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By Andrew Newton on 11 Sep, 2009 - 12:28 UTC

Having spent a few years as a compliance professional in the financial sector, I was intrigued to read about the detail of the Pfizer settlement.

 

The drug company Pfizer, you'll recall, has just settled with the US Department of Justice for a total financial penalty of $2.3 billion - the largest ever. The allegations against Pfizer concerned illegal marketing of painkiller Bextra and several other drugs.

 

What did not come through in the original reports was that in one part of the settlement, the inspector general  of the US Department of Health and Human Services  (HHS) required Pfizer to change the reporting line of the company's compliance department from the General Counsel to the Chief Executive. 

 

In-house compliance professionals are often in a bit of a bind. They are supposed to advise the business on how it needs to conduct itself if it is to remain within the letter of the regulations. Their reporting line, however, is often to someone with a strong personal interest in the short-term financial success of the business development to which the advice relates. Although compliance departments inevitably attract the label of "business prevention", their reporting lines (and remuneration and retention prospects) in fact incentivise them to bend over backward to accommodate the concerns of their superior. So much for independence.

 

In Pfizer's case compliance reported to the general counsel. As Lewis Morris, general counsel for the inspector-general's office put it:

 

"The lawyers tell you whether you can do something, and compliance tells you whether you should ... We think upper management should hear both arguments."

 

If that is what the lawyers are there to do, then they will be rewarded on the basis of their overall contribution to business development. Compliance reporting into that setup risk ending up singing the same tune, or leaving.

 

I predict regulators will become more prescriptive about the precise reporting lines of compliance professionals. I am not sure, though, that instituting a reporting line to the chief executive is the most effective course though. Although the CEO has a group-wide interest and won't want the actions of a particular division to threaten the overall reputation of the group, the CEO is still guided by short-term financial incentives. A better solution might be a reporting line into the audit committee of the board, which should be majority comprised of independent non-executives.

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Drugmaker AstraZeneca faces a class-action lawsuit in the UK from 16,000 patients who were prescribed the drug Seroquel for "off-label" indications and claim to have experienced significant side effects, like weight gain and diabetes.

 

Internal documents show that the company had aggressively promoted the drug for off-label, unapproved uses to doctors.  Seroquel was originally created and approved to treat schizophrenia, but AstraZeneca has promoted its use for other psychiatric disorders such as bipolar disorder.  The internal documents also show that the company was aware of the dicey legal territory they were navigating:

 

"Other documents show AstraZeneca keeping a close eye on the legal line between promoting clinical studies of Seroquel in disorders for which it is not yet approved and outright marketing of the drug for off-label use by the commercial department. One 2004 email said that slides prepared in connection with a study involving off-label use of Seroquel were "financed outside of Commercial for obvious legal reasons". On another document, the minutes of a meeting about doctors' attitudes to anti-psychotic drugs, a brand manager had scrawled that the sales force could "grease the skids" for Seroquel's use as a treatment for dementia."

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An update from The Scientist (free reg'n req'd) on the Merck/Elsevier story: there were six other fake journals issued on behalf of unnamed sponsors.

 

We previously covered Elsevier's publication of an apparently peer-reviewed serious journal for Merck, that was in fact a Merck-sponsored promotional tool.

 

Now The Scientist has found that there were seven such journals published between 2000 and 2005 by Elsevier's Australian operation.

 

"a "series of sponsored article publications" were put out by their Australia office and bore the Excerpta Medica imprint from 2000 to 2005. These titles were: the Australasian Journal of General Practice, the Australasian Journal of Neurology, the Australasian Journal of Cardiology, the Australasian Journal of Clinical Pharmacy, the Australasian Journal of Cardiovascular Medicine, and the Australasian Journal of Bone & Joint. Elsevier declined to provide the names of the sponsors of these titles, according to the company spokesperson."

 

If they can, would Merck and the other major drug companies please start denying their involvement in these others so we can see who the unnamed drug companies are?

Merck paid medical publisher Elsevier to publish a few volumes of Merck-favored research with the appearance of a serious peer-reviewed journal.

 

Instead, the Australasian Journal of Bone and Joint Medicine was in effect just company-sponsored marketing material without the sponsorship disclosure.

 

While the serious ethical breach by Merck is receiving much attention, I'd like to draw attention also to the bizarre ethical breach by the publisher.

 

Elsevier has a reputation as a serious publisher of peer-reviewed science, technical and medical journals. It knew that by attaching its name to this journal it would lead people into assuming that the same standards would apply to the information and views it contained.

 

Elsevier has a responsibility for its mind print. The information that it publishes can and will be taken and used for better or worse. Elsevier's corporate social responsibility page, however, prefers to talk about philanthropic and environmental initiatives.

 

Time for them to re-center on why they exist. Clue: it was not to squeeze an extra bit of revenue out of their brand by lending credence to Merck's blindingly unethical misstep.

According to experts, widespread abuse of antibiotics and overprescription of medication across Asia is driven by doctors' profit motive, and will lead to disastrous mass drug resistance in long run.

 

Reuters: "Experts warn that driven by profits from selling medicine, some doctors from Indonesia to Hong Kong are overprescribing medicines, a practice they say will be disastrous in the longer term.

 

"Polypharmacy (overmedication) is very popular here, it means they use a lot of medicines which are unnecessary, like giving you many types of antibiotics for a cold," said William Chui, honorary associate professor at the Clinical Trials Center attached to the University of Hong Kong.

 

"Every time they sell a drug, they get a profit, it is a profit motive. When they give lots of medicine, parents feel happier, more happy than when they are told to go home to sleep."

 

The consumption of multiple drugs triggers drug reaction and unpredictable side effects. Worse, it gives rise to bacterial resistance."

The Human Rights Centre at the University of Essex has issued a set of guidelines for pharma companies on the access to drugs for sexual health.

The opening paragraph sets the context:

"Almost 2 billion people lack access to essential medicines. This deprivation causes immense and avoidable suffering: ill health, pain, fear, loss of dignity and life. Improving access to existing medicines could save 10 million lives each year, 4 million of them in Africa and South-East Asia. Besides deprivation, gross inequity in access to medicines remains the overriding feature of the world pharmaceutical situation. Average per capita spending on medicines in high income countries is 100 times higher than in low-income countries: about US$400 compared with US$4. The World Health Organisation (WHO) estimates that 15 per cent of the world’s population consumes over 90 per cent of the world’s production of pharmaceuticals."

This particular report looks at the access to medicines issue in the context of sexual and reproductive health.

The guidelines cover themes including transparency, management, monitoring and accountability,
pricing and ethical marketing.

NovoNordisk gets several honorable mentions in the report for the extent of its willingness to hold up its practices to scrutiny against the guidelines. No other pharmaceutical firm was similarly inclined.
A decision of the US Supreme Court undermines an attempt by the Bush administration to insulate drug companies from responsibility.

The policy in question was the Food and Drug Administration's 2006 decision to adopt rules that insulated drug companies from state lawsuits where the drug had been approved by the FDA.

The case involved Diana Levine, a guitar-playing children's musician, whose arm had to be amputated after she received an injection of Wyeth Pharmaceutical's Phenergan drug. Whereas she had gone in with a migraine, Phernegan is a common treatment for nausea.

Levine successfully convinced a jury that the drug company should have placed stronger warnings about this risk on the drug packaging, regardless of the FDA approval of the drug.

Business argues that if a product meets a government standard then they should be immune to suits relating to that product.

This is a ludicrous view. Establishing a repository of responsibility anywhere but in the person with the greatest opportunity to identify and manage the risk of harm (i.e. drug producer in this case) creates a moral hazard: rather than attempting to make a product safe and then market it responsibly only for purposes for which it is known to be safe, the company's challenge becomes how to game the approval process.

This year, for example, we saw Pfizer pay $2.3 billion in an in-principle settlement with the US Attorney's Office over allegations of off-label marketing. From my previous post on that case:

"It is legal in the US to prescribe a drug for medical conditions other than those for which the drug has been approved, and there are many cases where this has proved beneficial. Medical knowledge can be advanced in this way.

What is illegal is for a drug company to promote such off-label uses, simply because those alternative uses have not been subjected to the rigorous clinical trials required to prove the safety of a drug for public marketing.

Drug companies have a habit of doing this.

Not long before Pfizer reported this settlement, Eli Lilly & Co. pleaded guilty to a charge that it illegally promoted the anti-psychotic drug Zyprexa for unapproved use. Lilly is to pay $1.42 billion to settle lawsuits and to end the criminal investigation.

Pfizer itself was fined $430 million in 2004 for promotion of its epilepsy drug Neurontin for off-label conditions including migraines, chronic pain and bipolar disease.

A research paper by Adriane Fugh-Berman and Douglas Melnick entitled "Off-Label Promotion, On-Target Sales" surveyed the ways in which pharmaceutical companies circumvent the rules.

The "decoy indication", for example, involves getting FDA approval for a drug that promises multiple uses on the basis of one use selected for the ease with which it will gain approval.

Fugh-Berman and Melnick argue that drug companies undertake a cost-benefit analysis of off-label promotion based on the likely fine if they get caught."

Fortunately, the Supreme Court ruled in favor of Diana Levine, holding that drugmakers could not hide behind federal regulation when faced with actions brought under state consumer protection laws. The majority refused to accept that legislators would have intended the concentration of all consumer recourse in one place, and that one so inadequately resourced for such a challenge.

The embedded video was made by Paul Zaloom in support of Diana Levine last year.

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The CSR Industry’s Lost Cause

Posted by christinearena to the Case in Point blog

What does the 2009 CRO 100 Best Corporate Citizens list say about the current state of the CSR industry? Perhaps it’s time for a makeover. >>

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  • on 12 May 2009

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