Source | Wall Street Journal

Documents in a lawsuit filed against Johnson & Johnson by two former salesmen show how the pharmaceutical giant sought to boost sales of its blockbuster anti-anemia drug Procrit by offering contracts that fattened doctors’ profits and urging its salespeople to push higher-than-approved doses.

The documents provide a rare window into the complex case that is adding to the legal problems piling up on the health-care giant. J&J is answering questions in multiple federal and state investigations and in whistleblower suits alleging illegal marketing or pricing of its products.

Concerns are rising about marketing of the anti-anemia drugs as questions emerge about the safety of high doses for cancer patients. Today a Food and Drug Administration panel plans to consider whether to add new restrictions on the drugs’ dosing or types of eligible patients.

Dean McClellan, who worked for 12 years at J&J’s Ortho Biotech unit selling Procrit, saved 15,000 pages of company memos, contracts and other work-related documents in a storage unit and shed he built off his garage. He says he was forced to retire in 2004 because the company told him his sales increases weren’t high enough. He believes the company wanted him out because of his age, which was 55 at the time. Angry, he agreed to join a whistleblower lawsuit by another former Procrit salesman, Mark Duxbury. A brief filed by J&J says Mr. Duxbury was fired in 1998 for racial and sexual harassment. Through his attorney, Jan Schlichtmann, Mr. Duxbury says he was a star salesman for Ortho whom the company turned on after he told the truth about their business practices at a court-ordered deposition.

A spokeswoman for J&J’s Ortho Biotech unit says the company doesn’t comment on matters of pending litigation. The suit was filed in U.S. District Court in Boston. The U.S. attorney in Boston has filed an amicus brief in support of the suit.

Some of Mr. McClellan’s documents reviewed by The Wall Street Journal indicate that Ortho Biotech created complex purchasing programs offering doctors discounts and cash rebates on Procrit, which would increase the doctors’ profits.

Procrit is an infused drug, which is administered by a doctor. Unlike pills sold by pharmacies, infused drugs offer profit opportunities for doctors, who can buy the drugs, administer the infusions in their offices, and collect the payments from insurers or the government. Drug companies can fatten the doctor’s margin using discounts and rebates to lower the price.

The Office of Inspector General of the Health and Human Services department put out new compliance guidelines in 2003 saying that marketing the spread may be in violation of anti-kickback laws. The Justice Department has been investigating drug companies for such marketing practices, resulting in big settlements of $875 million for TAP Pharmaceuticals in 2001 and $355 million for AstraZeneca in 2003. After extensive debate, Congress overhauled the Medicare reimbursement system in 2005 to prevent such practices. But drug companies continue to offer large buyers big rebates, which they say are legal.

Mr. McClellan’s documents on the marketing of Procrit show that in 2004 — after Amgen Inc.’s competing drug Aranesp came on the market — J&J made offers that would allow buyers of Procrit to receive discounts off an already-reduced price as well as rebates. For example, an internal company memo calculates that a physician who bought nearly $1 million of Procrit over 15 months would get a check for $237,885 back, or 24%.

Another J&J program offered hospitals an incentive to buy Procrit and shun Aranesp: discounts on purchases from across Johnson & Johnson’s product line — including some huge-selling drugs and medical devices sold by different subsidiaries — if the hospital used Procrit at least 75% of the time when prescribing anti-anemia drugs.

In addition, J&J created a “Right of First Refusal” contract for doctors, requiring them to allow Ortho Biotech to make a counteroffer if Amgen’s Aranesp price undercut Procrit.

Mr. McClellan also alleges the company pushed doctors to prescribe a higher dose years before it was approved as safe and effective by the FDA. For years, the company focused on educating health care providers on Procrit’s medical benefits, he says. But in the mid-1990s at a national sales force meeting, an Ortho executive announced that the division was moving to promote what it called “QW dosing,” switching patients from three, 10,000-unit doses a week to a single, 40,000-unit dose in cancer patients, Mr. McClellan says.

At that time, that dose wasn’t approved for cancer patients. Many years later, the FDA approved the dose in cancer patients, but before then, pushing the unapproved dose would have violated FDA rules.

Initially, “doctors weren’t buying into it,” Mr. McClellan says, in some cases because they worried Medicare wouldn’t reimburse an unapproved dose. To persuade them, Mr. McClellan says he was told to pitch the regimen as more convenient for patients and give doctors free samples of Procrit. He says that at one time he was given roughly 600 cards to give to doctors for free “trial” samples, worth $720,000 in Procrit, to persuade them to try the higher-dose regimen.

When the Arizona Cancer Center ran into resistance from Medicare over reimbursing $1 million for the unapproved dose of Procrit, an Ortho Biotech official drafted a letter, under the name of the center director, to Medicare arguing the appropriateness of the dose, says Mr. McClellan. He adds that he brought the letter to Daniel von Hoff, at the time the hematology/oncology director, for his signature. Dr. von Hoff, now at the Translational Genomics Research Institute, declined repeated requests for comment through an assistant. A spokesman for the Arizona Cancer Center said she wasn’t familiar with the matter.

The company also urged doctors who were still using three-times-a-week dosing to enroll patients in “mini” trials that used once-a-week dosing of a higher quantity of the drug. The doctors were given the drug free for those patients, Mr. McClellan says.

Doctors also got other financial support, Mr. McClellan says. He says the Arizona Cancer Center, one of the larger clinics in his sales territory, in 2003 received $10,000 to train 12 to 20 J&J employees, with a series of lectures given by the center’s doctors. A spokesperson for the Center said she couldn’t confirm whether it received the $10,000 payment from Ortho Biotech, but said the Center does provide classroom-type training to junior drug company employees.

In 2004, the Center announced in its newsletter that J&J’s Ortho Biotech unit had donated $40,000 to the center to “provide salary support” for a Hematology/Oncology fellow. Asked if these payments from J&J could pose any potential conflicts of interest, Thomas Miller, a professor at the Arizona Cancer Center who was involved in the J&J training and director of the fellowship program, said of the fellows, “I don’t think they know where it’s coming from.” He added, “I don’t remember from one year to the next where the money’s coming from.” He said that unlike doctors in private practice who purchase drugs and seek reimbursement for them, the doctors at the center don’t profit themselves from the drugs. “I’ve never written a prescription for Procrit ever,” he said.

Mr. McClellan’s allegations echo some of those in other lawsuits and investigations into pricing and marketing practices at other J & J subsidiaries.

Sales practices around other top-selling products — anti-psychotic Risperdal sold by J&J’s Janssen drug unit; Topamax, an anti-seizure medication sold by J&J’s Ortho-McNeil Pharmaceutical unit; heart drug Natrecor sold by the Scios unit — have drawn federal probes.

Last June, the Justice Department issued a subpoena to J&J’s DePuy unit asking for documents on the manufacture and marketing of orthopedic devices, and search warrants were executed. The U.S. attorney for the District of New Jersey is also leading a probe into kickbacks paid to doctors who use implants sold by DePuy Orthopedics and other companies, according to a person familiar with the matter.

In February, J&J said it believes subsidiaries made improper payments connected to the sale of medical devices in two “small-market” countries — prompting the resignation of a senior J&J executive. A congressional panel is looking into marketing practices of stents sold by the Cordis medical-device unit.

“All public comments on these matters have been made in public statements by our operating companies or in filings we’ve made with the SEC and we have no further comment,” says a J&J spokesman of the continuing investigations.

Critics contend steps don’t go far enough

By Gardiner Harris
NEW YORK TIMES NEWS SERVICE

January 31, 2007

The Food and Drug Administration announced changes yesterday that were intended to ensure marketed drugs are as safe as advertised, including the first effort to do a comprehensive assessment of the safety of drugs 18 months after introduction.

The agency also announced the creation of an advisory panel to improve the way that it announces safety worries and a collaboration with the Veterans Health Administration to track how patients fare after taking drugs.

The FDA plan is the latest effort to fix the agency after a series of missteps. In September 2004, Merck withdrew its arthritis drug, Vioxx, after a study showed that it doubled the risks of heart attack. At about the same time, the FDA announced that antidepressants cause some teens to think more about suicide.

In both cases, the FDA took years to acknowledge risks to millions of patients that had been apparent to some researchers.

“We don’t see this as the only answer,” FDA Commissioner Dr. Andrew C. von Eschenbach said at a news conference announcing the initiatives. “It’s merely a step as we continue a process of improvement that will be ongoing.”

Sen. Christopher Dodd, D-Conn., said in a written statement that far greater changes are needed at the FDA. Dodd promised to introduce two bills today that would restructure the FDA and require drug makers to disclose the results of all clinical trials involving humans. The bills have been co-authored by Sen. Charles Grassley, R-Iowa, who has called the FDA far too “cozy” with drug makers.

In many cases, the date that the FDA will undertake the efforts it announced yesterday is uncertain. For instance, Dr. Steven Galson, director of the agency’s drug center, said at the news conference that the pilot program to systematically assess a drug’s safety 18 months after its introduction will probably take about a year to put into place, with the assessment due 18 months after that.

“We’re just organizing that process to get started,” Galson said.

In a scathing assessment released in September, the Institute of Medicine concluded that the FDA was rife with internal squabbles and hobbled by underfinancing, poor management and outdated regulations. The institute, the most important medical advisory organization in the country, suggested that the FDA undergo 25 major changes, many of which would require congressional authorization.

Alta Charo, a professor of law and bioethics at the University of Wisconsin and one of the authors of the Institute of Medicine’s report, described the FDA announcement as “a good set of first steps towards improving the safety of the drug supply in the United States.”

She said that she was “disappointed” that the agency had failed to adopt some of the institute’s bolder recommendations, including one suggesting that the agency give greater authority to officials who assess the safety of drugs after they go on the market.

“We viewed that as critical,” she said.

Alan Goldhammer, deputy vice president for regulatory affairs for the Pharmaceutical and Research Manufacturers of America, praised the FDA’s announcement as a “very thoughtful and comprehensive response” to the Institute of Medicine’s report.

“The agency has made substantive and significant progress in improving and enhancing the drug safety system,” said Goldhammer, whose organization represents drug makers.

Still, the FDA plan does little to address a problem that nearly all agree underlies many of its woes: a chronic shortage of government money. As Von Eschenbach noted, the agency has regulatory authority over about a quarter of the U.S. economy. After the Sept. 11, 2001, terrorist attacks, the agency was asked to beef up its efforts to prevent bioterrorism. Despite having greater responsibilities, its budget has remained relatively flat for years.

There are now thousands of drugs in routine use. Figuring out which of these medicines may have undiscovered side effects will take a lot of money. The agency gets about $400 million of its $1.9 billion budget from fees assessed on drug makers. Under a formula negotiated with the drug industry, this money comes with strings attached. One restriction was that the agency could use very little of this money to track the safety of already-approved drugs.

That deal between the FDA and drug makers expires this year, and drug makers have already agreed to allow more of their money to be used for these post-market safety assessments. Whether those fees are enough, whether there should be strings attached to them, and whether that money should be coming from drug makers has become the subject of fierce debate.

“Drug makers clearly get their money’s worth,” said Dr. Sidney Wolfe, director of Public Citizen’s health research group. Wolfe and other consumer advocates say that the FDA’s dependence on drug industry fees has softened its oversight of drug makers.

Dr. Scott Gottlieb, who last week left his job as deputy commissioner of the FDA to return to the American Enterprise Institute, a free-market think tank, said that the real debate unfolding around FDA is between those who believe that the agency needs more money and tools to assess drug risks, and those who believe that the agency should begin regulating the practice of medicine.

“I think we need to give the agency the resources it needs to get information about drug risks quickly,” Gottlieb said. “But we don’t need the government telling doctors and patients what to do.”

The FDA plan promises to return the agency to its scientific roots. The FDA once had robust labs that undertook original studies to assess drug risks on its own. Those labs were largely eliminated over the past decade to plough more funds into the drug approval process and the support of a bare-bones computer program to track drug side effects.

But over the past two years, the agency has begun an aggressive effort to improve the science of drug safety, making itself a participant in scientific endeavors once left exclusively to drug makers and basic scientists.

Among these efforts announced yesterday was the creation of a database of genetic codes associated with bad drug outcomes; the development of a computer model to identify patients who are most likely to suffer liver injury; and the design of screening tests that would identify patients most at risk of general drug problems.

The Food and Drug Administration is continuing its investigation of an outbreak of E. coli O157:H7 infections linked to eating food from Taco Bell restaurants in 5 states.  FDA is collaborating with state and local health officials, the U.S. Centers for Disease Control and Prevention (CDC), and the firm to identify the cause of the outbreak. 

The peak of the outbreak occurred in the last week of November.  The number of new cases being identified has declined substantially.  For the latest details about these cases, see the CDC website at http://www.cdc.gov/ecoli/2006/december/120806.htm.  

Number of Cases 

CDC today reports 67 probable or confirmed cases of illness associated with the outbreak:  30 cases in New Jersey, 22 cases in New York, 12 cases in Pennsylvania, 2 cases in Delaware and 1 case in South Carolina (a person who became ill after eating at a Taco Bell in Pennsylvania).   In the vast majority of the cases, individuals reported having eaten at a Taco Bell restaurant within seven days before onset of illness.  Other cases of illness are under investigation by state public health officials.  Among the 67 cases, 51 were hospitalized and 8 developed a type of kidney failure called hemolytic uremic syndrome (HUS).  Illness onset dates range from November 20 to December 5.  

Source of Outbreak 

The source of the outbreak has not been determined, although it is presumed to be a contaminated food or foods.  Testing by FDA of samples of food items from Taco Bell restaurants has found no E. coli O157:H7.  CDC is conducting an ongoing “case control” study that involves interviewing ill and well Taco Bell restaurant patrons about what food items they consumed.  By comparing foods consumed by ill and well persons, investigators can show statistical links to particular food ingredients.  Of those ingredients, those consumed raw are of particular interest.  The CDC study is demonstrating that onions are probably not linked to this outbreak.  

On December 6, Taco Bell Corp. announced it was voluntarily removing green onions from its restaurants nationwide after preliminary tests by the firm indicated the possible presence of E. coli O157:H7 in samples of the product.  However, more sophisticated and reliable confirmatory tests conducted by FDA on the same samples tested negative for the presence of E. coli O157:H7. 

FDA has been working with Taco Bell Corp. and its suppliers and distributors to obtain information on sources and distribution of products, to aid in tracing back any product found to be contaminated with the bacteria or identified by the CDC case-control study as a vehicle of transmission. 

E. coli O157:H7 Infection 

Infection with E. coli O157:H7 causes diarrhea, often bloody.  Although most healthy adults can recover completely within a week, some people can develop hemolytic uremic syndrome, a form of kidney failure.  This condition is most likely to occur in young children and the elderly.  The condition can lead to serious kidney damage and even death.  Consumers who are concerned that they may have contracted E. coli O157:H7 infection should notify their local health department, and contact their physician or health care provider to seek medical attention as needed. 

FDA will provide additional updates on this investigation as more information becomes available. 

Do I Have a Taco Bell E. Coli Food Poisoning Lawsuit? 

If you or a loved one have been the vicitm of Taco Bell induced food poisoning, you should contact us immediately. You may be entitled to compensation for your food poisoning related injuries. 

Learn More: Taco Bell E. Coli Food Poisoning