Health Spectator

According to a story that appeared over the weekend from the Associated Press, the U.S. Solicitor General has been meeting with lawyers representing the tobacco industry’s four largest companies in an effort to forestall an appearance before the U.S. Supreme Court to follow up on a 2006 ruling by U.S. District Judge Gladys Kessler that the tobacco industry had concealed the dangers of cigarette smoking over a period of decades. The government has been considering asking the Court to award it $280 billion in past company profits and $14 billion toward a national campaign to limit smoking. Those awards had been denied by lower federal courts, one of which nevertheless denied an appeal by the defendants last May.

Since the lawsuit invovled charges of racketeering under the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), the losing defendants had vowed to pursue an appeal to reverse those charges. The conflicting goals are leading to an interesting stand-off. Both sides may stand to gain from negotiation. Although the companies undoubtedly would like to have the racketeering conviction dropped, there would seem to be little hope of that, giving the preponderance of the evidence.

Tobacco company defendants in the lawsuit are Philip Morris USA Inc. and its parent company, Altria Group Inc.; R.J. Reynolds Tobacco Co.; British American Tobacco Investments Ltd.; and Lorillard Tobacco Co. A former U.S. subsidiary of British American Tobacco, Brown & Williamson Tobacco Corp., merged with Reynolds in 2004.

Just three of those companies—Philip Morris, R.J. Reynolds and Lorillard—supply nearly 90 percent of U.S. retail cigarette sales.

The U.S. Department of Justice announced today that it had reached the largest settlement ever with a pharmaceutical manufacturer as Pfizer pled guilty to felony charges of fraudulent promotion of pharmaceuticals.

According to a DOJ press release, the company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States for any matter. Pharmacia & Upjohn (subsidiaries of Pfizer) will also forfeit $105 million, for a total criminal resolution of $1.3 billion. The companies were misbranding Bextra with the intent to defraud or mislead. Bextra is an anti-inflammatory drug that Pfizer pulled from the market in 2005.

Misbranding in this case refers to the practice of recommending a drug for a purpose that has not been approved by the Food and Drug Administration (FDA).

The company also settled civil suits with the DOJ for violation of the False Claims Act as a result of illegally promoting four drugs—Bextra; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug—and causing false claims to be submitted to government health care programs for uses that were not medically accepted by the FDA and therefore not covered by those programs. The civil settlement also resolves allegations that Pfizer paid kickbacks to health care providers to induce them to prescribe these and other drugs. The federal share of the civil settlement is $668,514,830 and the state Medicaid share of the civil settlement is $331,485,170.

The DOJ further stated that this is the largest civil fraud settlement in history against a pharmaceutical company.

“This historic settlement will return nearly $1 billion to Medicare, Medicaid, and other government insurance programs, securing their future for the Americans who depend on these programs,” said Kathleen Sebelius, Secretary of Department of Health and Human Services. “The Department of Health and Human Services will continue to seek opportunities to work with its government partners to prosecute fraud wherever we can find it. But we will also look for new ways to prevent fraud before it happens. Health care is too important to let a single dollar go to waste.”

“Illegal conduct and fraud by pharmaceutical companies puts the public health at risk, corrupts medical decisions by health care providers, and costs the government billions of dollars,” said Tony West, Assistant Attorney General for the Civil Division. “This civil settlement and plea agreement by Pfizer represent yet another example of what penalties will be faced when a pharmaceutical company puts profits ahead of patient welfare.”

Are you enraged by any of this? If so, leave your comments below.

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