

The AP coverage of this store (here, via Businessweek) also noted that the settlement involved a corporate integrity agreement.  Neither story mentioned any admissions made by the company.  As far as I could tell, no corporate executives suffered any consequences as part of this settlement.

Settlement 2 - Fraud, Obstructing the US Government, and Less Colorful Kickbacks to Promote Bone Growth Stimulators

The article did nor provide any helpful photographs, but it did note that Orthofix recently made a second settlement.

The settlement’s approval comes after Orthofix officials agreed to pay $42 million to resolve a separate whistle-blower suit and a criminal probe of allegations it paid kickbacks to doctors who used its bone-growth stimulators.


One of its units will plead guilty in federal court in Boston federal court to a single felony count of obstructing a U.S. government audit and pay a $7.8 million fine, according to a June 7 regulatory filing. Orthofix also will pay $34.2 million to resolve whistle-blower claims that the company defrauded the federal Medicare program over bone-growth stimulators, which patients wear after surgery to speed healing.

Amazingly, unlike the first settlement, and unlike most settlements we have discussed,

Five Orthofix employees have pleaded guilty to criminal charges in connection with probes of the kickback allegations. Thomas Guerrieri, an Orthofix vice president, pleaded guilty in April to violating the federal anti-kickback statute by setting up fake consulting agreements for doctors who used the company’s products.

Note that we discussed a surgeon who pleaded guilty to accepting kickbacks from multiple device companies, including the Blackstone subsidiary of Orthofix, here in 2008.

Settlement 3 - "Chocolate" Bribes to Mexican Government Officials

Finally, the AP story noted in passing "the recent resolution of a federal Foreign Corrupt Practices action" against the company.  I could not find any news coverage of that, but in July there did appear a SEC press release.

The Securities and Exchange Commission today charged Texas-based medical device company Orthofix International N.V. with violating the Foreign Corrupt Practices Act (FCPA) when a subsidiary paid routine bribes referred to as 'chocolates' to Mexican officials in order to obtain lucrative sales contracts with government hospitals.

The SEC alleges that Orthofix’s Mexican subsidiary Promeca S.A. de C.V. bribed officials at Mexico’s government-owned health care and social services institution Instituto Mexicano del Seguro Social (IMSS). The 'chocolates' came in the form of cash, laptop computers, televisions, and appliances that were provided directly to Mexican government officials or indirectly through front companies that the officials owned. The bribery scheme lasted for several years and yielded nearly $5 million in illegal profits for the Orthofix subsidiary.


Orthofix agreed to pay $5.2 million to settle the SEC's charges.

Also,

Orthofix also disclosed today in an 8-K filing that it has reached an agreement with the U.S. Department of Justice to pay a $2.22 million penalty in a related action.

Summary  

So the box score here includes settlements of legal actions alleging bribery and kickbacks, a corporate integrity agreement, a guilty plea by a company subsidiary to obstructing the US government, and multiple guilty pleas by company executives.  The bribes and kickbacks were provided in various colorful forms.  

The variety of unethical behaviors unearthed suggests a company with a seriously deranged corporate culture.  Whether the various actions taken against it, including the very unusual punishments meted out to some of its apparently mid-level executives will change its behavior, or serve as a lesson to other companies and their leaders is not clear.  Whether they are sufficient to suggest anyone should trust this company, its leaders, or its products seems questionable.   

This story adds to our various compilations of legal settlements and tales of crime, including bribery, kickbacks and fraud involving major health care organizations which suggest serious, deep afflictions within the culture of our commercialized health care system.  Yet almost nowhere, except here on Health Care Renewal are there calls for serious reforms to restore trust in our health care organizations and their leaders.

As we have said endlessly, up to now, such legal settlements seemingly have had no effect on the bad behavior of big health care organizations, while they continually erode trust in these organizations and their leadership, and trust in physicians to put patients ahead of personal gain.

Furthermore, these cases seem to be part of a larger social problem. It seems that nowadays the leadership of large, powerful organizations feels free to promote their own interests using psychologically sophisticated but deceptive marketing and public relations strategies no matter what their effect on the public welfare.

Again as we have said all too many times before, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Maybe after all the election hoopla dies down here in the US, we can finally have a serious conversation about health care reform that will make our health care system more trustworthy. 

Sunday Settlement and Guilty Plea Roundup

Here we go again. 

AstraZeneca / Seroquel

We have posted frequently about allegations of devious marketing techniques used by AstraZeneca to promote its blockbuster atypical anti-psychotic drug Seroquel (quetiapine.)  See our posts here, here, here, here, and here.  Now, as reported by the New York Times, it is time for AZ to settle with the US government.

AstraZeneca has completed a deal to pay $520 million to settle federal investigations into marketing practices for its blockbuster schizophrenia drug, Seroquel, the Attorney General, Eric Holder, said at a news conference Tuesday afternoon.

'AstraZeneca paid kickbacks to doctors as part of an illegal scheme to market drugs for unapproved uses,' Kathleen Sebelius, secretary of health and human services, said at the event in Washington. She said the company promoted drugs for unapproved uses by children, the elderly, veterans and prisoners.

AstraZeneca agreed to sign a corporate integrity agreement with the federal government over its marketing of Seroquel for unapproved uses, but will not face criminal charges, company and federal officials said.

The company, based in London, has been accused of misleading doctors and patients by playing up favorable research and not adequately disclosing studies that show Seroquel increases the risk of diabetes.

Of course, an AZ spokesperson had a different take on it.

Glenn Engelmann, AstraZeneca’s U.S. general counsel, released a statement saying the company denies the allegations but settled the investigation with the payment.

'It is in the best interest of AstraZeneca to resolve these matters and to move forward with our business of discovering and developing important, life-changing medicines — while avoiding the delay, uncertainty, and expense of protracted litigation,' Mr. Engelmann said.

Johnson and Johnson / Topamax

On the other hand, the issue of how Johnson and Johnson marketed Topamax (topiramate), a drug approved for treating seizures, is a new one for Health Care Renewal.  Here is the story, via Bloomberg.

Two units of Johnson & Johnson will pay more than $81 million to resolve criminal and civil claims over illegal promotion of the epilepsy drug Topamax, the U.S. Justice Department said.

Ortho-McNeil Pharmaceutical LLC agreed to plead guilty to a misdemeanor and pay a $6.14 million criminal fine for misbranding the drug, the government said. Ortho-McNeil-Janssen Pharmaceuticals also will pay $75.37 million to resolve civil allegations that it illegally marketed Topamax and caused false claims to be submitted to government health programs.

While the Food and Drug Administration approved Topamax for the treatment of partial onset seizures, Ortho-McNeil Pharmaceutical promoted the drug for unapproved psychiatric uses, the government said. The company hired physicians through its 'Doctor-for-a-Day' program to join sales representatives in visiting doctors and to speak to colleagues about unapproved uses and doses, according to the government.

In this case, the company admitted wrong-doing as part of the specific plea agreement.

Under the plea agreement, Ortho-McNeil Pharmaceutical will admit that from 2001 to 2003 it promoted Topamax 'for certain uses not approved' by the FDA, according to a statement by Ortho-McNeil-Janssen.

The company 'voluntarily discontinued the program at issue before receiving the government’s first subpoena in the investigation,' according to the statement.

Ortho-McNeil-Janssen also will sign a five-year corporate integrity agreement with the U.S. Health and Human Services Department.

Summary

Once more, with feeling ....  We have discussed a series of legal settlements and criminal convictions and guilty pleas resolving cases of alleged wrong-doing by health care organizations. Almost none included any penalties for people who authorized, directed or implemented the bad behavior. None of the financial penalties were so big as to be more than another cost of doing business for the organizations involved. Corporate entities, but very rarely people have pleaded guilty or been convicted (almost always of misdemeanors), Some of the cases included gimmicks, like a subsidiary constructed only to plead guilty, that otherwise seemed to lessen accountability.

If we truly want health care that is accessible, of high quality, at a fair price, and more importantly, if we want health care that is honest and focused on patients, we need to provide health care leaders with clear, rational incentives in these directions, and make them fully accountable for their actions, and the courses of their organizations under their leadership.

ADDENDUM (2 May,2010) - See also comments on the Hooked: Ethics, Medicine, and Pharma blog by Dr Howard Brody on the AZ settlement.

Pfizer (in the Guise of Pharmacia) Pfound to Violate Pfraud Law, While Pfizer CEO Made Pfederal Reserve Advisor

It was only a month ago that Pfizer Inc, the world's largest pharmaceutical company, submitted to a gargantuan $2.3 billion settlement and yet another corporate integrity agreement. As we posted here, this was the company's fourth major settlement of charges of unethical marketing behavior since 2002.

Now Pfizer is in trouble again. As reported by the AP,

A judge on Tuesday imposed $4.5 million in forfeitures on prescription drug company Pharmacia Inc.[a Pfizer Inc subsidiary] for misrepresenting prices and defrauding Wisconsin's Medicaid system.

A jury in February found that Pharmacia violated the state's Medicaid fraud law 1.44 million times over a decade. State Justice Department attorneys had demanded about $212 million in forfeitures, but Dane County Circuit Judge Richard Niess said jurors grossly overcalculated the number of violations.

After reviewing the evidence, the judge found the actual tally was 4,578.

He elected to set the forfeiture level at $1,000 per violation. The judge said he was concerned that if he ordered the maximum $68.6 million Pharmacia would pass the expense to consumers and nothing showed any of the fraudulent $7 million went directly to Pharmacia's profits.

On the other hand, the judge said, a $100 per violation forfeiture totaling $457,800 would 'not register so much as blip on Pharmacia's multibillion-dollar annual fiscal radar screen' and a higher amount would draw attention to the need to reform pharmaceutical reimbursement scales.

I must say that I do not understand the reasoning the judge used to set the penalties. If he thought that Pfizer would merely pass along a large penalty to patients, why would the company not pass along a smaller penalty to them.

In any case, this is just the latest in a long string of cases in which a health care corporation was found to have committed unethical or illegal acts, but the only the corporation itself, but not the people who actually performed, directed or authorized the acts, paid a penalty. And when the penalty is paid by the corporation, its impact can be spread over all stock-holders, all employees, and all patients, clients, or customers, thus diluting its effect, and protecting those who authorized, directed, or performed the acts in question.

I submit again that only when the people in health care leadership who perform, direct or authorize bad behavior pay penalties will bad behavior be deterred.

Note that while Pfizer may be the world's largest pharmaceutical corporation, it seems to be the corporation most often cited for, convicted of, or having to make settlements for bad behavior (see some recent examples here). (Although in the current case, you would have to read the news report very carefully to realize that Pfizer was involved. The fact that Pharmacia is a Pfizer subsidiary was only mentioned in passing.)

Nonetheless, one would think Pfizer's leadership would be ashamed, and their reputation would suffer. But no. At about the same time this latest settlement was announced, this report from Reuters appeared:

The Federal Reserve Bank of New York said on Thursday that Pfizer (PFE.N) chief executive Jeffrey Kindler and Loews Corp (L.N) chief executive James Tisch will fill the two vacancies on its board of directors.

Kindler was elected to finish a three-year term ending Dec. 31, taking the seat PepsiCo (PEP.N) chief executive Indra Nooyi resigned from in February.

Regional Federal Reserve banks' boards of directors offer recommendations on Fed policy, but have no policy-making powers. They also provide anecdotal information about the business conditions that help inform the central bank.

Regional Fed banks have three classes of directors: Class A, elected by member banks to represent banks; Class B, elected by member banks but representing the public; and Class C, which represent the public but are chosen by the Board of Governors in Washington.

Kindler and Tisch join Jeffrey Immelt, chairman and chief executive of General Electric (GE.N) as Class B directors.

I suppose Kindler could offer quite a bit of "anecdotal information" about bad behavior in the pharmaceutical industry. But it seems rather comic to think about the CEO of the world's biggest, and lately baddest pharmaceutical company as "representing the public." Rather, and more seriously, this is just the latest example of how leaders of health care organizations have joined the superclass, and how the superclass protects its own.

Intermune Executive Convicted of Fraud

From today's New York Times comes word of an unusual legal case,

In a verdict that could strike fear into pharmaceutical industry executive suites, the former head of a drug company was convicted of wire fraud Tuesday for issuing what federal prosecutors called a misleading press release that contributed to off-label sales of his company’s drug.

But the executive, W. Scott Harkonen, the former chief executive of InterMune, was acquitted by the federal jury in San Francisco of a related charge of off-label marketing itself, known as 'misbranding,' the Justice Department said.

The case was unusual because off-label marketing cases are often settled with the company paying a fine. It is rare for prosecutors to press charges against individual executives.

'Today’s verdict demonstrates that pharmaceutical executives will not be able to hide behind a corporate shield when they promote drugs using false or fraudulent information,' Thomas P. Doyle, a special agent in the Food and Drug Administration’s office of criminal investigations, said in a statement Tuesday.

InterMune’s drug, Actimmune, was approved for two rare genetic conditions. But the main sales of the drug, which peaked at $141million in 2003, came from an unapproved use: treating idiopathic pulmonary fibrosis, a scarring of the lungs that can be fatal.

InterMune conducted a large clinical trial testing Actimmune as a treatment for the lung disease. The drug did not achieve the goal of the trial, which was to improve lung function compared with a placebo. But InterMune found that if only the patients in the trial with mild or moderate disease were considered, those who got the drug lived longer than those who received the placebo. The company highlighted the 'survival benefit' in a news release, issued in August 2002. [Editor's note - if the primary study outcome was improvement of lung function, and the only 'positive' result was improvement of survival in one sub-group, that result may have been due to chance alone, due to multiple statistical comparisons. If one does analyses on multiple sub-groups and for multiple endpoints, the likelihood of finding a 'significant' result increases with the number of such analyses done.]

Prosecutors said the news release was part of a scheme to induce off-label sales of Actimmune, also known as interferon gamma, which costs about $50,000 a year.

[The company's attorney] Mr. Topel said interpretation of the clinical trial results was a matter of debate. 'One position in a scientific dispute has been criminalized — quite an astonishing thing,' Mr. Topel said in an interview.

Wire fraud carries a maximum sentence of 20 years in prison and a $250,000 fine. Dr. Harkonen, who remains free on bail, has not been sentenced.

A medical doctor by training, he was chief executive of InterMune from February 1998 until June 2003.

InterMune agreed to pay about $37 million in 2006 to settle charges related to Actimmune marketing. The company, based in Brisbane, Calif., also entered into a five-year corporate integrity agreement with the Department of Health and Human Services.

In 2007, a second big trial of Actimmune found that the drug did not prolong lives of patients with pulmonary fibrosis. Sales of the drug have dwindled year by year. [Editor's note - this suggests again that the result in the sub-group from the first trial might have been a false positive due to multiple comparisons.]

This case is unusual because it involved the prosecution of an individual who appeared to be responsible for the allegedly unlawful conduct. In most cases of unethical or unlawful conduct alleged on the part of health care organizations, at most it is the organization itself that has paid the penalty, usually in the form of a fine, sometimes accompanied by a corporate integrity agreement or deferred prosecution agreement. (See relevant posts here.)

We have argued that such penalties applied to corporations do little to deter bad behavior. A fine can just be a cost of doing business. The cost of the fine may diffuse across the whole organization. For public for-profit corporations, the fine may finally be paid by stockholders (through lower dividends or lower stock appreciation), employees as a group (through lower pay), and customers, clients, or patients (through higher prices). So the penalty may ultimately be spread over a large number of people, hardly any of which were actually responsible for the bad behavior. The few people responsible, who could include people who implemented, directed, or approved the behavior, usually have suffered no consequences. So what is to deter such people from again behaving badly?

So this case seems to be a step forward. One may argue whether off-label marketing should be illegal, but it currently is illegal. Corporate leaders who do not like this law ought to strive to change it, not violate it. If the law is to be upheld, when someone within a corporation implements, directs or approved illegal off-label marketing, then that person should suffer the consequences.