Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News
What biopharmas faced in fines, settlements, and judgments.
Costly as it is for biopharmas to follow the law, it’s even costlier when government regulators and courts see something amiss, and act on it by imposing fines or compelling companies to shell out millions to settle allegations or full-blown lawsuits.
This year’s list looked like it would include an eye-popping $9 billion jury verdict, until a judge stepped in and knocked out 99% of the judgment. Yet the companies involved are still fighting the remaining fine, insisting that they have done nothing wrong.
Following are the top 10 “Punishment Payouts”—GEN’s admittedly inelegant umbrella term for fines, settlements, and judgments faced by biopharma companies in 2014. Even without a $9 billion verdict on top, this year’s list still includes some significant payouts. Eight of this year’s top 10 were above $100 million.
And three of the top 10 were imposed not by U.S. agencies or courts, but by overseas authorities—namely the European Union, China, and Italy. Cash-strapped governments struggling to contain healthcare costs are eager, in a sense, to profit from biopharma actions they view as crossing a legal line, since most companies settle their disputes even as they insist they did nothing illegal. The alternative, companies fear, is even larger fines and judgments—and in extreme cases, loss of access to a market.
China’s presence on this year’s list reflects its anticorruption crackdown under President Xi Jinping, who also heads the military and serves as general secretary of the Communist Party. The crackdown has ensnared several pharmas eager to boost sales by expanding their presence in the world’s most populous country—with the company hardest hit being forced to pay the equivalent of almost a half-billion-dollars in fines, and see five former executives sentenced to prison terms.
That company appears twice on the list, reflecting two separate instances where authorities succeeded in forcing the company to pay for its actions. A second company appears on this list three times, following the settling of two lawsuits related to one drug and a combined federal-state investigation focused on a second. Other companies listed below appear once.
Amount: $35 million
Date: August 6, 2014
Pfizer settled with Attorneys General from 41 states and the District of Columbia, which alleged that the company improperly marketing the immunosuppressive drug Rapamune. Pfizer admitted to no wrongdoing, but agreed to resolve allegations that predecessor Wyeth Pharmaceuticals unlawfully promoted Rapamune through unapproved combinations and uses beyond the approved indication of kidney transplants; and switching of patients from other drugs.
The complaint added that Wyeth misrepresented Rapamune’s uses and benefits through promotional talks by Wyeth-retained doctors, misleading data presentations, and funding of studies at hospitals and transplant centers designed to encourage off-label uses.
Pfizer agreed not to promote any of its drugs for off-label uses; make any claim comparing the safety or efficacy of a Pfizer product to another product without “substantial” evidence; provide financial incentives for off-label sales of any Pfizer product; make, or cause to be made, any written or oral claim that is false, misleading, or deceptive regarding any Pfizer product; affirmatively seek the inclusion of Rapamune in hospital protocols or standing orders for which Rapamune has not been approved by the FDA; disseminate information on any off-label or unapproved use of Rapamune unless such information and materials complies with applicable FDA regulations; and seek to influence the prescribing of Rapamune in hospitals or transplant centers in any manner (including through funding clinical trials) that does not comply with federal anti-kickback law.
#9. Takeda Pharmaceutical and Eli Lilly
Amount: $36.8 million
Date: October 27, 2014; April 7, 2014
Takeda Pharmaceutical and Eli Lilly continue to appeal a U.S. District Court judgment against them after being found guilty of hiding the risk of cancer from patients taking their diabetes drug, Actos (Pioglitazone HCl). The appeal continues in Terrence Allen, et al. v. Takeda Pharmaceuticals North America, Inc., et al, No. 6:12-cv-00064, despite U.S. District Judge Rebecca Doherty cutting by 99% the original $9 billion in combined punitive damages assessed by a jury to the companies.
In U.S. District Court for Western Louisiana in Lafayette, LA, the jury assessed $6 billion in punitive damages to Takeda, and $3 billion to Lilly, after previously ordering the companies to pay a combined $1.475 million in compensatory damages to Terrence Allen of Attica, NY. Allen blamed Actos for causing his bladder cancer after taking the drug from 2006 to 2011. That year, the FDA required a product label update warning of a 40% increase in the risk of bladder cancer for people using Actos longer than a year.
Amount: $105 million
Date: June 4, 2014
GlaxoSmithKline (GSK) agreed to pay $105 million to authorities in 44 U.S. states to settle allegations that it unlawfully misrepresented asthma drug Advair and antidepressants Paxil and Wellbutrin. GSK did not admit any wrongdoing. The settlement bars GSK from providing incentive payments to its salespeople for encouraging off-label promotion of drugs, as well as from promoting its products through paid doctors.
The states alleged that between 1999 and 2003, GSK deceptively promoted Paxil as safe and effective for children and adolescents, despite lack of FDA approval and data from three clinical trials linking the drug to increased risk of suicide in such patients. The states also alleged that GSK promoted Wellbutrin for FDA-unapproved indications that included depression in children, weight loss, obesity, sexual dysfunction, attention deficit hyperactivity disorder; addictions, anxiety, and bipolar disorder.
GSK was also accused of wrongly promoting Advair between 2000 and the drug’s label change in 2010 as a first line treatment for all asthma patients, including mild asthma patients not on inhaled corticosteroid medication and only used short-acting beta agonists (SABAs) intermittently. The pharma giant was also alleged to have promoted Advair as a first line treatment for mild asthma patients by citing clinical trials dismissed by FDA as offering insufficient evidence, without telling healthcare professionals of FDA’s stance.
Amount: $190 million
Date: April 21, 2014
Pfizer agreed to settle a class action lawsuit alleging that the pharma giant acted to delay the entry to market of generic versions of its epilepsy drug Neurontin (gabapentin). Without admitting to any wrongdoing, Pfizer said it sought to end the 12 years of litigation by agreeing to pay $190 million, plus interest, to direct-purchaser plaintiffs and members of a court-certified class consisting of “All persons or entities in the United States that purchased Neurontin from Pfizer at any time during the period of December 11, 2002 through August 31, 2008 and who have purchased generic gabapentin.”
The lawsuit alleged that Pfizer engaged in actions to maintain its exclusivity on the sale of Neurontin, including sham patent infringement lawsuits and promotion of the drug for unapproved uses. Buyers of Neurontin argued that Pfizer's actions forced them to pay inflated prices for the drug. The case is titled In re: Neurontin Antitrust Litigation, No. 2:02-cv-01390, filed in the U.S. District Court for the District of New Jersey.
#6. Endo Health Solutions (now Endo International)
Amount: $192.7 million
Date: February 21, 2014
Endo Health Solutions (now Endo International) and its subsidiary Endo Pharmaceuticals agreed to pay $192.7 million to resolve criminal and civil liability arising from Endo’s marketing of the prescription drug Lidoderm for non-FDA-approved uses. Endo will pay $137.7 million to the federal government and $34.2 million to the states and the District of Columbia. The resolution included a deferred prosecution agreement and forfeiture totaling $20.8 million and civil false claims settlements with the federal government and the states and the District of Columbia totaling $171.9 million.
The federal government charged that between 2002 and 2006, Endo Pharmaceuticals introduced into interstate commerce Lidoderm that was misbranded under the Federal Food, Drug and Cosmetic Act (FDCA) because its labeling lacked adequate directions for use in the treatment of non-PHN related pain, including low back pain, diabetic neuropathy, and carpal tunnel syndrome. Lidoderm was approved by the FDA only for the relief of pain associated with post-herpetic neuralgia (PHN), a complication of shingles. Washington also alleged that some Endo sales managers instructed sales representatives on how to expand sales conversations with doctors beyond PHN, and encouraged promotion of Lidoderm in workers’ compensation clinics.
Endo also agreed to settle its potential civil liability in connection with its marketing of Lidoderm. The government alleged that from March 1999 through December 2007, Endo caused false claims to be submitted to Medicaid and federal health care programs by promoting Lidoderm for unapproved uses, some of which were not medically accepted indications and thus were not covered by the programs.
#5. Novartis and Roche
Amount: €182.5 million ($215.4 million), of which Novartis was assessed €92 million ($108.6 million) and Roche, €90.5 million ($106.8 million)
Date: December 2, 2014; February 27, 2014
Novartis and Roche tried, but failed, to successfully appeal the combined €182.5 million ($215.4 million) in antitrust fines levied against them in February 2014 by Italian officials. The Italian Competition Authority said the pharma giants were fined for ripping off Italy’s state-run healthcare system by colluding to steer doctors toward prescribing the companies’ costly eye treatment Lucentis rather than a cheaper alternative, Roche’s Avastin.
The authority said the companies created “an artificial distinction between the two products” since 2011 for economic reasons: Roche collects royalties from sales of Lucentis, developed by its Genentech subsidiary, while Novartis benefits directly from Lucentis’ sales and holds a more-than-30% stake in Roche. The authority said the alleged collusion cost the country’s National Health Service an estimated €45 million ($53 million) in 2012, “while increased future costs might possibly exceed €600 million ($708 million) per year.”
Novartis and Roche immediately appealed the fines, which were upheld in December by the Lazio regional administrative court.
Amount: $325 million
Date: November 10, 2014; May 30, 2014
In a settlement approved November 10 by U.S. District Court Judge Patti B. Saris for the District of Massachusetts, Pfizer agreed to pay $325 million to settle a lawsuit by third-party payers, both private insurers and government agencies. They alleged that Pfizer cost them billions of dollars by deliberately expanding its promotion of off-label uses for Neurontin.
The company did not admit to any wrongdoing, but said all third-party payer claims and state antitrust claims would be resolved through the settlement, which surfaced on May 30 in court filings. The plaintiffs filed suit in 2004 after Pfizer’s Warner-Lambert unit agreed to pay $430 million in criminal and civil penalties to the U.S. Justice Department after pleading guilty to two violations of the Food Drug and Cosmetic Act.
The violations encompassed marketing of Neurontin beyond then-approved indications of adult epilepsy and post-herpetic neuralgia. Those uses included ADHD, bipolar disorder, migraines, and other pain indications. The off-label marketing stretched back to before Warner-Lambert’s 2000 acquisition by Pfizer.
#3. GlaxoSmithKline (GSK)
Amount: 3 billion yuan renminbi ($484.5 million)
Date: September 19, 2014
GSK was fined 3 billion yuan renminbi ($484.5 million) by Changsha Intermediate People’s Court in Hunan Province after being found guilty of offering money or property to nongovernment employees of medical institutions across China in order to obtain improper commercial gains.
Following a “closed-door” or secret trial, the court concluded that the company “resorted to bribery to boost sales of its medical products and sought benefits in an unfair manner,” according to China’s state-run news agency Xinhua. The fine was the largest ever levied by a Chinese court, Xinhua added, and followed more than a year of Chinese state scrutiny of the company, since officials charged GSK in a money-and-sex scandal.
Additionally, the court sentenced five former GSK executives, including the onetime head of its operations in China, to prison terms of up to three years, while giving reprieves of up to four years from what would have been the rest of their sentences.
#2. Krka, Lupin, Mylan, and its Indian subsidiary Mylan Laboratories (formerly Matrix Laboratories), Servier, Teva Pharmaceutical Industries, Niche/Unichem Laboratories
Amount: €427.7 million ($503.9 million), of which Servier was assessed €331 million ($390 million); Lupin, €40 million ($47.2 million); Mylan/Matrix, €17.16 million ($20.2 million); Teva, €15.6 million ($18.4 million); Niche/Unichem, €14 million ($16.5 million); and Krka, €10 million ($11.8 million)
Date: July 9, 2014
The European Commission fined the companies, alleging that they concluded a series of deals, all intended to protect Servier's bestselling blood pressure control medicine, perindopril, from price competition by generics in the EU. According to the EC, Servier implemented a strategy to exclude competitors and delay the entry of cheaper generic medicines to the detriment of public budgets and patients in breach of EU antitrust rules. Servier’s actions violated EU antitrust rules that prohibit the abuse of a dominant market position, the EC added.
While Servier lost most of its European exclusivity for the perindopril molecule in 2003, generic competitors still faced numerous barriers to market—from “secondary” patents relating to processes and form, to Servier’s acquisition in 2004 of the most advanced patent related to the drug. Even though Servier never put the technology protected by the patent to use, the EC argued, its ownership effectively forced several generic drug developers to halt their efforts, delaying the entry of cheaper generic medicines that would save money for EU members’ mostly-public healthcare systems. Between 2005 and 2007, Servier and the generics reached “pay for delay” settlements that, according to the EC, added up to “several tens of millions of Euros.”
All of the companies are appealing the EU fines, saying they did nothing illegal. Servier said its patent defense was essential to continuing development of innovative medicines.
#1. Boehringer Ingelheim
Amount: $650 million
Date: May 28, 2014
Boehringer Ingelheim agreed to settle approximately 4,000 U.S. state and federal court cases constituting the majority of U.S. cases regarding the blood thinner Pradaxa® (dabigatran etexilate). Plaintiffs alleged that Pradaxa caused bleeding events that could not be controlled and were sometimes fatal.
The company has insisted it properly advised healthcare professionals and patients about the blood thinner’s benefits and safety, and admitted no wrongdoing in its settlement offer. That offer affected more than 2,500 Pradaxa cases that were consolidated in East St. Louis, Illinois, before U.S. District Judge David Herndon [In re Pradaxa Products Liability Litigation, 12-MD-02385, U.S. District Court, Southern District of Illinois]; as well as an additional 1,500 cases in state courts in California, Connecticut, Delaware, and Illinois.
The settlement offer came four months before the scheduled September start of the first U.S. trial, and five months after Judge Herndon fined the company $931,000 for not preserving “countless” files on Pradaxa’s development and marketing. Pradaxa generated €1.2 billion ($1.4 billion) in 2013 sales, up about 8.8% from 2012.