Princess Health and Pfizer's Latest International Pfiascos - Charges of Anti-Competitive Practices, Inflated Prices, Deception and Secrecy. Princessiccia
adverse effects antitrust deception executive compensation health care prices legal settlements marketing Pfizer suppression of medical research vaccinesMany big health care organizations seem to just be unable to keep out of trouble, and the bigger they are, the more kinds of trouble. Pfizer Inc, considered to be one of the world's largest pharmaceutical companies, has supplied us with plenty of stories. Enough new stories about Pfizer have accumulated since last year to do a roundup.
Presented in chronological order....
Italy Demands Damages from Pfizer for Anti-Trust Violations
This story came out in May, 2014, via Reuters,
The specific charges against Pfizer were:
At least in English language news sources, I have not seen how this turned out, but note that this was apparently an administrative court finding, not just a prosecutor's allegation.
Pfizer Accused of Overcharging for Pediatric Vaccines
This appeared in January, 2015, here via Ed Silverman's PharmaLot blog (when it was affiliated with the Wall Street Journal),
Think about the children.
The post included a statement from Pfizer about how hard it is to manufacture the vaccine, and an update to the post included a statement from Pfizer that it was already selling its pneumococcal vaccine, Prevenar 13, below cost to GAVI, which buys up vaccines and provides them to poor countries. A week later, again via (the old version of) PharmaLot, Pfizer announced an additional 6% price cut. Furthermore, Bill Gates, whose foundation supports GAVI, insisted that cutting vaccine prices would discourage pharmaceutical companies from investing in vaccine research and supplying products to poor countries, according to the Guardian.
However, neither Pfizer nor Mr Gates acknowledged how much money Pfizer already is making from Prevenar in developed countries, amounts which likely do far more than offset any losses in poorer countries. Specifically, in July, 2015 FierceVaccines reported that
Also,
And,
Pfizer Settles Shareholder Suit for $400M
This settlement was just the latest that has resulted from allegations of illegal drug marketing by Pfizer. As reported again by the redoubtable Ed Silverman in the old version of PharmaLot,
This settlement followed an even larger one back in 2009 when,
We discussed that settlement in 2009 here, here, and here. Note that the 2009 settlement included a guilty plea to a criminal charge (albeit to a misdemeanor), and was of allegations including paying kickbacks to doctors for use of Pfizer drugs. So this additional settlement of deceiving investors just ices that cake.
UK Competition and Markets Authority Stated Pfizer Abused Market Dominance
This story appeared in August, 2015, via the Telegraph,
In particular,
While the CMA findings were apparently "provisional," but the agency has the power to find that the law has been breached and "has the power to fine then up to 10pc of their global annual turnover - last year Pfizer had revenue of almost $50bn." So this is the second government finding of anti-competitive behavior by Pfizer in a little over one year.
Pfizer Resists AllTrials Calls for Transparency
Late in August, 2014, per the Guardian,
We have been discussing how pharmaceutical, biotechnology, and device companies have manipulated the clinical trials they sponsor to increase the likelihood that the results make their products look good, and may suppress trials whose results cannot be made to look good enough. This clinical research suppression and manipulation can lead to poor clinical decisions, may harm patients, and abuses the trust of patients who volunteer to participate in clinical research. This situation has led to the AllTrials campaign to make clinical research transparent (look here). However,
Pfizer Found to Have Withheld Reports of Adverse Drug Events in Japan
Finally, reported in September, 2015 by in-PharmaTechnologist.com,
That website has copy protection so I cannot quote further, but the order involved 11 drugs, including Enbrel and Lyrica. So here is yet another example of a government agency finding that Pfizer was less than transparent, if not overtly deceptive.
Summary
So in a little more than a year, Pfizer has been accused of anti-competitive practices raising drug costs in Italy, excess pricing of vaccines for use by poor children in undeveloped countries, deceiving its own investors about illegal marketing activities in the US, abuse of market dominance leading to excessive drug costs in the UK, stonewalling clinical trial transparency measures globally, and failing to disclose adverse drug effects in a timely manner in Japan. This is on top of an already impressive record of misbehavior (See our summary of Pfizer mischief at the end of the post.)
However, as seems usual these days, no one at Pfizer who might have authorized, directed or implemented any of this bad behavior has ever seemingly paid any sort of penalty for it. Instead, while this was going on, the top leadership of Pfizer just gets richer faster and faster. In fact, in March, 2015, the Wall Street Journal reported the current Pfizer CEO's total compensation in 2014,
Furthermore,
Never mind all those pesky allegations of overpricing, anti-competitive practices, deception and opaqueness, and never mind that current executives are becoming exceedingly risk in part from the continuation of such practices. So it seems the board of Pfizer will just continue handing its executives piles of money, despite, or for all I know, because of the company's continuing bad behavior. Given these incentives, is it any wonder that the bad behavior continues? Pfizer seems to be just another example - albeit a big one - of how health care is dominated by an oligarchy of unaccountable leaders who continue to demonstrate their impunity hidden by aspirational but hollow public relations and marketing.
Of course, it is doubtful such bad behavior would continue if there risks of external penalties, e.g., from law enforcement. But there never seem to be any.
In the past, US law enforcement authorities have announced they would use the responsible corporate officer doctrine, a legally tested rationale for prosecuting corporate managers for bad behavior by those who report to them (e.g., in 2010, look here), But it seems they have never done so, at least in cases involving large health care organizations. Last week, the US Department of Justice announced it would start going after executives of companies that misbehave, and would press the companies to give up the name of responsible executives in exchange for more lenient treatment of the companies themselves (e.g., see this report in the NY Times). Meanwhile, however, the march of legal settlements for bad behavior in health care continues, absent any penalties for organizational leaders who might have authorized or directed it, much less for those who simply put incentives in place to foster bad behavior while looking away from what those incentives inspired.
I hope these current promises by law enforcement officials are not as hollow as earlier ones, because continuing our society's continuing failure to rein in corrupt business practices via law enforcement and regulation may lead a desperate populace to more radical approaches. The UK Labor Party just elected a Marxist leader (see this Reuters report.) One wonders how long it will be before anger at the larger oligarchy, of which health care leadership is merely a part, boils over in other countries, and in more radical ways.
Instead, we continue to advocate for true health care reform with the immediate priority of changing how health care organizations are led, and ensuring leadership that upholds health care values, is willing to be accountable, and is open, honest, transparent and ethical. We still may have time to reform. But the reform will have to be big and true. If not, moderate voices may be drowned out, and the results may be worse than anyone could imagine.
Appendix - Pfizer's Previous Settlements
For all our posts on Pfizer, look here.
In the beginning of the 21st century, according to the Philadelphia Inquirer, Pfizer made three major settlements,
- 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,
- Pfizer paid a $2.3 billion settlement in 2009 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).
- The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).
- Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (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).
Presented in chronological order....
Italy Demands Damages from Pfizer for Anti-Trust Violations
This story came out in May, 2014, via Reuters,
Italy said on Wednesday it was seeking more than a billion euros in damages from multinational drug companies following a ruling by the country's antitrust authority that their policies had been detrimental to Italy's national health service.
The health ministry said in a statement it was requesting a total 1.2 billion euros ($1.6 billion) from Novartis and Roche for the damages incurred in 2012-2014, and was requesting 14 million euros from Pfizer.
It cited several recent antitrust rulings that the companies' repeated anti-competitive actions had caused the national health service 'considerable damage'.
The specific charges against Pfizer were:
Italy's state council, the highest administrative court, in February ruled that Pfizer had abused its dominant position relating to the glaucoma drug Xalatan 'with a clear and persistent intention to suppress competition'.
At least in English language news sources, I have not seen how this turned out, but note that this was apparently an administrative court finding, not just a prosecutor's allegation.
Pfizer Accused of Overcharging for Pediatric Vaccines
This appeared in January, 2015, here via Ed Silverman's PharmaLot blog (when it was affiliated with the Wall Street Journal),
In a bid to widen access to vaccines, Doctors Without Borders is calling on Pfizer and GlaxoSmithKline to lower the prices for their pneumococcal vaccines to $5 per child in developing countries. The non-profit claims the drug makers are 'overcharging' donors and developing countries for vaccines that 'already earn them billions of dollars in wealthy countries.'
The non-profit, which regularly advocates for lower prices for medicines, maintains that, in general, the price to vaccinate a child against several diseases is now a 'colossal' 68 times more expensive than in 2001. In a new report, Doctors Without Borders attributes 45% of that increased cost to the price tags for pneumococcal vaccines sold by the drug makers. Pneumococcal disease, by the way, kills about 1 million children per year, mostly in poor and developing nations.
Think about the children.
The non-profit maintains that the current price tag makes it difficult to supply the vaccine to large numbers of children, and the drug makers have already received $1 billion in incentives to manufacturer the vaccine for developing countries. 'We think it�s time for Glaxo and Pfizer to do their part to make vaccines more affordable for countries in the long term, because the discounts the companies are offering today are just not good enough,' says Malpani in a statement.
Moreover, Doctors Without Borders warns that pricing may eventually make it harder for a growing number of middle-income countries to afford vaccines. Over time, some of these countries will eventually �graduate� from the subsidized vaccine pricing established by Gavi and, when that happens, Doctors Without Borders estimates costs may rise up to six times what is the countries pay today.
The post included a statement from Pfizer about how hard it is to manufacture the vaccine, and an update to the post included a statement from Pfizer that it was already selling its pneumococcal vaccine, Prevenar 13, below cost to GAVI, which buys up vaccines and provides them to poor countries. A week later, again via (the old version of) PharmaLot, Pfizer announced an additional 6% price cut. Furthermore, Bill Gates, whose foundation supports GAVI, insisted that cutting vaccine prices would discourage pharmaceutical companies from investing in vaccine research and supplying products to poor countries, according to the Guardian.
However, neither Pfizer nor Mr Gates acknowledged how much money Pfizer already is making from Prevenar in developed countries, amounts which likely do far more than offset any losses in poorer countries. Specifically, in July, 2015 FierceVaccines reported that
The world's biggest vaccine by sales--Prevnar 13--just keeps getting bigger. And in doing so, the shot helped Pfizer notch 44% vaccines growth for the second quarter as the unit saw sales grow from $1.09 billion in last year's Q2 to $1.58 billion during the period this year.
For the quarter, the superstar pneumococcal disease-blocker notched a U.S. sales increase of 87% versus the same period last year, a jump Pfizer CEO Ian Read attributed to 'continued strong uptake' in U.S. adults.
Also,
Prevnar 13, which reeled in $4.29 billion in sales last year, is expected to grow to $5.83 billion in 2020 and remain atop the vaccines sales charts.
And,
The company is also working 'country by country' to broaden the vaccine's reach in G7 countries....So there seems to be some evidence in support of the Doctors Without Borders claim that Pfizer could easily afford some small losses selling vaccines for use by poor children in less developed countries while it makes billions of dollars from vaccine sales in developed countries.
Pfizer Settles Shareholder Suit for $400M
This settlement was just the latest that has resulted from allegations of illegal drug marketing by Pfizer. As reported again by the redoubtable Ed Silverman in the old version of PharmaLot,
Pfizer has reached an agreement in principle to pay $400 million to settle a class-action securities lawsuit that alleged the drug maker illegally marketed several medicines and, subsequently, caused investors to lose money, according to a filing with the U.S. Securities and Exchange Commission.
The lawsuit alleged that, between January 2006 and January 2009, Pfizer marketed several drugs on an off-label basis. The medicines included the Bextra painkiller that was withdrawn from the market in 2005; the Geodon antipsychotic; the Zyvox antibiotic and the Lyrica epilepsy treatment.
The lawsuit, which was filed in federal court in 2010, alleged that the sales boost the drug maker received from the marketing prompted Pfizer executives to make 'false and misleading statements about Pfizer�s financial performance and sales practices [that] caused Pfizer stock to trade at artificially inflated prices.'
This settlement followed an even larger one back in 2009 when,
the drug maker revealed plans to pay $2.3 billion to resolve criminal and civil allegations that these drugs were marketed illegally.
We discussed that settlement in 2009 here, here, and here. Note that the 2009 settlement included a guilty plea to a criminal charge (albeit to a misdemeanor), and was of allegations including paying kickbacks to doctors for use of Pfizer drugs. So this additional settlement of deceiving investors just ices that cake.
UK Competition and Markets Authority Stated Pfizer Abused Market Dominance
This story appeared in August, 2015, via the Telegraph,
The Competition and Markets Authority (CMA) has issued a statement of objections alleging the companies breached UK and EU law by raising the prices they charged for phenytoin sodium sold to the NHS.
In particular,
The CMA says that for years industry giant Pfizer, which is listed in the US, and Flynn, a Stevenage-based company, between them sold the drug at a price up to 27 times higher than it had been previously priced.
Before September 2012, Pfizer manufactured and sold phenytoin sodium capsules to UK wholesalers and pharmacies under the brand name Epanutin.
Pfizer then sold the UK distribution rights for Epanutin to Flynn, which 'de-branded' the drug and started selling its version in September 2012. Pfizer continued to manufacture the drug, which it sold to Flynn at prices the CMA says were 'significantly higher' than those at which it had previously sold Epanutin.
The CMA claims Pfizer sold the drug at between 8 and 17 times its historic prices to Flynn, which then sold on phenytoin sodium at between 25 to 27 times more than the prices previously charged by Pfizer.
Before Flynn bought the rights for Epanutin, the NHS spent about �2.3m on phenytoin sodium capsules a year, according to the CMA. After the deal this spend rose to just over �50m in 2013 and more than �40m in 2014.
While the CMA findings were apparently "provisional," but the agency has the power to find that the law has been breached and "has the power to fine then up to 10pc of their global annual turnover - last year Pfizer had revenue of almost $50bn." So this is the second government finding of anti-competitive behavior by Pfizer in a little over one year.
Pfizer Resists AllTrials Calls for Transparency
Late in August, 2014, per the Guardian,
Pfizer, one of the world�s largest pharmaceutical groups, has said it will resist demands from investors and transparency campaigners that it disclose results from all historical drug trials.
We have been discussing how pharmaceutical, biotechnology, and device companies have manipulated the clinical trials they sponsor to increase the likelihood that the results make their products look good, and may suppress trials whose results cannot be made to look good enough. This clinical research suppression and manipulation can lead to poor clinical decisions, may harm patients, and abuses the trust of patients who volunteer to participate in clinical research. This situation has led to the AllTrials campaign to make clinical research transparent (look here). However,
Pfizer said it had a 'longstanding commitment to clinical trial transparency' and it already published data for trials from 2007. Requests for earlier data are considered on an individual basis. But it added: 'We don�t believe that further investment beyond this would offer value to patients, health services or to our shareholders.'This despite arguments above about the harms of research suppression. Given how much money Pfizer has spent on lawsuits, including one above about allegations of its management's deception of shareholders, one might think it would be worth it for management to make a little investment in transparency.
Pfizer Found to Have Withheld Reports of Adverse Drug Events in Japan
Finally, reported in September, 2015 by in-PharmaTechnologist.com,
Pfizer failed to report hundreds of serious adverse drug reactions (ADRs) in the required timeframes according to Japan�s Ministry of Health, Labor and Welfare (MHLW) which has issued the US firm with a business improvement order.
That website has copy protection so I cannot quote further, but the order involved 11 drugs, including Enbrel and Lyrica. So here is yet another example of a government agency finding that Pfizer was less than transparent, if not overtly deceptive.
Summary
So in a little more than a year, Pfizer has been accused of anti-competitive practices raising drug costs in Italy, excess pricing of vaccines for use by poor children in undeveloped countries, deceiving its own investors about illegal marketing activities in the US, abuse of market dominance leading to excessive drug costs in the UK, stonewalling clinical trial transparency measures globally, and failing to disclose adverse drug effects in a timely manner in Japan. This is on top of an already impressive record of misbehavior (See our summary of Pfizer mischief at the end of the post.)
However, as seems usual these days, no one at Pfizer who might have authorized, directed or implemented any of this bad behavior has ever seemingly paid any sort of penalty for it. Instead, while this was going on, the top leadership of Pfizer just gets richer faster and faster. In fact, in March, 2015, the Wall Street Journal reported the current Pfizer CEO's total compensation in 2014,
Pfizer Inc. said Thursday that Chief Executive Ian Read�s total compensation rose 23% last year, lifted by an increase in pension value that offset a reduced annual bonus and equity award.
Furthermore,
Mr. Read�s 2014 pay package totaled $23.3 million. The board raised the CEO�s salary to $1.83 million from $1.79 million but decreased his annual bonus by $400,000 and his equity award by nearly $1 million despite concluding that Mr. Read�s leadership during the year was 'outstanding.'It is not obvious that the rise in CEO pay is even remotely correlated to any rise in share-holder value. Moreover, there seems to be a total disconnect between the rewards given the CEO and the ethical record of the company he leads, especially since Pfizer, which calls itself "one of the world's premier pharmaceutical" corporations, announces its aspirations thus,
[Even though] Over the course of 2014, shares in the New York-based pharmaceutical company gained about 2% amid a 4% decrease in revenue.
we at Pfizer are committed to applying science and our global resources to improve health and well-being at every stage of life. We strive to provide access to safe, effective and affordable medicines and related health care services to the people who need them.
Never mind all those pesky allegations of overpricing, anti-competitive practices, deception and opaqueness, and never mind that current executives are becoming exceedingly risk in part from the continuation of such practices. So it seems the board of Pfizer will just continue handing its executives piles of money, despite, or for all I know, because of the company's continuing bad behavior. Given these incentives, is it any wonder that the bad behavior continues? Pfizer seems to be just another example - albeit a big one - of how health care is dominated by an oligarchy of unaccountable leaders who continue to demonstrate their impunity hidden by aspirational but hollow public relations and marketing.
Of course, it is doubtful such bad behavior would continue if there risks of external penalties, e.g., from law enforcement. But there never seem to be any.
In the past, US law enforcement authorities have announced they would use the responsible corporate officer doctrine, a legally tested rationale for prosecuting corporate managers for bad behavior by those who report to them (e.g., in 2010, look here), But it seems they have never done so, at least in cases involving large health care organizations. Last week, the US Department of Justice announced it would start going after executives of companies that misbehave, and would press the companies to give up the name of responsible executives in exchange for more lenient treatment of the companies themselves (e.g., see this report in the NY Times). Meanwhile, however, the march of legal settlements for bad behavior in health care continues, absent any penalties for organizational leaders who might have authorized or directed it, much less for those who simply put incentives in place to foster bad behavior while looking away from what those incentives inspired.
I hope these current promises by law enforcement officials are not as hollow as earlier ones, because continuing our society's continuing failure to rein in corrupt business practices via law enforcement and regulation may lead a desperate populace to more radical approaches. The UK Labor Party just elected a Marxist leader (see this Reuters report.) One wonders how long it will be before anger at the larger oligarchy, of which health care leadership is merely a part, boils over in other countries, and in more radical ways.
Instead, we continue to advocate for true health care reform with the immediate priority of changing how health care organizations are led, and ensuring leadership that upholds health care values, is willing to be accountable, and is open, honest, transparent and ethical. We still may have time to reform. But the reform will have to be big and true. If not, moderate voices may be drowned out, and the results may be worse than anyone could imagine.
Appendix - Pfizer's Previous Settlements
For all our posts on Pfizer, look here.
In the beginning of the 21st century, according to the Philadelphia Inquirer, Pfizer made three major settlements,
- 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,
- Pfizer paid a $2.3 billion settlement in 2009 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).
- The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).
- Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (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).
