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Pfizer unit agrees to $430m in fines

Division to plead guilty to illegally marketing its top epilepsy drug

Warner-Lambert, a division of the giant pharmaceutical company Pfizer Inc., has agreed to plead guilty to criminal conduct and pay $430 million in fines to resolve charges that it illegally marketed its top-selling epilepsy drug, Neurontin, for illnesses ranging from manic depression to hiccups.

The US attorney's office in Boston, which led an investigation into Warner-Lambert's sales practices during the 1990s, said yesterday that the fine is the second largest imposed in a healthcare fraud settlement, second to the $885 million TAP Pharmaceutical Products paid three years ago.

But the fine is the largest against a drug maker for promoting its medications for unapproved uses, and may signal prosecutors' growing interest in why so many patients take drugs for illnesses for which they were never intended or approved, and the role pharmaceutical companies play.

"I'm sure this is going to be a very new hot area," said Thomas S. Crane, a lawyer with the Boston law firm Mintz, Levin, which represents drug companies and hospitals in healthcare-fraud cases. "This settlement is a huge wake-up call about the potential liability of aggressive promotion of unapproved products."

Boston lawyer Thomas M. Sobol, who is representing consumers against Warner-Lambert in a similar case involving Neurontin, said "there have been disclosures by many companies that they're under investigation for off-label promotions. It might be a harbinger of other similar types of revelations. The dollars involved are so significant in off-label use, and the rules are such that there can be potential abuse."

Under federal regulations, a company must seek approval from the US Food and Drug Administration, by providing clinical data proving that a drug is safe and effective for particular illnesses before it can market that drug to doctors. The system is designed to protect patients from medications that do not work for their ailment -- or that are dangerous to take. Though drug companies are forbidden from promoting unapproved drugs, doctors still can prescribe them if they believe the drugs will be helpful for a patient.

The case against Warner-Lambert began more than seven years ago, when David Franklin, then a medical liaison for the company, quit his job after four months because he believed Warner-Lambert was training him to illegally promote Neurontin to doctors. Franklin saved documents and voicemails, and hired a lawyer, Thomas Greene of Boston. They filed a civil lawsuit and requested from Pfizer more than 200,000 documents about its marketing practices, which became the basis for the government's case.

Among the disclosures in the documents, the US attorney's office said the company gave doctors kickbacks in the form of lavish trips and tickets disguised as educational or consulting payments. In one instance, prosecutors said, Warner-Lambert's Parke-Davis division paid for doctors to stay five days in Atlanta during the 1996 Summer Olympics. The doctors stayed at the Chateau Elan Resort and Winery, and the company covered their meals, use of the resort, and motor coach travel to the games. Agendas for the meeting listed 10.5 hours of business meetings, including one session devoted to off-label uses for Neurontin, prosecutors said.

The company also ran teleconferences, in which sales representatives recruited doctors to call into a prearranged number and listen to a physician or Warner-Lambert employee speak about off-label uses of Neurontin.

Franklin said the company trained him to promote the drug for various illnesses, including social phobias, restless leg syndrome, and migraine headaches, though the FDA had approved it only as add-on therapy for epilepsy in 1993. Later, in 2002, the FDA approved it to treat shingles.

For example, Franklin said, although the company possessed an unpublished study showing a placebo, or sugar pill, was more effective for bipolar disorder than Neurontin, he was responsible for "convincing physicians that 90 percent of patients had 90 percent recovery 90 percent of the time."

Now, 90 percent of Neurontin sales are for off-label use, and the drug brought $2.7 billion in revenue to Pfizer last year.

Franklin, 42, will receive $26.6 million of the settlement, under the federal whistleblower law. He now works for Boston Scientific Corp., the Natick maker of cardiac stents.

"I thought I was being hired to answer doctors' questions in a fair and balanced way," Franklin said yesterday. "My job was actually to pervert the medical process and provide absolutely false and fabricated information to the physician. After seven and a half years of this case, we realize the depth of control these companies have over our healthcare."

Greene said bipolar patients may have been harmed by taking Neurontin, because they were not given a drug that controlled their symptoms and some contemplated suicide. He said he has referred dozens of patients who have called him to other lawyers.

Doctors have prescribed the drug to nearly 10 million patients in the past decade.

Pfizer executives would not comment on the case yesterday. But they issued a statement pointing out that the allegations concern the conduct of Warner-Lambert in 1996, well before Pfizer bought the company in 2000. "Pfizer has cooperated fully with the government to resolve this matter, which did not involve Pfizer practices or employees," the statement said.

In the settlement, Warner-Lambert agreed to plead guilty to two counts of violating the Food, Drug & Cosmetic Act. As part of the plea, the company will pay $240 million in criminal fines. The violations are felonies, because Warner-Lambert had a prior conviction for failing to report to federal regulators a problem at one of its manufacturing plants; a second offense triggers a felony. Massachusetts US Attorney Michael J. Sullivan did not insist that Pfizer plead guilty to the charges, in apparent recognition that the violations did not occur on the company's watch.

Warner-Lambert settled its civil liabilities by agreeing to pay the federal and state Medicaid insurance programs for the poor $152 million, reimbursing them for money they spent for unapproved uses of Neurontin for patients. Franklin's share comes out of this amount. The company will pay an additional $38 million to the 50 state attorneys general's offices, which will use the money to develop unbiased drug information for patients and doctors.

Pfizer entered into an extensive corporate compliance agreement with the government, that among other measures requires the company to train and supervise its sales staff in appropriate marketing techniques and hire a senior manager to oversee compliance -- actions Pfizer said it already has taken.

"Clearly we are at a vital period in the treatment of pharmaceutical companies in the healthcare system," Sullivan said yesterday during a press conference in Washington, D.C. "Pharmaceutical companies must not be allowed to profit from breaking rules and regulations."

Associate Attorney General Robert D. McCallum would not comment on whether the US Department of Justice is investigating any other possible criminal activity at Warner-Lambert that it may have uncovered during the Franklin case.

Liz Kowalczyk can be reached at Stephen J. Glain of the Globe staff contributed to this report from Washington.

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