As Doctors Write Prescriptions, Drug Company Writes a Check Part 2

[Guest guest]

H group. Here's Part 2 (and the url at bottom)

Over the last two years, Schering-Plough, which had sales

of $8.33 billion last year, has set aside a total of $500

million to cover its legal problems - mainly for expected

fines from the Boston investigation and from a separate

inquiry by federal prosecutors in Philadelphia who are

investigating whether Schering-Plough overcharged Medicaid.

Besides looking into whether Schering-Plough paid doctors

large sums to prescribe the company's drug for hepatitis C,

prosecutors are investigating whether many

company-sponsored clinical trials for the drug were simply

another way to funnel money to doctors.

Dr. Pappas, director of clinical research for St.

Luke's Texas Liver Institute in Houston, said that

Schering-Plough " flooded the market with pseudo-trials. "

Dr. Pappas and eight other liver specialists who were

interviewed say the system worked like this:

Schering-Plough paid physicians $1,000 to $1,500 per

patient for prescribing Intron A, the company's hepatitis C

treatment. In conventional clinical trials, participants

are given drugs free, but the doctors said that in these

cases the patients or insurers paid for their medication.

Because patients usually undergo Intron A treatment for

nearly a year and the therapy costs thousands of dollars,

Schering-Plough's payments to physicians left plenty of

room for the company to profit handsomely, the doctors

said.

In return for the fees, physicians were supposed to collect

data on their patients' progress and pass it along to

Schering-Plough, the doctors said. But many physicians were

not diligent about their recordkeeping, and the company did

little to insist on accurate data, according to Dr. Pappas

and the others.

One of the nation's most prominent liver disease

specialists, who spoke on condition of anonymity for fear

of angering big drug makers, called the trials " purely

marketing gimmicks. "

" Science and marketing should not be mixed like that, " the

doctor said.

Schering-Plough did more than encourage physicians to place

patients on Intron A, many of the physicians said. They

said the company would remove any doctor from its clinical

program - and shut off the money spigot - if he or she

wrote prescriptions for competing drugs, participated in

clinical trials of alternatives to Intron A or even spoke

favorably about treatments besides Intron A.

The main competitor to Intron A, which Schering-Plough now

sells as Peg-Intron, is Roche's comparably priced drug

Pegasys.

Dr. Jensen, the hepatology director at Rush

University Medical Center in Chicago, said he wanted to

perform clinical trials using drugs from both

Schering-Plough and Roche. " I was told by Schering-Plough

that I couldn't do both - that I had to sign an exclusive

agreement with them, " Dr. Jensen said. " That was the

juncture when Schering and I parted ways. "

Six specialists in liver disease said Schering-Plough also

paid what it called consulting fees to doctors to keep them

loyal to the company's products. The letter accompanying a

check for $10,000 explained that the money was for

consulting services that were detailed on an accompanying

" Schedule A, " said a doctor who insisted on anonymity. But

when the doctor turned to the attached sheet, he said,

" Schedule A " were the only words printed on an otherwise

blank sheet of paper.

Dr. Pappas, who in the past has consulted for

Schering-Plough and worked for Roche, said that stories

about the enormous sums that Schering-Plough paid its

consultants were common among liver specialists. " These

were very high-value consulting agreements with selected

opinion leaders that looked like payments of money with no

clear agreements on what was supposed to be executed, " Dr.

Pappas said.

In an interview, Mr. Hassan and other top executives

declined to discuss past marketing practices.

Kogan, the company's previous chairman and chief executive,

declined to be interviewed.

Schering-Plough's current management says that much has

changed at the company since Mr. Hassan took over. The

company no longer allows sales representatives or marketing

executives to have any say over its clinical trials,

physician education or medical consulting, they said. And

in all clinical trials begun in the last year, they said,

drugs have been provided free to the enrolled patients,

rather than being billed to them or their insurers.

" The temptation to give clinical grants to high prescribers

and consulting agreements to high prescribers is why we

pulled those decisions out of the hands of the sales

representatives, " said Brent Saunders, who was named senior

vice president for compliance and business practices last

year. " Sales representatives had an input into that process

before, which I think is still fairly normal in the

industry. "

In the separate Philadelphia investigation, Schering-Plough

is expected to plead guilty soon to charges that it failed

to provide Medicaid with its lowest drug prices, as is

required by law, and to pay a fine. Investigators are

examining whether Schering-Plough, to gain sales with some

private insurers, offered premiums, such as free patient

consulting arrangements, with its drugs. Prosecutors are

arguing that such incentives had a market value and meant

that Schering-Plough was offering drugs to private payers

at prices well below those offered to Medicaid. Many other

drug companies are the targets of similar inquiries.

The Boston inquiry into suspected kickbacks and improper

marketing by Schering-Plough could take months more to

resolve, people close to the investigation say.

Schering-Plough may also be charged with obstruction of

justice and document destruction as part of the Boston

inquiry, according to the company's filings with securities

regulators.

Industry experts say the federal inquiries into

Schering-Plough and the other drug giants have led some

companies to adopt significant changes in the way they

peddle drugs to doctors. Other companies have been slower

to react. " These investigations came out of left field, and

no one saw them coming, " said Barton Hutt, a former

F.D.A. general counsel who now advises drug companies. " The

industry has since had to reshape entirely what they are

doing, but it was too late to redo what they'd been doing

for years. "

Tony Farino, leader of the pharmaceutical consulting

service at Pricewaterhouses, said that as a result of

the investigations many companies in the drug industry were

hiring executives to police marketing and sales practices.

" Reputational risk is something they're all trying to

manage, " Mr. Farino said, " because the damages from failure

can be significant. "

http://www.nytimes.com/2004/06/27/business/27DRUG.final.html?ex=1089309139 & e

i=1 & en=97e21a324ed1ff21

Copyright 2004 The New York Times Company

[Guest guest]

H group. Here's Part 2 (and the url at bottom)

Over the last two years, Schering-Plough, which had sales

of $8.33 billion last year, has set aside a total of $500

million to cover its legal problems - mainly for expected

fines from the Boston investigation and from a separate

inquiry by federal prosecutors in Philadelphia who are

investigating whether Schering-Plough overcharged Medicaid.

Besides looking into whether Schering-Plough paid doctors

large sums to prescribe the company's drug for hepatitis C,

prosecutors are investigating whether many

company-sponsored clinical trials for the drug were simply

another way to funnel money to doctors.

Dr. Pappas, director of clinical research for St.

Luke's Texas Liver Institute in Houston, said that

Schering-Plough " flooded the market with pseudo-trials. "

Dr. Pappas and eight other liver specialists who were

interviewed say the system worked like this:

Schering-Plough paid physicians $1,000 to $1,500 per

patient for prescribing Intron A, the company's hepatitis C

treatment. In conventional clinical trials, participants

are given drugs free, but the doctors said that in these

cases the patients or insurers paid for their medication.

Because patients usually undergo Intron A treatment for

nearly a year and the therapy costs thousands of dollars,

Schering-Plough's payments to physicians left plenty of

room for the company to profit handsomely, the doctors

said.

In return for the fees, physicians were supposed to collect

data on their patients' progress and pass it along to

Schering-Plough, the doctors said. But many physicians were

not diligent about their recordkeeping, and the company did

little to insist on accurate data, according to Dr. Pappas

and the others.

One of the nation's most prominent liver disease

specialists, who spoke on condition of anonymity for fear

of angering big drug makers, called the trials " purely

marketing gimmicks. "

" Science and marketing should not be mixed like that, " the

doctor said.

Schering-Plough did more than encourage physicians to place

patients on Intron A, many of the physicians said. They

said the company would remove any doctor from its clinical

program - and shut off the money spigot - if he or she

wrote prescriptions for competing drugs, participated in

clinical trials of alternatives to Intron A or even spoke

favorably about treatments besides Intron A.

The main competitor to Intron A, which Schering-Plough now

sells as Peg-Intron, is Roche's comparably priced drug

Pegasys.

Dr. Jensen, the hepatology director at Rush

University Medical Center in Chicago, said he wanted to

perform clinical trials using drugs from both

Schering-Plough and Roche. " I was told by Schering-Plough

that I couldn't do both - that I had to sign an exclusive

agreement with them, " Dr. Jensen said. " That was the

juncture when Schering and I parted ways. "

Six specialists in liver disease said Schering-Plough also

paid what it called consulting fees to doctors to keep them

loyal to the company's products. The letter accompanying a

check for $10,000 explained that the money was for

consulting services that were detailed on an accompanying

" Schedule A, " said a doctor who insisted on anonymity. But

when the doctor turned to the attached sheet, he said,

" Schedule A " were the only words printed on an otherwise

blank sheet of paper.

Dr. Pappas, who in the past has consulted for

Schering-Plough and worked for Roche, said that stories

about the enormous sums that Schering-Plough paid its

consultants were common among liver specialists. " These

were very high-value consulting agreements with selected

opinion leaders that looked like payments of money with no

clear agreements on what was supposed to be executed, " Dr.

Pappas said.

In an interview, Mr. Hassan and other top executives

declined to discuss past marketing practices.

Kogan, the company's previous chairman and chief executive,

declined to be interviewed.

Schering-Plough's current management says that much has

changed at the company since Mr. Hassan took over. The

company no longer allows sales representatives or marketing

executives to have any say over its clinical trials,

physician education or medical consulting, they said. And

in all clinical trials begun in the last year, they said,

drugs have been provided free to the enrolled patients,

rather than being billed to them or their insurers.

" The temptation to give clinical grants to high prescribers

and consulting agreements to high prescribers is why we

pulled those decisions out of the hands of the sales

representatives, " said Brent Saunders, who was named senior

vice president for compliance and business practices last

year. " Sales representatives had an input into that process

before, which I think is still fairly normal in the

industry. "

In the separate Philadelphia investigation, Schering-Plough

is expected to plead guilty soon to charges that it failed

to provide Medicaid with its lowest drug prices, as is

required by law, and to pay a fine. Investigators are

examining whether Schering-Plough, to gain sales with some

private insurers, offered premiums, such as free patient

consulting arrangements, with its drugs. Prosecutors are

arguing that such incentives had a market value and meant

that Schering-Plough was offering drugs to private payers

at prices well below those offered to Medicaid. Many other

drug companies are the targets of similar inquiries.

The Boston inquiry into suspected kickbacks and improper

marketing by Schering-Plough could take months more to

resolve, people close to the investigation say.

Schering-Plough may also be charged with obstruction of

justice and document destruction as part of the Boston

inquiry, according to the company's filings with securities

regulators.

Industry experts say the federal inquiries into

Schering-Plough and the other drug giants have led some

companies to adopt significant changes in the way they

peddle drugs to doctors. Other companies have been slower

to react. " These investigations came out of left field, and

no one saw them coming, " said Barton Hutt, a former

F.D.A. general counsel who now advises drug companies. " The

industry has since had to reshape entirely what they are

doing, but it was too late to redo what they'd been doing

for years. "

Tony Farino, leader of the pharmaceutical consulting

service at Pricewaterhouses, said that as a result of

the investigations many companies in the drug industry were

hiring executives to police marketing and sales practices.

" Reputational risk is something they're all trying to

manage, " Mr. Farino said, " because the damages from failure

can be significant. "

http://www.nytimes.com/2004/06/27/business/27DRUG.final.html?ex=1089309139 & e

i=1 & en=97e21a324ed1ff21

Copyright 2004 The New York Times Company

[Guest guest]

H group. Here's Part 2 (and the url at bottom)

Over the last two years, Schering-Plough, which had sales

of $8.33 billion last year, has set aside a total of $500

million to cover its legal problems - mainly for expected

fines from the Boston investigation and from a separate

inquiry by federal prosecutors in Philadelphia who are

investigating whether Schering-Plough overcharged Medicaid.

Besides looking into whether Schering-Plough paid doctors

large sums to prescribe the company's drug for hepatitis C,

prosecutors are investigating whether many

company-sponsored clinical trials for the drug were simply

another way to funnel money to doctors.

Dr. Pappas, director of clinical research for St.

Luke's Texas Liver Institute in Houston, said that

Schering-Plough " flooded the market with pseudo-trials. "

Dr. Pappas and eight other liver specialists who were

interviewed say the system worked like this:

Schering-Plough paid physicians $1,000 to $1,500 per

patient for prescribing Intron A, the company's hepatitis C

treatment. In conventional clinical trials, participants

are given drugs free, but the doctors said that in these

cases the patients or insurers paid for their medication.

Because patients usually undergo Intron A treatment for

nearly a year and the therapy costs thousands of dollars,

Schering-Plough's payments to physicians left plenty of

room for the company to profit handsomely, the doctors

said.

In return for the fees, physicians were supposed to collect

data on their patients' progress and pass it along to

Schering-Plough, the doctors said. But many physicians were

not diligent about their recordkeeping, and the company did

little to insist on accurate data, according to Dr. Pappas

and the others.

One of the nation's most prominent liver disease

specialists, who spoke on condition of anonymity for fear

of angering big drug makers, called the trials " purely

marketing gimmicks. "

" Science and marketing should not be mixed like that, " the

doctor said.

Schering-Plough did more than encourage physicians to place

patients on Intron A, many of the physicians said. They

said the company would remove any doctor from its clinical

program - and shut off the money spigot - if he or she

wrote prescriptions for competing drugs, participated in

clinical trials of alternatives to Intron A or even spoke

favorably about treatments besides Intron A.

The main competitor to Intron A, which Schering-Plough now

sells as Peg-Intron, is Roche's comparably priced drug

Pegasys.

Dr. Jensen, the hepatology director at Rush

University Medical Center in Chicago, said he wanted to

perform clinical trials using drugs from both

Schering-Plough and Roche. " I was told by Schering-Plough

that I couldn't do both - that I had to sign an exclusive

agreement with them, " Dr. Jensen said. " That was the

juncture when Schering and I parted ways. "

Six specialists in liver disease said Schering-Plough also

paid what it called consulting fees to doctors to keep them

loyal to the company's products. The letter accompanying a

check for $10,000 explained that the money was for

consulting services that were detailed on an accompanying

" Schedule A, " said a doctor who insisted on anonymity. But

when the doctor turned to the attached sheet, he said,

" Schedule A " were the only words printed on an otherwise

blank sheet of paper.

Dr. Pappas, who in the past has consulted for

Schering-Plough and worked for Roche, said that stories

about the enormous sums that Schering-Plough paid its

consultants were common among liver specialists. " These

were very high-value consulting agreements with selected

opinion leaders that looked like payments of money with no

clear agreements on what was supposed to be executed, " Dr.

Pappas said.

In an interview, Mr. Hassan and other top executives

declined to discuss past marketing practices.

Kogan, the company's previous chairman and chief executive,

declined to be interviewed.

Schering-Plough's current management says that much has

changed at the company since Mr. Hassan took over. The

company no longer allows sales representatives or marketing

executives to have any say over its clinical trials,

physician education or medical consulting, they said. And

in all clinical trials begun in the last year, they said,

drugs have been provided free to the enrolled patients,

rather than being billed to them or their insurers.

" The temptation to give clinical grants to high prescribers

and consulting agreements to high prescribers is why we

pulled those decisions out of the hands of the sales

representatives, " said Brent Saunders, who was named senior

vice president for compliance and business practices last

year. " Sales representatives had an input into that process

before, which I think is still fairly normal in the

industry. "

In the separate Philadelphia investigation, Schering-Plough

is expected to plead guilty soon to charges that it failed

to provide Medicaid with its lowest drug prices, as is

required by law, and to pay a fine. Investigators are

examining whether Schering-Plough, to gain sales with some

private insurers, offered premiums, such as free patient

consulting arrangements, with its drugs. Prosecutors are

arguing that such incentives had a market value and meant

that Schering-Plough was offering drugs to private payers

at prices well below those offered to Medicaid. Many other

drug companies are the targets of similar inquiries.

The Boston inquiry into suspected kickbacks and improper

marketing by Schering-Plough could take months more to

resolve, people close to the investigation say.

Schering-Plough may also be charged with obstruction of

justice and document destruction as part of the Boston

inquiry, according to the company's filings with securities

regulators.

Industry experts say the federal inquiries into

Schering-Plough and the other drug giants have led some

companies to adopt significant changes in the way they

peddle drugs to doctors. Other companies have been slower

to react. " These investigations came out of left field, and

no one saw them coming, " said Barton Hutt, a former

F.D.A. general counsel who now advises drug companies. " The

industry has since had to reshape entirely what they are

doing, but it was too late to redo what they'd been doing

for years. "

Tony Farino, leader of the pharmaceutical consulting

service at Pricewaterhouses, said that as a result of

the investigations many companies in the drug industry were

hiring executives to police marketing and sales practices.

" Reputational risk is something they're all trying to

manage, " Mr. Farino said, " because the damages from failure

can be significant. "

http://www.nytimes.com/2004/06/27/business/27DRUG.final.html?ex=1089309139 & e

i=1 & en=97e21a324ed1ff21

Copyright 2004 The New York Times Company

[Guest guest]

H group. Here's Part 2 (and the url at bottom)

Over the last two years, Schering-Plough, which had sales

of $8.33 billion last year, has set aside a total of $500

million to cover its legal problems - mainly for expected

fines from the Boston investigation and from a separate

inquiry by federal prosecutors in Philadelphia who are

investigating whether Schering-Plough overcharged Medicaid.

Besides looking into whether Schering-Plough paid doctors

large sums to prescribe the company's drug for hepatitis C,

prosecutors are investigating whether many

company-sponsored clinical trials for the drug were simply

another way to funnel money to doctors.

Dr. Pappas, director of clinical research for St.

Luke's Texas Liver Institute in Houston, said that

Schering-Plough " flooded the market with pseudo-trials. "

Dr. Pappas and eight other liver specialists who were

interviewed say the system worked like this:

Schering-Plough paid physicians $1,000 to $1,500 per

patient for prescribing Intron A, the company's hepatitis C

treatment. In conventional clinical trials, participants

are given drugs free, but the doctors said that in these

cases the patients or insurers paid for their medication.

Because patients usually undergo Intron A treatment for

nearly a year and the therapy costs thousands of dollars,

Schering-Plough's payments to physicians left plenty of

room for the company to profit handsomely, the doctors

said.

In return for the fees, physicians were supposed to collect

data on their patients' progress and pass it along to

Schering-Plough, the doctors said. But many physicians were

not diligent about their recordkeeping, and the company did

little to insist on accurate data, according to Dr. Pappas

and the others.

One of the nation's most prominent liver disease

specialists, who spoke on condition of anonymity for fear

of angering big drug makers, called the trials " purely

marketing gimmicks. "

" Science and marketing should not be mixed like that, " the

doctor said.

Schering-Plough did more than encourage physicians to place

patients on Intron A, many of the physicians said. They

said the company would remove any doctor from its clinical

program - and shut off the money spigot - if he or she

wrote prescriptions for competing drugs, participated in

clinical trials of alternatives to Intron A or even spoke

favorably about treatments besides Intron A.

The main competitor to Intron A, which Schering-Plough now

sells as Peg-Intron, is Roche's comparably priced drug

Pegasys.

Dr. Jensen, the hepatology director at Rush

University Medical Center in Chicago, said he wanted to

perform clinical trials using drugs from both

Schering-Plough and Roche. " I was told by Schering-Plough

that I couldn't do both - that I had to sign an exclusive

agreement with them, " Dr. Jensen said. " That was the

juncture when Schering and I parted ways. "

Six specialists in liver disease said Schering-Plough also

paid what it called consulting fees to doctors to keep them

loyal to the company's products. The letter accompanying a

check for $10,000 explained that the money was for

consulting services that were detailed on an accompanying

" Schedule A, " said a doctor who insisted on anonymity. But

when the doctor turned to the attached sheet, he said,

" Schedule A " were the only words printed on an otherwise

blank sheet of paper.

Dr. Pappas, who in the past has consulted for

Schering-Plough and worked for Roche, said that stories

about the enormous sums that Schering-Plough paid its

consultants were common among liver specialists. " These

were very high-value consulting agreements with selected

opinion leaders that looked like payments of money with no

clear agreements on what was supposed to be executed, " Dr.

Pappas said.

In an interview, Mr. Hassan and other top executives

declined to discuss past marketing practices.

Kogan, the company's previous chairman and chief executive,

declined to be interviewed.

Schering-Plough's current management says that much has

changed at the company since Mr. Hassan took over. The

company no longer allows sales representatives or marketing

executives to have any say over its clinical trials,

physician education or medical consulting, they said. And

in all clinical trials begun in the last year, they said,

drugs have been provided free to the enrolled patients,

rather than being billed to them or their insurers.

" The temptation to give clinical grants to high prescribers

and consulting agreements to high prescribers is why we

pulled those decisions out of the hands of the sales

representatives, " said Brent Saunders, who was named senior

vice president for compliance and business practices last

year. " Sales representatives had an input into that process

before, which I think is still fairly normal in the

industry. "

In the separate Philadelphia investigation, Schering-Plough

is expected to plead guilty soon to charges that it failed

to provide Medicaid with its lowest drug prices, as is

required by law, and to pay a fine. Investigators are

examining whether Schering-Plough, to gain sales with some

private insurers, offered premiums, such as free patient

consulting arrangements, with its drugs. Prosecutors are

arguing that such incentives had a market value and meant

that Schering-Plough was offering drugs to private payers

at prices well below those offered to Medicaid. Many other

drug companies are the targets of similar inquiries.

The Boston inquiry into suspected kickbacks and improper

marketing by Schering-Plough could take months more to

resolve, people close to the investigation say.

Schering-Plough may also be charged with obstruction of

justice and document destruction as part of the Boston

inquiry, according to the company's filings with securities

regulators.

Industry experts say the federal inquiries into

Schering-Plough and the other drug giants have led some

companies to adopt significant changes in the way they

peddle drugs to doctors. Other companies have been slower

to react. " These investigations came out of left field, and

no one saw them coming, " said Barton Hutt, a former

F.D.A. general counsel who now advises drug companies. " The

industry has since had to reshape entirely what they are

doing, but it was too late to redo what they'd been doing

for years. "

Tony Farino, leader of the pharmaceutical consulting

service at Pricewaterhouses, said that as a result of

the investigations many companies in the drug industry were

hiring executives to police marketing and sales practices.

" Reputational risk is something they're all trying to

manage, " Mr. Farino said, " because the damages from failure

can be significant. "

http://www.nytimes.com/2004/06/27/business/27DRUG.final.html?ex=1089309139 & e

i=1 & en=97e21a324ed1ff21

Copyright 2004 The New York Times Company