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Showing posts with label restraint of competition. Show all posts
Showing posts with label restraint of competition. Show all posts

More Pharmaceutical Misadventures - Actelion Damages Upheld, Genzyme (Sanofi Subsidiary) Settled, Merck Fined

Saturday, January 18, 2014

The march of legal settlements by large health care organizations goes on, albeit with ever more quiet footsteps as the number of journalists available to amplify their sounds declines.  Last week we noted the shutdown of PharmaLot, a journalistic blog edited by Ed Silverman that was one of the few that reported fearlessly on the pharmaceutical industry, warts and all.

So we dedicate this round up of legal settlements by pharmaceutical companies announced last month, December, 2013, to Ed Silverman, who reported on two of the cases below, and whose reports have been silenced by the shutdown of the PharmaLot web-site by its corporate owner.

In alphabetical order by name of the pharmaceutical company,

Actelion $40.7 Million Damages for Keeping Possibly Competitive Drug Off the Market Upheld

This story was reported by Ed Silverman on Pharmalot, and by the San Francisco Chronicle.  The basics, according to the latter article, were:

A state appeals court has upheld $407 million in damages against the Swiss biotechnology giant Actelion and its executives for buying a Bay Area company and using it to thwart another firm's plans to market a competing hypertension drug in the United States.

The drug, Fasudil, is manufactured by Ashai Kasei Pharma Corp of  Japan for treatment of pulmonary arterial hypertension, an often fatal disease of the lung arteries. In June 2006, Asahi signed a licensing agreement with the South San Francisco biotech firm CoTherix, which agreed to develop oral and inhaled versions of Fasudil and seek regulatory approval in the U.S. and Europe.

Less than five months later, Actelion bought CoTherix, paying a premium price of more than $400 million, and announced soon afterward that it was dropping plans to develop Fasudil. Actelion's own drug, Tracleer, dominates the U.S. market for treatment of the same disease and generates more than $1 billion in revenue a year.

Note that the federal appeals court judge, Terence Bruiniers, found that the actions by Actelion were not only anti-competitive, but may have harmed patients,

'By impeding the development of Fasudil, Actelion not only sabotaged a competitive and foreseeably profitable commercial venture, but prevented a drug with the potential for alleviating the suffering of patients with life-threatening and debilitating diseases from reaching the market,' Bruiniers wrote.

Further note that in this civil lawsuit, it appears that the top executives who engineered the anti-competitive actions that may have harmed patients will actually face negative consequences.  The judge also said,

the jury was entitled to conclude that three Actelion executives - CEO Jean Paul Clozel, chief scientific officer Martine Clozel, and Simon Buckingham, director of corporate and business development - had shown a disregard for the rights of Asahi and its customers and were liable for $30 million in punitive damages, about 10 percent of the executives' net worth.


Sanofi Subsidiary Genzyme Settled Charges of Encouraging Unapproved Internal Use of SepraFilm for $22 Million

The longest version of this story appeared in the Tampa Bay Times.  The basics were: 

 A Massachusetts-based biotechnology company has agreed to pay $22.28 million to resolve allegations brought by whistle-blowers in Tampa and Miami that it marketed an inappropriate use for a surgery medication, U.S. government attorneys said.

Genzyme, a corporation known for its research into drugs for rare genetic diseases, is paying the settlement in a lawsuit over Seprafilm, a material it manufactures for use in the operating room.

According to court documents, Genzyme sales representatives encouraged doctors to use the product in a manner not approved by the U.S. Food and Drug Administration, leading to improper claims for reimbursement from hospitals.

The details were:

 According to court documents, Seprafilm is intended to be applied during open surgery to prevent organs and muscle tissue from sticking together. However, the whistle-blowers and lawyers for the federal government alleged that Genzyme sales representatives taught doctors to use it in less invasive procedures — such as laparoscopic or 'keyhole' surgeries — by mixing it into a liquidlike 'slurry' that could be injected into the body.

Apparently the sales representative who blew the whistle in this case "recognized that this was a potential danger."  It certainly seems possible that the unapproved use of this material modified to be injected within the body might have resulted in harm to patients, and that at least its harmfulness when used in this manner had had never been tested.  However, in this litigation as supported by the US Department of Justice the plaintiffs were "not required to prove ... that patients had been harmed."

Note that unlike the civil case above, and as is typical of federal lawsuits against big health care organizations, those company employees who authorized or directed the questionable actions did not suffer any negative consequences.

(Added on 19 January, 2013) - Further note that as the article implied, but did not emphasize, since 2011, Genzyme has been owned by Sanofi.  Sanofi's last three major settlements since 2007 were summarized here. 

Merck Fined 15.3 Million Euros for Smear Campaign Against Generic Competition

This case was reported by Ed Silverman on PharmaLot, and briefly by Reuters,

The French competition authority said on Thursday it had fined Schering-Plough, now owned by Merck, 15.3 million euros ($21 million) over what it called a smear campaign against generic competition to Subutex, its drug for opioid addiction.

It also handed out a fine of 414,000 euros to parent Merck and another of 318,000 euros to British supplier Reckitt Benckiser for anti-competitive behaviour in staging the campaign in late 2005.


Note that while this case did not involve any implications of physical harm to patients, it seemed to involve active deception.

Summary

First, as we have said for years, legal actions like those listed above may or may not result in huge financial penalties, and rarely result in penalties for individuals who authorized, directed or implemented the actions in question, but do serve as markers of the extent of misbehavior by large health care organizations.  Such misbehavior may have adverse consequences for patients and for public health and the health care system.

Second, also as we have said for years, such actions mark the problem, but are unlikely to deter future problems.  In fact, many large health care organizations have settled strings of cases since we started trying to keep track of them (and may not have done so completely).  For example, the Genzyme, hence Sanofi settlement this year is at least the fourth major settlement by this company since 2007. 

Settlements resulting in fines imposed on a company as a whole are diffused, paid by stockholders, employees, and patients, and hence are likely to be regarded as a cost of doing business by top  management.  Managers, however, often are given huge financial incentives for all actions that increase short term revenue.  So managers are likely to continue to enable or direct bad behavior as long as it can bring in lots of revenue at no personal risk.

Third, while there has been a modest increase in discussion of ill-informed, mission-hostile, self-interested, conflicted, or even criminal or corrupt management since we started Health Care Renewal, the increasing plight of journalism seems to be making these issues more anechoic.  The shutdown of PharmaLot and the silencing of its archives is another reminder of how public relations and marketing are now overwhelming disinterested reporting (see this report by Pro Publica).

If we really want to reverse the downward spiral of our ever more expensive, less accessible, and lower quality health care system, we first have to preserve our ability to identify and loudly discuss its problems.

Roy M. Poses MD for Health Care Renewal


The Camel's Aching Back - Johnson and Johnson and Novartis Fined 16 Million Euro for "Anticompetitive" Scheme to Delay Generic Fentanyl

Tuesday, December 17, 2013

Legal and regulatory actions unfavorable for giant pharmaceutical, biotechnology and device company Johnson and Johnson just keep coming.  We last discussed such a story only two weeks ago here. 

The Latest Case

This latest story got only desultory US coverage from the wire services.  The most complete version is in the European Commission press release. 

The basics were:

The European Commission has imposed fines of € 10 798 000 on the US pharmaceutical company Johnson & Johnson (J&J) and € 5 493 000 on Novartis of Switzerland. In July 2005, their respective Dutch subsidiaries concluded an anticompetitive agreement to delay the market entry of a cheaper generic version of the pain-killer fentanyl in the Netherlands, in breach of EU antitrust rules.

In more detail,


J&J initially developed Fentanyl and has commercialised it in different formats since the 1960s. In 2005, J&J's protection on the fentanyl depot patch had expired in the Netherlands and Novartis' Dutch subsidiary, Sandoz, was on the verge of launching its generic fentanyl depot patch. It had already produced the necessary packaging material. 

However, in July 2005, instead of actually starting to sell the generic version, Sandoz concluded a so-called 'co-promotion agreement' with Janssen-Cilag, J&J's Dutch subsidiary. The agreement provided strong incentives for Sandoz not to enter the market. Indeed, the agreed monthly payments exceeded the profits that Sandoz expected to obtain from selling its generic product, for as long as there was no generic entry. Consequently, Sandoz did not offer its product on the market. The agreement was stopped in December 2006 when a third party was about to launch a generic fentanyl patch.

The agreement therefore delayed the entry of a cheaper generic medicine for seventeen months and kept prices for fentanyl in the Netherlands artificially high - to the detriment of patients and taxpayers who finance the Dutch health system.

The obligatory colorful bits,

 Why did J&J and Novartis conclude that agreement? According to internal documents Sandoz would abstain from entering the Dutch market in exchange for 'a part of [the] cake'. Instead of competing, Janssen-Cilag and Sandoz agreed on cooperation so as 'not to have a depot generic on the market and in that way to keep the high current price'. Janssen-Cilag did not consider any other existing potential partners for the so-called 'co-promotion agreement' but just focused on its close competitor Sandoz. Sandoz engaged in very limited or no actual co-promotion activities.

So, 

 The Commission therefore concluded that the object of this agreement was anticompetitive and infringed Article 101 of the Treaty on the functioning of the European Union (TFEU). 

Johnson and Johnson's Ever Lengthening Unhappy Legal History

There have been so many settlements made by, fines assessed against, and other adverse legal actions affecting Johnson and Johnson in the recent past that we must make a major revision of our summary of such cases (see same appended at the end of this post.)

Yet despite all these actions, there is no hint that anything will change at the company.  After all, it is extremely profitable, and all the fines, while they individually appear large, are not a big fraction of the money it brings in.  And, as we have noted far too often, not one of these actions actually provides any negative consequences, much less severely punishes anyone at the company who authorized, directed, or implemented the bad behavior.  

Instead, the leadership of the company continues to make itself very rich. As we wrote here,  Mr William Weldon, the outgoing CEO on whose watch most of the misbehavior resulting in the legal actions listed in the appendix below occurred, retired with a huge retirement package, after receiving extremely generous compensation prior to that.  The new CEO as of April, 2012,  Mr  Alex Gorsky, per the company's 2013 proxy statement, already owns more than 190,000 Johnson and Johnson shares,  and received $10,977,109  total compensation in 2012.  Mr Weldon received over $29 million in total compensation just for 2012, the year in which he retired.  Other top executives received from over $3.5 million to over $8 million. One can only imagine how much top executives are making this year.

So Johnson and Johnson, once admired for proclaiming in its famous credo to "put the needs and well-being of the people we serve first," now seems to put its own hired managers first.  It boggles the mind that despite this amazing record of bad behavior, the executives who presided over it still have jobs, have made no obvious changes in how they manage the company, and in fact continue to get ridiculously rich.  The board of directors, which includes the President of the University of Michigan, a Professor and Emeritus Chancellor and Vice President of Health Affairs at Emory, a Professor at MIT, a former FDA Commissioner, and Senior Fellow at the Brookings Institute, and the Vice Chancellor of Health Sciences, Dean of the David Geffen School of Medicine at the University of California, Los Angeles (UCLA); Chief Executive Officer of the UCLA Health System, who seemingly ought to care about the integrity of evidence, protecting patients from harm, and the need for simple honesty, have not obviously done anything about the apparent massive violation of the company credo that has made its managers wealth.   Other than the stockholder lawsuit discussed below, the supposed owners of the company seem to be mute.

When will the straws break the camel's back?  In the absence of such a fracture, I repeat like an old, broken record... 

Many of largest and once proud health care organizations now have recent records of repeated, egregious ethical lapses. Not only have their leaders have nearly all avoided penalties, but they have become extremely rich while their companies have so misbehaved.

These leaders seem to have become like nobility, able to extract money from lesser folk, while remaining entirely unaccountable for bad results of their reigns. We can see from this case that health care organizations' leadership's nobility overlaps with the supposed "royalty" of the leaders of big financial firms, none of whom have gone to jail after the global financial collapse, great recession, and ongoing international financial disaster (look here). The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent.  As Massachusetts Governor Deval Patrick exhorted his fellow Democrats, I exhort state, federal (and international, for that  matter) law enforcement to "grow a backbone" and go after the people who were responsible for and most profited from the ongoing ethical debacle in health care.

Again, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.

Appendix - Johnson and Johnson Recent Legal Record

2010
- Convictions in two different states in 2010 for misleading marketing of Risperdal
- A guilty plea for misbranding Topamax in 2010
2011
- Guilty pleas to bribery in Europe in 2011 by Johnson and Johnson's DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses in 2011 (see this link for all of the above)
- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post here)
2012
- In 2012, testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post here).
-  Also in 2012,  Johnson & Johnson was fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look here).
-  Also in 2012, Johnson & Johnson announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this post). 
2013
-  In 2013, Johnson & Johnson settled case by shareholders alleging that management made misleading statements and withheld material information about manufacturing problems (see this post)
-  In 2013, Johnson & Johnson Janssen subsidiary pleaded guilty to a charge of misbranding Risperdal, and settled for a total of $2.2 billion allegations that it promoted the drug for elderly demented patients and adolescents without an indication, and despite evidence of its harms (see this post). 
-  In 2013, Johnson & Johnson DePuy subsidiary agreed to settle with multiple plaintiffs for $2.5 billion allegations that it sold defective mental-on-metal artificial hip, and hid evidence of its harms .
- In 2013, Johnson & Johnsonn Janssen subsidiary was found by two juries to have concealed harms of its drug Topamax (see this post for this and above case).
- In 2013, Johnson & Johnson Ethicon subsidiary's Advanced Surgical Products and two of its executives agreed to settle charges by US FDA that is sold mislabeled products used to sterilize equipment such as endoscopes (see this post).
- In 2013, Johnson & Johnson fined by European Commission for anticompetitive practices, that is, collusion with Novartis to delay marketing generic version of Fentanyl (in the current post above).