When Rewards Outweigh Penalties, Companies Put Your Health at Risk

When pharmaceutical companies like Pfizer pay billion-dollar fines for illegal off-label marketing (promoting drugs for unapproved uses), prosecutors and the FDA often think that they’ve been punished sufficiently to deter future off-label marketing campaigns. But a story by David Evans in The Washington Post shows that by the time the government catches up with offenders, the fines it can impose are often far outweighed by the profits generated.

The $2.3 billion in fines and penalties Pfizer paid for marketing Bextra and three other drugs cited in the Sept. 2 plea agreement for off-label uses amount to just 14 percent of its $16.8 billion in revenue from selling those medicines from 2001 to 2008. The total of $2.75 billion Pfizer has paid in off-label penalties since 2004 is a little more than 1 percent of the company’s revenue of $245 billion from 2004 to 2008.

For pharmaceutical companies, the worst consequences of being caught are more than outweighed by the profits that they can generate through illegal activity, and in the absence of criminal penalties for individuals, one almost has to question what the incentives are for companies not to engage in illegal behavior.

And if it weren’t bad enough that pharmaceutical company fines often pale in comparison to profits, doctors face no penalties — or even regulatory oversight — for their off-label prescription use. But how do doctors come to determine what potential off-label benefits some drugs have? From their friendly pharmaceutical reps or drug companies, of course.

It wasn’t until 2004 that prosecutors began to take pharmaceutical companies’ illegal marketing of off-label uses for their drugs seriously — and, by that time, companies were often already awash in profits and unwilling to stop. Evans describes one instance of this:

In the January 2004 settlement negotiations with Loucks, Sullivan and two other prosecutors, Pfizer’s lawyers assured the U.S. Attorney’s Office that the company wouldn’t market drugs off-label.

“They asserted that the company understood the rules and had taken steps to assure corporate compliance with the law,” Loucks says. “We remember those promises.”

What Pfizer’s lawyers didn’t tell the prosecutors was that Pfizer was at that moment running an off-label marketing promotion using more than 100 salespeople who were pitching Bextra, according to a Pfizer sales manager who pleaded guilty to misbranding a drug in March 2009.

Bextra was eventually removed from the market for safety reasons.

Veteran prosecutors and judges agree that an unwillingness to pursue criminal sanctions and the relatively low dollar penalties that companies face if they are caught and prosecutors lead companies to believe that it is in their best interest to continue engaging in illegal practices in order to maximize profits. Evans notes that approximately $100 million for health care fraud enforcement is part of the health care reform bill that just passed — and if it doesn’t all go toward investigating Medicaid and Medicare fraud, it may assist in prosecuting companies in a more timely fashion, reducing their incentives to market drugs for off-label use.