A daily look at legal news and the business of law:
On Thursday, a Boston jury found that pharmaceutical giant Pfizer (PFE) had violated the Racketeer Influenced Corrupt Organizations (RICO) Act in its marketing of the epilepsy drug Neurontin for uses the Food and Drug Administration never approved, particularly migraines, bipolar disorder and neuropathic pain. While marketing a drug for an FDA-unapproved use is by definition illegal, Pfizer's conduct was even worse.
Pfizer's own studies -- studies it didn't tell anyone about -- showed Neurontin was no better than a placebo for those conditions. Worse, Neurontin, unlike placebos, has side effects. How many migraine, bipolar and neuropathic pain patients suffered those side effects for nothing? The jury's $47.4 million verdict was automatically tripled under the RICO Act's provisions. BusinessWeek's report on the verdict is particularly thorough.
Doctors can legally prescribe drugs for "off-label" uses not approved by the FDA, but drugmakers cannot market drugs for such off-label uses. Why is it OK to prescribe drugs for these uses? Well, the paradigm for off-label prescribing is that doctors do it when nothing else has worked for a patient who is either terminally ill or otherwise in desperate need of treatment. In those scenarios, it's hard to argue with giving doctors the ability to experiment with whatever drugs they think might help. (In truth, off-label prescribing is so common that this extreme scenario hardly represents the typical situation.) Marketing drugs for that kind of experimental use, however, is obviously problematic and thus banned.
Too Great a Temptation
The difficulty for many pharmaceutical companies, however, is that generally they've proven a given drug to be safe and effective only as a treatment for a very specific or relatively uncommon condition, such as epilepsy. If it's used to treat only that condition, the drug's profit potential is limited, yet the extensive clinical work required to prove safety and effectiveness for additional uses is so time-consuming and expensive that drugmakers don't want to do it.
Instead, they do small-scale studies that suggest a drug might be safe and effective for an unapproved use, and they inform doctors about the limited, if promising, data. (Of course, in this case, the data didn't suggest Neurontin was effective for the off-label uses.) Informing doctors about the data is legal, only if drugmakers don't cross the line to active promotion for those uses, which unfortunately, drugmakers often do. The profit potential of off-label marketing can be just too great a temptation.
In the Neurontin case, off-label prescriptions reportedly accounted for 15% of its sales in its first year on the market, 1994, and had grown to 94% of its sales in 2002. That meant that by 2002, $2.12 billion in Neurontin sales came from prescriptions for uses not proven to be either safe or effective.
Despite the newness of the RICO verdict, the finding on Pfizer's conduct isn't really news. In 2004, Pfizer (through Warner-Lambert, which Pfizer acquired in 2000) paid $430 million to settle criminal and civil charges that it illegally marketed Neurontin in the same ways addressed in the RICO case. Just because the guilty verdict in the RICO case is unsurprising, however, it doesn't mean that it's not a big deal for Pfizer. Many other Neurontin-marketing cases have been filed, and Judge Patti Saris, who oversaw the trial decided on Thursday, is not only in charge of them but she ruled last year that this trial's results may be binding on those cases.
And in the Business of Law...
Ruden McClosky, a Florida firm that's been undergoing a slow-motion meltdown for awhile now, just lost four more partners from its Miami office. Once home to 30 attorneys, the office is now down to six, and arguably down to four. Of the remaining six, one is of counsel, and one is usually in Tampa.
Managing your Portfolio
Keeping your portfolio and financial life fit!View Course »