Pfizer, Inc., must pay a $142 million jury verdict to Kaiser Foundation Health Plan, Inc. (“Kaiser”) for “damages” related to the off-label promotion of Neurontin®, the First Circuit ruled last week. Unfortunately, for Pfizer and other companies that have pleaded guilty to misbranding violations based on off-label promotion, the First Circuit’s ruling could spell even more trouble ahead.
Historical Background on Off-Label Charges Regarding Neurontin
By way of background, the FDA approved Neurontin® in December 1993 exclusively for adjunctive or supplemental anti-seizure use by epilepsy patients. The Government charged that the drug’s manufacturer, Warner-Lambert, had illegally marketed Neurontin® for multiple off-label uses, including the treatment of bipolar mental disorder, pain, Amyotrophic Lateral Sclerosis (ALS, or Lou Gehrig’sDisease), attention deficit disorder, migraine, drug and alcohol withdrawal seizures, restless leg syndrome, and as a first-line monotherapy treatment for epilepsy.
The 2004 Plea Agreement between the Government and Warner-Lambert specifically stated that Warner-Lambert’s criminal conduct caused $150 million in losses and that, as a result of a prior Food, Drug & Cosmetic (FDCA) conviction, Warner-Lambert’s off-label violations constituted felonies. Warner-Lambert (which had been acquired by Pfizer) ultimately paid the Government $430 million in civil and criminal penalties related to its off-label marketing of Neurontin®. (In a separate but related matter, Dr. David Franklin, a former medical liaison at Warner-Lambert’s Parke-Davis Division, filed a False Claims Act qui tam action in 2001 in which he claimed that Parke-Davis had engaged in a fraudulent scheme to promote the off-label use of Neurontin® . . . although Parke-Davis and the Government entered into a stipulation of dismissal, Franklin collected a $24.6 relator’s award).
The First Circuit’s Ruling
Almost immediately following the Warner-Lambert settlement, Kaiser and other health insurance plans got the idea that if government health care programs could cry “fraud” from being “tricked” into reimbursing for Neurontin®’s off-label uses, so could they. However, instead of filing a garden-variety health care fraud suit, Kaiser and Co. filed a Racketeering Influence and Corrupt Organizations (RICO) lawsuit against Pfizer, accusing the pharmaceutical giant (by virtue of having acquired Warner-Lambert) of engaging in a pattern of racketeering activity consisting of multiple acts of fraud based on the company’s marketing of Neurontin® for multiple off-label uses. In 2010, the case went to trial and the jury sided with Kaiser, awarding the health insurer $47.3 million in damages. However, under RICO, those damages were trebled for total jury verdict of $142 million.
In affirming the verdict, the First Circuit quoted the jury’s conclusion that ”Kaiser prove[d] that Pfizer violated RICO with respect to its promotion of Neurontin® for” bipolar disorder, migraine, neuropathic pain, and dosages exceeding 1800 mg per day, and that these “violation[s] of RICO cause[d] Kaiser injury.” The court’s three latest rulings against Pfizer has significant financial and legal implications: similar claims will now be pursued by Aetna, Inc., and a class action filed by Harden Manufacturing Corp. will also move forward.
Although Kaiser was able to capitalize on the Warner-Lambert settlement and the admissions Pfizer made as a result of the settlement, Warner-Lambert’s off-label promotion of Neurontin® was egregious even by the standards of the day. For example, the trial record showed that Warner-Lambert promoted Neurontin® for bi-polar disorder based solely on anectodal evidence, and despite knowledge of several clinical trials that established that Neurontin® was more effective — and in one clinical trial even less effective — than placebo. Accordingly, Kaiser’s decision to jump on the Government bandwagon and exact its own pound of flesh from Pfizer makes economic sense. However, its decision to capitalize on Warner-Lambert’s behavior and seek “treble” damages from Pfizer under the RICO statute was a bit aggressive to say the least. Given the egregiousness of Warner-Lambert’s conduct, it is unclear whether these cases represent an outlier, or whether Pfizer and other companies should brace for similar RICO litigation wherever really “bad” conduct can be established.
The case is In Re: Neurontin Marketing and Sales Practices Litigation, Nos. 11-1904, 11-2096 (1st Cir. 2013)
Click on the link to read the 2004 Department of Justice/Warner-Lambert settlement announcement.