Fighting the Drug Companies to Lower Costs, Increase Access

November 25, 2003

Citizens use law to pursue drug firms

Citing unfair competition and weak FDA oversight, consumer coalition sues

giant pharmaceutical companies

Bernadette Tansey, Chronicle Staff Writer Sunday, November 23, 2003

------

An uprising is under way in California among patients and consumer groups

who think drug firms have been pushing their products too hard while

government regulators are taking the consequences too lightly.

Convinced that the Food and Drug Administration won't curb aggressive

marketing that can hurt patients and hike medical costs, the insurgent

citizen movement is using a controversial state consumer law to challenge

manufacturers. In civil suits against a range of drug and biotech

companies including Botox maker Allergan Inc. and drug giant Pfizer,

private citizens are turning to California's courtrooms to change the

ground rules for the industry.

The emerging consumer strategy, which bypasses FDA prerogatives, alarms

drug and biotechnology firms. In the most organized and far-reaching

effort, a Boston consumer coalition that blames drug firms for soaring

health care costs is bringing its fight to California. The nationwide

group, Prescription Access Litigation, is challenging company practices

ranging from drug advertising to doctors' freebies.

PAL, an initiative of the watchdog group Community Catalyst, says the FDA

lacks the resources to rein in aggressive marketing that can inflate the

nation's prescription drug bill.

" To the extent they do any enforcement, companies take it as a cost of

doing business,'' said Renee Hodin, PAL's associate director.

The coalition is seeking heavy financial judgments from firms accused of

exaggerating drug benefits, touting products for unproven uses or paying

doctors to drum up expensive prescriptions.

The companies deny wrongdoing, while industry officials warn that the

lawsuits raise a nightmare scenario of state court judges in 58 counties

setting their own rules for practices usually overseen by the FDA.

Pfizer the major target

Citizen actions under the state consumer law have hit a number of firms in

and out of California. But the biggest target is New York's Pfizer Inc.,

the world's largest drug company. Pfizer is the defendant in two actions

sponsored by PAL, which has member groups in 34 states, including

California.

In the suits against Pfizer, PAL is seeking sweeping refunds to California

purchasers of two prescription drugs with combined sales close to $2

billion. The consumer groups claim Pfizer subsidiaries improperly promoted

the drugs, Neurontin and Bextra, for uses not approved by the FDA.

Pfizer maintains the actions by PAL are pre-empted by federal drug laws.

" The relief it seeks would frustrate Congress' intent to have the FDA

determine the 'truth' about the safety and efficacy of drugs,'' Pfizer

attorneys argued in a brief in the Bextra suit.

Far from being a tiny David confronting a drug industry Goliath, PAL has

teamed up with an ally closer to Pfizer's size in the world of litigation

-- the Seattle law firm Hagens Berman, a class-action practice that

represented 13 states in landmark litigation against the tobacco industry.

Managing partner Steve Berman said the firm chose to file the Pfizer suits

in California for two reasons.

" It has, next to New York, the largest market share (in prescription drug

sales) of any one state,'' Berman said. " We feel a victory in California

would have a very big impact on company practices.''

Reason No. 2: California has one of the toughest consumer laws in the

nation.

The Unfair Competition Law is a tool used by state prosecutors to combat

anti-competitive or corrupt business dealings. It also allows private

citizens or groups to file suit in the name of the public. When these

suits succeed, judges can order a halt to unfair business practices. They

can also order firms to forfeit some of the money they made while those

practices occurred --

penalties that can be far higher than fines imposed by regulatory agencies.

Trial attorneys, consumer groups and many prosecutors see the law as a

bulwark against violations too numerous to be pursued by the state

attorney general or county district attorneys. Industry groups say

attorneys abuse the law by filing frivolous suits to reap quick

settlements, not to protect consumers.

Industry attorneys worry

The law can put firms in great jeopardy, forcing many to settle rather

than take a risk on a judge's ruling, industry lawyers say.

" The standards are so broad, and not necessarily completely defined, that

there is a tremendous risk of liability,'' said Vanessa Wells, an attorney

with Heller Ehrman White & McAuliffe.

If judges uphold suits like PAL's, California courts could become a

separate arena, independent of the FDA, that could strongly influence drug

industry practices nationwide.

PAL's suits against Pfizer revolve around an issue that has long been a

point of conflict between the drug industry and the FDA itself: off-label

promotion. Once the FDA approves a drug for sale as a safe and effective

remedy for one disease, doctors are free to prescribe it for other

conditions not listed on the FDA label if they conclude a patient will

benefit.

But in general, the FDA forbids firms from actively advertising off-label

uses. The agency wants companies to prove that drugs work in other

diseases by conducting more clinical trials. Off-label drugs have

sometimes been linked to patient injuries and deaths.

The PAL-sponsored lawsuits claim that Pfizer caused a different kind of

harm through off-label promotion: inflating health care costs.

Costly off-label uses

Repeating the allegations of a whistle-blower, PAL claims Pfizer and its

Parke-Davis unit deliberately bypassed FDA rules and touted their epilepsy

drug Neurontin for an array of other off-label conditions such as migraine

headaches, attention deficit disorder and bipolar disorder.

The suit alleges that Neurontin grew into a $1.3 billion blockbuster, with

up to 90 percent of that coming from off-label sales, according to some

estimates.

The whistle-blower, former Parke-Davis employee David Franklin, claims the

company boosted such sales by giving doctors thousands of dollars to

promote off-label uses at medical meetings, by paying other doctors to

attend such meetings in luxurious settings and by sponsoring flawed

research studies.

Pfizer spokeswoman Mariann Caprino said many of the allegations concerning

Neurontin cover a period before Pfizer acquired Parke-Davis. " It's a

long-standing and very well-known Pfizer policy that we have not and do

not promote our medicines for uses for which they have not been

FDA-approved,'' Caprino said.

The FDA has warned that some Neurontin marketing materials violated agency

rules. But FDA spokesman Brad Stone said he could not comment on whether

the FDA asked prosecutors to take further enforcement actions.

Government prosecutors are looking into Franklin's charges and might seek

payback for the millions of dollars that public insurance plans like

Medicaid have spent on Neurontin. But it's the potentially larger outlays

by private patients that PAL is going after in California.

A second PAL-backed suit accuses Pfizer and its subsidiary, Pharmacia, of

promoting the arthritis drug Bextra for an off-label use, a charge Pfizer

denies.

Pfizer seeks dismissal

Pfizer insists that both suits should be thrown out of court because they

trespass on the FDA's jurisdiction over drug promotion. Some California

judges have agreed that federal law pre-empts such state court actions,

but other judges have not. The FDA generally does not weigh in on such

disputes, and the question remains open, legal experts say.

Consumer advocates say the FDA is now slower to sanction aggressive drug

promotion. Critics also point to a new rule that forbids FDA staff from

warning companies of alleged marketing violations without the approval of

FDA Chief Counsel Daniel Troy, formerly a prominent drug industry lawyer.

Nancy Ostrove, an FDA risk communication manager, said the agency's

enforcement program has not been deterred by a lack of resources. She said

the review by Troy's office lends force to the FDA's warnings because

violators know FDA lawyers have already agreed that serious penalties

could follow if the violations persist.

" We're trying to get the industry to understand we're serious about the

actions we undertake,'' Ostrove said.

To seek court penalties under California's Unfair Competition Law,

consumer advocates need not prove that any patient was harmed by a drug,

only that its promotion amounted to an unfair business practice.

Hagens Berman attorney Tom Sobol said aggressive marketing of unproven

drugs hurts everyone.

" There ends up being a widespread harm of increased (drug) utilization and

increased cost that ends up being borne by everybody,'' Sobol said.

As Hagens Berman handles pre-trial skirmishes in the Pfizer suits, the

firm has already settled one suit against a Florida drug firm for $12

million and has filed another state consumer action against a Georgia

company.

Berman, the firm's managing partner, said he is considering three or four

more suits against drug firms under the California law.

------

Unfair Competition Law

Although it's a tool used by state prosecutors to combat anti-competitive

or corrupt business dealings, it also allows private citizens or groups to

file suit in the name of the public. When these suits succeed, judges can

order a halt to unfair business practices. They can also order firms to

forfeit some of the money they made while those practices occurred --

penalties that can be far higher than fines imposed by regulators.

E-mail Bernadette Tansey at btansey.

" But then, I'm no prognosticator. I just predict exploding cars. What do

you want from me? "

--Terry Hickman, sf writer

member Omaha Beach Party

November 25, 2003

I'm sorry, but what has this to do with being a vegetarian?

-

The Stewarts

Tuesday, November 25, 2003 1:37 PM

Fighting the Drug Companies to Lower Costs,

Increase Access