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AG Cooper announces $430 million national drug settlement

Release date: 5/13/2004

Raleigh: Attorney General Roy Cooper today announced a major consumer protection and Medicaid fraud settlement with drug maker Warner-Lambert worth $430 million nationally.

“This drug company broke the law and put profits over patients,” said Cooper. “Pushing doctors to prescribe a drug that may not be in their patients’ best interest is bad business and bad medicine.”

Today’s agreement is part of a 50 state settlement involving Attorneys General consumer protection offices and Medicaid Fraud Control Units as well as the United States Attorney’s Office in Boston. Cooper’s Medicaid Investigations Unit helped lead the settlement negotiations. Warner-Lambert, now owned by Pfizer, will pay a total of $430 million dollars to resolve allegations that it illegally marketed the drug Neurontin for “off-label” purposes that had not been approved by the Food and Drug Administration.

Neurontin is a prescription medication approved by the FDA to treat epilepsy and post-herpetic neuralgia. North Carolina and the other states contend that Warner-Lambert undertook a massive marketing scheme to encourage doctors to prescribe Neurontin for other conditions. Approximately 90% of Neurontin prescriptions are for offlabel purposes. Physicians may prescribe drugs for off-label uses but it is illegal for drug companies to promote off-label use of their drugs. Investigators discovered that Warner-Lambert paid to produce and distribute reports promoting Neurontin to treat psychiatric disorders, back pain, alcohol/drug withdrawal, restless leg syndrome and migraines, despite a lack of scientific evidence to support the drug’s use for these purposes.

In addition, Warner-Lambert paid physicians for “research,” in effect a kickback to those who prescribed the drug for off-label purposes. The company also provided expensive perks to physicians who attended or spoke at continuing medical education classes where Neurontin was promoted for off-label uses. This marketing effort tainted the information given to doctors and consumers, leading to unnecessary and ineffective prescriptions for Neurontin, some of which were paid for by Medicaid.

Warner-Lambert will pay $152 million dollars in damages and penalties to state Medicaid programs. Cooper’s Medicaid Investigations Unit won $5.4 million toward Medicaid efforts in North Carolina. Of that total, about $1 million goes to the state’s Medicaid program and $1 million to a fund for public schools. The remainder goes to support federal Medicaid efforts in the state.

To settle the consumer protection investigation, Warner-Lambert will pay the states a total of $38 million dollars. Funds will go toward programs to provide prescribers and consumers with fair and balanced information about Neurontin and similar drugs.

The agreement also bars Warner-Lambert and Pfizer, Inc., now its parent company, from making false claims about Neurontin, promoting its off-label use, misrepresenting scientific evidence about the drug, failing to disclose funding of Neurontin research and educational events, and violating Federal anti-kickback laws.

The states’ settlement was reached in conjunction with a federal settlement negotiated by the U.S. Attorney’s Office in which Warner-Lambert pled guilty to violating the Food, Drug and Cosmetic Act in U.S. District Court in Boston and paid a fine of $240 million dollars.

Cooper’s Medicaid Investigations Unit works to uncover fraud and abuse of Medicaid benefits by nurses, doctors, hospitals, pharmacies and other health care providers as well as patient abuse and neglect in nursing homes and other Medicaid-funded facilities. Criminal convictions and money garnered during the past federal fiscal year were the highest achieved in the history of the North Carolina Department of Justice. The Medicaid fraud unit investigated and closed 72 cases of Medicaid fraud between October 1, 2002 and September 30, 2003. Investigations lead to 31 criminal convictions and 22 civil settlements that recovered more than $14 million from Medicaid abusers.