Bristol-Myers Squibb Will Pay $19.5 Billion in Abilify Settlement

Last month, pharmaceutical company Bristol-Myers Squibb agreed to pay $19.5 million to settle a multi-state lawsuit that charged the company with improper marketing of the atypical antipsychotic Abilify. Abilify is made by Otsuka America Pharmaceutical, Inc. and marketed and promoted in the United States by Bristol-Myers Squibb. Money from the Abilify settlement, which was announced on December 8, 2016, will be split among the 42 states (plus the District of Columbia) that joined the lawsuit.

The lawsuit charged BMS with promoting Abilify for uses not approved by the U.S Food and Drug Administration (FDA), a practice known as off-label marketing. BMS was also accused of minimizing the drug’s risks (which include an increased risk of death in elderly patients), overstating its effectiveness, and deceiving and misleading consumers. The drug is also currently the target of numerous lawsuits related to impulse control and gambling problems associated with Abilify.

Stories like this have become commonplace in the drug industry, particularly the psychiatric drug industry. Recent major settlements involve atypical antipsychotics Risperdal, Zyprexa, Abilify, Geodon, and Seroquel, antidepressants Paxil, Wellbutrin, Lexapro, Celexa, and Zoloft, and the mood disorder and seizure drugs Neurontin and Depakote. Companies who have settled include Pfizer, Eli Lilly & Co, Johnson & Johnson, GlaxoSmithKline, AstraZeneca, and Bristol-Myers Squibb.

In each case, the plot line is more or less the same. A drug maker breaks laws designed to protect consumers, federal and state agencies bring charges, the maker pays hundreds of millions and even billions of dollars to settle, and government officials proudly announce that justice has been served. But has it?

This is not a rhetorical question. Lives hang in the balance. In his book, Off-Label Prescribing: Justifying Unapproved Medicine, Dr. David Cavalla (Ph.D., University of Cambridge, former chairman, Society for Medicines Research) estimates that there are 35,000 to 45,000 deaths per year associated with off-label use each year in the United States. Pushing medications on people without knowing if they are safe or effective has obvious dangers and the consequences are often fatal.

Drug Makers are Testing the Legal System, Not Drugs

For the drug maker, there are numerous advantages to skirting consumer protection laws and settling the subsequent lawsuits. The principal advantage is monetary.

Testing a drug to see if it’s safe and effective for a particular condition (e.g. depression) and population of patients (e.g. adults, children and pregnant women) is expensive. According to a 2012 report from Forbes.com, major pharmaceutical companies spend from $4 billion to nearly $12 billion in research and development for each drug that is approved by the FDA. The cost-per-approved-drug figures represent a company’s total R & D budget for all the drugs it developed, including those that failed in testing, divided by just the number of drugs that ultimately achieved FDA approval. Forbes reported that Bristol-Myers Squibb spent over $45 billion in research and development from 1997 to 2011 and produced 11 FDA-approved drugs. Of course the R & D process takes time and not infrequently involves failure. But in off-label marketing, the pharmaceutical industry has found a way around the time and expense, as well as the risk of failure.

This is made possible by a basic fact of medical practice. Once a drug has received FDA approval for a particular condition and population, a doctor can legally prescribe that drug for many other conditions and populations for which the drug has not received FDA clearance. The fact that the drug has never been tested and proven to be safe and effective for unapproved conditions and populations, is no barrier. Drug makers need only convince doctors that the drug is safe and effective and encourage them (frequently with various forms of kickbacks and bribes) to prescribe it. The only problem is that this is illegal. But settlements, like the Abilify settlement, come long after a company has earned far more from off-label marketing than it will ever pay to appease the government.

Abilify was approved by the FDA as a treatment for schizophrenia in November 2002, and by 2006 it was already generating annual sales over $1 billion. In 2007, BMS paid over $515 million to settle a U.S. Department of Justice lawsuit that accused the company of “a wide assortment of illegal marketing and pricing practices,” from 2002 through 2005, including the off-label promotion of Abilify for children, adolescents and geriatric patients. By then, it had already earned billions and seeded the fertile fields of psychiatric drug treatment for billions more.

In short, drug makers have found that it’s much cheaper to test the legal system than to test drugs. How else to explain the 373 federal and state settlements that, according to the consumer advocacy group Public Citizen, drug companies entered into from 1991 through 2015? (Several of those companies, including BMS, reached eight or more settlements.) Collectively, those companies paid $35.7 billion in criminal and civil penalties. If that seems high, consider the fact that U.S. sales of Abilify from 2005-2014 totaled about $38 billion. Otsuka received a sizable portion of those sales, but it’s clear that BMS earned more than enough to pay its Abilify settlement costs.

A Cost of Doing Business
Estimated BMS earnings from U.S. Abilify sales, 2005-2014 $ 21 billion
What BMS paid to settle federal and state lawsuits $534.5 million
Settlement fees as a percentage of BMS Abilify earnings 2.5%

Pharmaceutical Companies Pleading Not Guilty

Another advantage of the sell-first-settle-later approach is that the public relations fallout is minimal. The drama may be over before it starts. The Abilify settlement was reached the same day the lawsuit for off-label marketing was filed. News reports, in which a drug company often denies wrongdoing, appear quickly and then quietly disappear.

“The company did not acknowledge any wrongdoing in the civil cases.”

NBC News report on $1.42 billion paid by Eli Lilly & Co to settle charges it illegally marketed its atypical antipsychotic, Zyprexa.

“It [Johnson & Johnson] did not admit to wrongdoing for the civil portion of the settlement.”
New York Times report on $2.2 billion paid by Johnson & Johnson to settle charges it illegally promoted its atypical antipsychotic, Risperdal, to children and the elderly.

Terms of the Abilify Settlement

In the Abilify settlement, Bristol-Myers Squibb was not required to plead guilty to the charges contained in the off-label marketing complaint. But the behaviors that BMS agreed not to engage in as a condition of settling the lawsuit, leave little doubt as to why the states took legal action.

As part of the Abilify settlement, Bristol-Myers Squibb agreed that it would:

  • Not make or cause to be made false, misleading or deceptive claims regarding an atypical antipsychotic.
  • Not make claims about the safety and efficacy of an atypical antipsychotic that are not supported by substantial evidence.
  • Present risk information “clearly and conspicuously” when promoting an atypical antipsychotic. This means BMS must follow U.S. Food and Drug Administration (FDA) guidance when informing doctors or consumers about the risks associated with Abilify or similar drugs. FDA guidance is meant to ensure that both the content of the risk information, and the way it is communicated, are not deceptive or misleading.
  • Not make promotional claims for the safety and effectiveness of atypical antipsychotics that violate government regulations or agreements voluntarily made with the FDA.

FDA Reviews Policy on Off-Label Marketing

BMS has to be pleased with this latest Abilify settlement. Indeed, for the pharmaceutical industry in general, current enforcement policy seems guaranteed to keep the off-label game going. The recent legal decisions that limit the FDA’s ability to regulate off-label marketing may even improve their chances of success.

In March 2015, the FDA itself settled a lawsuit brought by a company that challenged the agency’s right to prevent it from telling doctors about its fish-oil-based drug, Vascepa. A federal judge had previously ruled that the company, Amarin Pharma, Inc., had a first amendment right to “engage in truthful and non-misleading promotional speech” about its products, even speech about uses that were not approved by the FDA.

Last November, the FDA held a public hearing to review policy concerning the off-label marketing of drugs and medical devices. FDA Commissioner Robert Califf was reported to have voiced concern at the hearing that allowing drug companies to share information about non-approved uses directly with healthcare providers would encourage those companies to avoid the scientific work—research and publishing in peer-reviewed journals—that gives consumers and professionals some assurance a drug is safe and effective. A 90-day comment period that followed the hearing was extended to April, so it is likely that any new FDA policy regarding off-label marketing will not be finalized until the latter half of 2017.

The Road Ahead for Consumers of Pharmaceuticals

It would seem reasonable to assume that the more drug makers play the off-label game, the better they will get at it. Just how much recent legal decisions and a new FDA policy will either nourish or constrain the industry’s practiced talent for deception, remains to be seen. For consumers of pharmaceutical products the road ahead could be a very treacherous one.

By | 2018-07-17T12:00:22+00:00 January 20th, 2017|Abilify News, Pharma News|