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Drugmaker admitted fraud, but sales flourish

By Schmit, USA TODAY

What happens to drug companies that commit federal crimes? For the nation's

No. 1 drug company, the answer is: some pain, more gain.

In mid-May, Pfizer's (PFE) Warner-Lambert division pleaded guilty to

illegally marketing a drug called Neurontin to treat ailments for which it was

not

approved. Pfizer, which did not own Warner-Lambert when the government said the

wrongdoing happened, paid a $430 million fine to settle charges that included

defrauding Medicaid.

Pfizer's confession that the success of one of its top drugs was built partly

on fraud may have been humbling, but it isn't hurting the bottom line.

Neurontin sales last quarter rose 32% from a year ago, and 2004 sales should

pass

last year's $2.7 billion. With few exceptions, state Medicaid programs pay for

Neurontin just as before and so do major insurers. (Related story: Pfizer

poised to fight off generics with new drug)

Other drug penalties

Other government civil and criminal settlements involving drug companies:

Schering-Plough in July agreed to pay $345 million to settle charges that it

didn't give Medicaid its best price for the allergy drug Claritin.

AstraZeneca Pharmaceuticals in 2003 paid $355 million to settle charges that

it gave doctors kickbacks by providing free samples of its prostate drug

Zoladex knowing that they would bill Medicaid and Medicare.

Bayer in 2003 paid $257 million to settle charges that it concealed some

drug discounts to avoid paying Medicaid enough in rebates.

TAP Pharmaceuticals in 2001 paid $875 million to settle charges similar to

AstraZeneca's involving its prostate cancer drug Lupron.

By Schmit

The tale of Neurontin shows how hard it is to stop the momentum of a

blockbuster drug, absent evidence that it is unsafe, and to control health care

costs.

" They (Warner-Lambert) made their money, and they got off cheap, " says Larry

Sasich, a doctor of pharmacy at the consumer-oriented Public Citizen Health

Research Group based in Washington, D.C. Without prosecution of Warner-Lambert

executives, he says, the $430 million fine is an inexpensive " cost of doing

business. " (Related story: Whistle-blower started scrutiny)

In addition to the fine, Pfizer agreed to tighter rules to ensure compliance

with drug-marketing laws. It will also contribute millions of dollars to

states to educate doctors about Neurontin.

Approved for two conditions

Warner-Lambert's offense was marketing Neurontin to doctors for purposes

other than as a supplemental anti-seizure medication for epileptics. That was

the

only use approved by the Food and Drug Administration during Neurontin's early

years, when prosecutors say Warner-Lambert's illegal marketing took place.

In 2002, the FDA said Neurontin also could be used for nerve pain related to

shingles.

Doctors can prescribe FDA-approved drugs for other purposes, so-called

off-label uses. But federal law forbids pharmaceutical companies to market drugs

for

treatments not FDA-approved.

The Justice Department says that's what Warner-Lambert did from shortly after

introducing Neurontin in 1994 until 2000. Prosecutors alleged that

Warner-Lambert lied to doctors about the drug's effectiveness, paid doctors to

allow a

sales representative to sit in on sessions with patients and paid doctors, some

up to $250,000, to unethically talk up Neurontin to other doctors.

In fact, the list of ailments that Warner-Lambert claimed Neurontin

alleviated was so long — covering pain, headaches, bipolar disorder, attention

deficit

disorder, alcohol detoxification — that some Warner-Lambert employees dubbed

it the " snake oil " list, government documents say.

The strategy worked. In 2002, 94% of Neurontin's sales were for off-label

uses, up from40% in 1995, the government estimates, citing company documents and

independent market research. Wall Street firm Lehman Bros. estimates that 90%

of Neurontin sales are currently off-label.

Doctors consider the drug relatively safe with few side effects. But

prosecutors said Warner-Lambert's actions caused Medicaid to pay for

prescriptions it

should not have. They also said patients could have been harmed by taking a

drug not proved safe and effective for their condition.

" The aggressive marketing campaign by Warner-Lambert resulted in real

increased costs to the states, insurers and consumers, " Vermont Attorney General

Sorrell said the day of the settlement. He noted a 30-day supply of

Neurontin at a common dose costs $205.

Angry at the company

Steve Borcherding, 42, is a former Neurontin user. The father of three runs a

home-repair business in Portland, Ore. He has bipolar disorder, an illness

often called manic depression. People who have the disorder often cycle from

euphoria to deep depression. Borcherding has hit psychotic states. If not on

medication, he says, he might do things such as try to drive through a brick

wall

because he believes he'll pass through.

In 2001, his psychiatrist suggested he try Neurontin. He knew it wasn't

FDA-approved for his illness. That didn't worry him, because many drugs for his

condition are not FDA-approved.

He says he didn't know that two studies published in 2000 — including one

sponsored partly by Warner-Lambert — had shown Neurontin was no more effective

than a placebo for his disorder.

He says he began taking Neurontin along with another drug he'd been taking

before. His wife, Karla Wolf, says Neurontin didn't seem to make a difference

for her husband at first. She recalls his mania then increased, and he was

hospitalized for five days.

Borcherding was then taken off Neurontin.

He isn't suing anyone. Since the government's settlement, the New York-based

law firm of Finkelstein & Partners has filed at least five lawsuits alleging

Neurontin caused suicides or attempted suicides. Borcherding says there's no

way to prove that Neurontin caused his downward spiral. He'd had similar spirals

before taking Neurontin and had been hospitalized while on other drugs.

He considers drug researchers " heroes " and trusts the doctor who prescribed

Neurontin for him.

But he's angry at the company's promotion of the drug for his illness. " They

had the data that this was not an effective drug, and they ignored that data, "

he says. " I really have faith in the scientific process and Western medicine

and empirical evidence, and they hijacked that process. They betrayed it. "

Pfizer says that the company will vigorously defend itself against all

lawsuits and that it knows of no individual harmed by Neurontin. It also says

that

many drugs are used off-label, including cancer drugs, and that the government

did not allege illegal conduct after Pfizer bought Warner-Lambert in 2000.

As part of the settlement, Warner-Lambert pleaded guilty to conduct before

Aug. 21, 1996, only, even though prosecutors alleged illegal actions occurred

later, too. The settlement made it possible for the company to continue to

participate in federal health care programs such as Medicaid, despite an Aug.

21,

1996, health care fraud law that might have led to its exclusion. Pfizer would

not make an executive available to be interviewed for this story.

Used by millions

Almost 12 million people have used Neurontin since 1994, Pfizer says. Sixty

countries allow it to treat pain. Even though the U.S. has approved it for only

two conditions, Neurontin's popularity has snowballed. For the past three

years, it has been the third-biggest drug cost for Oregon's Medicaid program.

That occurred despite a lack of strong scientific support for its off-label

uses.

In 2003, the Journal of Managed Care Pharmacy published a literature review

of Neurontin studies. The author, Mack, a doctor of pharmacy, concluded

Neurontin was not the " optimal " treatment for the majority of off-label uses

except nerve pain related to diabetes and for frequent migraines.

One rigorous study published in 2002 dubbed it an expensive anti-migraine

option: $138 per migraine prevented.

Assistant U.S. Attorney Kanwit in Boston, one of the chief prosecutors

on the Neurontin case, says his biggest hope is that the case changes drug

industry marketing practices.

As far as affecting Neurontin's momentum, Kanwit acknowledges the case may

have little impact. Among the reasons:

•Insurers have a hard time controlling drug prescriptions. Insurance

companies and Medicaid programs can require doctors to get their approval before

prescribing a specific drug. But it's rarely done with Neurontin, even though

the

allegations about fraudulent marketing became public in 2000.

Only four of 50 state Medicaid programs require preapproval of Neurontin

prescriptions, USA TODAY found when it surveyed all of them after Pfizer's

government settlement. Among major health insurers, only Aetna says it's

considering

preapproval.

Preapproval can hurt sales. Florida expects its July 1 decision to require

preapproval for Neurontin will save more than $7 million in its $2.1 billion

Medicaid drug program. Neurontin prescriptions in Maine's Medicaid program

dropped 19% — despite a 9% increase in eligible Medicaid clients — after

preapproval took hold in October. Massachusetts and Oregon also started

requiring

preapproval last year.

Other states and insurers are wary because restricting Neurontin's

availability could hurt consumers who really need it. Preapproval rules are also

costly

and time consuming to administer. What's more, lower-cost generic competitors

may become available in the USA as soon as next year. To require preapproval

for Neurontin prescriptions now may cost more than it saves, says

Seidman, chief pharmacy officer for WellPoint Health Networks, parent of Blue

Cross

of California.

" We have to make sure the payoff is worth the hassle factor, " agrees

Nesser, pharmacy director of the Oklahoma Health Care Authority.

The authority decided it wasn't in 2002 after its own study suggested that

fewer than 10% of its clients on Neurontin suffered from epilepsy or shingles,

Neurontin's two FDA-approved uses. " You don't want to put a roadblock on an

epilepsy drug, " Nesser says.

Oklahoma's Neurontin costs surpassed $5 million in 2003, up from $4.2 million

the year before.

•Medicaid laws fuel off-label prescribing. To ensure that Medicaid patients

had good access to drugs, Congress in the early 1990s decreed Medicaid should

pay for a drug for a use that is FDA-approved or supported by citations in one

of three medical directories.

One directory, Drugdex Information System, owned by Canada's Thomson Corp.,

says Neurontin is effective or possibly effective in treating 46 ailments.

Often, that judgment is based on case studies of a small number of patients or

studies in which patients knew they were taking the drug, which can skew

results.

The FDA requires more rigorous testing for approval.

The other directories cite Neurontin for FDA-approved conditions and six pain

conditions.

Nicotine withdrawal is one condition Drugdex says Neurontin is " possibly

effective " in treating. That is based on the 2001 case of a 54-year-old man who

had also been alcohol-dependent and who was being treated for depression. While

on a daily dosage of 2,400 milligrams a day, costing about $8 to $12 a day

based on today's online prices, he abstained from nicotine for 10 weeks. The

study's author suggested further study.

Medicaid could refuse to pay for Neurontin for nicotine withdrawal, says

Barbara Dean, head of Texas' Medicaid drug program. But it " would be taking its

chances, " she says, because drug companies can argue that Medicaid laws

stipulate it pay.

Drugdex editor Soares says Drugdex hasn't changed its criteria for

what it includes in decades. Drugdex became one of the three directories in

1997. " I realize there's implications for (Medicaid) reimbursements, " he says.

But Drugdex's No. 1 goal is to inform pharmacists and doctors about a drug's

use and how it works, he says. The nicotine study was published in a reputable

medical journal, and Drugdex's review board, which includes doctors, included

it because " people might be talking about it. " Drugdex notes support for

Neurontin for nicotine withdrawal is poorly documented.

•Doctors want to help patients. They'll try drugs if they think they might

work, even if the FDA hasn't sanctioned them for a particular treatment.

Jim Moorman, CEO of Taxpayers Against Fraud, spends his life working on ways

to reduce fraud, thus taxes. He applauds the Justice Department's action

against Pfizer.

Yet he also takes Neurontin because " it seems to work " in alleviating his

restless-leg syndrome. Neurontin is not FDA-approved to treat RLS, in which legs

inadvertently jerk. No drugs are, but there is some evidence that Neurontin

can help RLS patients.

" Let's recognize this: There are off-label uses for Neurontin that are

valid, " Moorman says. " But (Warner's) marketing department didn't care if the

uses

were valid or not. "

Turek, medical director of the Oregon Health Plan, also says a drug

that may not work for many may work for an individual, even if it has only a

placebo effect.

Should onus be on doctors?

Despite Pfizer's fraud settlement, psychiatrist Suzanne Vogel-Scibilia

remains sold on Neurontin. She has 1,000 patients in her Pennsylvania practice.

A

board member for the National Alliance for the Mentally Ill, she says the

bipolar studies on Neurontin are not exhaustive enough.

She prescribes Neurontin, always with another drug, to ease anxiety and sleep

disorders in mild bipolar cases. As a bipolar patient, she takes it, too. " As

a doctor, I want the freedom to prescribe what I think works, " she says.

She says doctors should check the validity of drug studies and decide

prescriptions case by case.

But Jerome Avorn, author of an upcoming book, Powerful Medicines, says

time-pressed doctors turn most often to drug representatives for drug

information.

Avorn, a doctor with Harvard Medical School and Brigham and Women's Hospital,

also says doctors too often attempt to learn whether a drug works for a patient

by trying it. " We ought to have a better system than that. " He advocates more

studies and easier access to data.

Even Oregon, with new preapproval rules, will continue to pay for Neurontin

for existing bipolar users. " It doesn't fit with the science ... but people

aren't machines, so we have to use some of the art (of medicine) as well as the

science, " Turek says.

Janet Marquez, 25, doesn't pay much mind to studies. She looks at her life.

Several years ago, Marquez spent four months in a psychiatric hospital.

Diagnosed as bipolar, she tried other drugs. They didn't work, she says. About

four

years ago, she started Neurontin. She's now in college, living on her own and

volunteering at a local library.

When Oregon last year threatened not to pay for her Neurontin, her doctor

wrote a letter for her.

Oregon still pays for Marquez's Neurontin. " If it doesn't work, then why do I

feel better? " she says.

Contributing: Darryl Haralson, Ankner

Hallenbeck~Sikorsky~ BS,RN,UM,QC

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