Franklin v. Parke-Davis
|U.S. ex rel. Franklin v. Parke-Davis|
|Decided||August 22, 2003|
|Case name||Franklin v. Parke-Davis|
|Civil Action No.||96–11651PBS|
|Holding||Off-label promotion of pharmaceutical products which causes false claims for payment under the federal Medicaid program is a valid theory of recovery under the False Claims Act.|
|Judge||Patti B. Saris|
|False Claims Act|
Franklin v. Parke-Davis is a lawsuit filed against Parke-Davis, a division of Warner-Lambert Company, and Pfizer under the qui tam provisions of the False Claims Act. The suit was commenced by Dr. David Franklin, a microbiologist hired in the spring of 1996 in a sales capacity at Parke-Davis, a pharmaceutical subsidiary of Warner-Lambert (Warner-Lambert was subsequently acquired by Pfizer in 2000). In denying the defendants' motion for summary judgment, the court for the first time recognized off-label promotion of drugs could cause Medicaid to pay for prescriptions that were not reimbursable, triggering False Claims Act liability. The case was also significant in exposing the degree to which publication bias impacts the randomized controlled studies conducted by pharmaceutical companies to test the efficacy of their products. Ultimately, the parties reached a settlement agreement of $430 million to resolve all civil claims and criminal charges stemming from the qui tam complaint. At the time of the settlement in May 2004, it represented one of the largest False Claims Act recoveries against a pharmaceutical company in U.S. history, and was the first off-label promotion settlement under the False Claims Act.
After a brief period of employment at Parke-Davis, Franklin became disillusioned by what he believed to be the company's illegal marketing practices in connection with sales of the drug Neurontin. In 1994, the Food and Drug Administration (FDA) approved Neurontin as a secondary course of treatment for epilepsy, to be used only when the first medication had not brought the epileptic seizures entirely under control. Warner-Lambert executives, however, estimated that sales of Neurontin as a supplemental epilepsy treatment would generate little more than $500 million in revenue over the drug's patent period, an underwhelming sales forecast. Consequently, the company's executives decided to promote Neurontin for treatment of more than a dozen other conditions for which the FDA had not approved the drug, particularly manic depression. High-level executives sat on the committee which devised the off-label sales scheme.
Under the Federal Food, Drug, and Cosmetic Act, it is illegal for companies to promote medications for uses not approved by the FDA. Franklin alleged that Parke-Davis executives instructed their medical liaisons to promote Neurontin to physicians as an effective treatment for all sorts of conditions, including relieving several types of pain, migraines, bipolar disorder, and other psychiatric illnesses. Members of the Parke-Davis sales team were charged with promoting the drug for off-label indications even though no credible scientific evidence existed to support Neurontin's efficacy beyond the approved use as a secondary epilepsy treatment. Moreover, physicians and other health care providers were paid illegal kickbacks as a quid pro quo for prescribing Neurontin, including expensive meals, stays at luxury resorts, and cash payments.
In order to manufacture the appearance that credible empirical evidence existed to substantiate Parke-Davis's claims about Neurontin's effectiveness off label, the company hired ad agencies and marketing firms to produce articles about gabapentin describing the drug's "emerging uses." The firms recruited physicians and paid them to sign their names to the ghost written articles as authors. Parke-Davis executives reviewed and edited each article manuscript prior to submission to medical journals for publication. The company also paid doctors to speak at conferences, retreats, and dinners about the positive clinical benefits of Neurontin; one physician was paid more than $300,000 over three years to give such presentations.
According to Dr. Franklin, a physician's account of the deleterious effects of Neurontin observed in children with attention deficit disorder precipitated his ultimate decision to leave Parke-Davis in July 1996 after only four months of employment. In August 1996, Franklin and attorney Thomas Greene filed a qui tam complaint in the United States District Court for the District of Massachusetts in Boston under the False Claims Act, a federal statute which permits private citizen-whistleblowers (also known as "relators") to sue on behalf of the federal government for fraud involving federal money. Violators of the False Claims Act may be liable for treble damages in addition to civil penalties of $5,500 to $11,000 per violation.
The complaint alleged that Warner-Lambert had perpetrated a fraud against Medicaid by engaging in a marketing scheme which caused Neurontin scripts to be prescribed for off-label uses. Under the Medicare and Medicaid programs, drug prescriptions for uses not approved by the FDA or supported by the statutory compendia are not reimbursable with some exceptions, and therefore any off-label Neurontin prescriptions submitted for reimbursement under those programs would constitute "false claims" under the statute. The defendants sought to have the complaint dismissed, arguing that the causal link between any representations made by Parke-Davis sales representatives and reimbursements for off-label Neurontin prescriptions was too remote. Furthermore, Warner-Lambert argued that Franklin could only prove the pharmaceutical company's liability by showing that Parke-Davis sales liaisons made fraudulent misrepresentations about the drug as opposed to merely engaging in "truthful" off-label promotion.
In an opinion handed down on August 22, 2003, District Judge Patti B. Saris agreed with David Franklin, denying Warner Lambert's summary judgment motion to dismiss the lawsuit. Judge Saris found that, if it could be proven that the off-label marketing of Neurontin caused doctors to prescribe the drug and submit prescriptions to Medicaid, then the company would indeed be liable under the False Claims Act. In addition, Judge Saris found that the submission of false Medicaid claims was a foreseeable result of Warner-Lambert's marketing scheme. The case established for the first time that drug companies could be held liable under the False Claims Act for off-label promotion of pharmaceutical products.
Settlement and Impact
On May 13, 2004, the Department of Justice announced that it had reached an agreement with Warner-Lambert and Pfizer. Warner-Lambert agreed to pay $430 million to resolve criminal and civil liability related to the off-label promotion of Neurontin, and also agreed to plead guilty to two felony counts of misbranding drugs under the Federal Food, Drug, and Cosmetic Act, resulting in a $240 million criminal fine. Civil damages under the False Claims Act were paid out to the federal government in the amount of $83.6 million, and damages paid out to the states totaled $106.4 million. Relator David Franklin was awarded one of the highest shares ever under the False Claims Act, 29.5% of the settlement, in recognition of his important role in exposing the illicit marketing scheme. Pfizer agreed to institute a corporate compliance program as part of the settlement.
Since the settlement in 2004, whistleblowers and the federal government have prosecuted numerous off-label promotion cases under the False Claims Act. At least thirteen large settlements have since been reached with pharmaceutical companies for off-label marketing of prescription drugs. To date, the largest settlement ever reached in an off-label promotion whistleblower suit under the False Claims Act was announced in July 2012 for $3 billion.
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- U.S. ex rel. Franklin v. Parke-Davis, Div. of Warner-Lambert Co., No. CIV.A.96–11651PBS, 2003 WL 22048255, at *1 (D. Mass. Aug. 22, 2003)
- Melody Petersen, Our Daily Meds: How the Pharmaceutical Companies Transformed Themselves into Slick Marketing Machines and Hooked the Nation on Prescription Drugs, New York: Sarah Crichton Books (2008).
- Petersen, p. 218
- Ibid., 219
- Petersen, p. 219
- Ibid., 222
- Ibid., 234
- Ibid., 234-235
- Ibid., 235
- Ibid., 243
- Petersen, p. 244
- Franklin, 2003 WL 22048255, at *3
- Franklin at *4
- Franklin at *1
- Franklin at *4-*5