19 Minutes with the OIG of the Department of Health and Human Services

Who cared about my recent articles about Celebrex, Bextra and OIG?

Apparently the OIG at the Department of Health and Human Services:



Always delightful when the government comes by, not that I always have time to check . . . but what were they so interested in? Oh this . . .

HHS Special Agents Take Aim at Pfizer

The Office of the Inspector General (OIG) of the Department of Health and Human Services is clearly taking a sudden interest into Pfizer’s activities.

A week ago I told you about a Pfizer whistleblower who accused the company of using the sales force to illegally market maraviroc, a new AIDS-drug before FDA approval. The OIG soon got involved, see e-mail from an OIG special agent here.

Yesterday that agent spoke with Pfizer’s most recent whistleblower, Jane Roe, for about an hour about the drug maraviroc and the alleged illegal premarketing. Jane claims the agent informed her that OIG has started an investigation, but she also came away with the impression that they were looking into other suspicious areas (more about that below). She says she was told that OIG couldn’t formally interview her on the record, unless she had an attorney which she had to pay for or she’d have to allow a Pfizer attorney to represent her, because she’s still on the company payroll.

I'm not sure if that makes complete sense since they already talked, but that's what she told me.

Jane’s last words to me were “The OIG will not tell me what the nature of the investigation is . . . [all is] very hush-hush. I sense others have either come forward or been contacted by the OIG and if they are former employees [they] can sing like canaries...I smell a grand jury coming, just a guess.”

But maybe Jane isn’t too far off the mark. Clearly HHS agents also have an interest in learning more about how Pfizer has conducted itself in other areas:

In fact, yesterday, quite unannounced, two HHS agents came by. (And, yes, I could prove this if needed, otherwise I wouldn’t dare make these comments . . .)

The first agent only cared about the maraviroc premarketing allegations; the other one was oh, so interested in everything Pfizer and was in particular looking for information about Celebrex and Bextra. I think the fact that I had written the story “FBI investigating Pfizer's Celebrex and Bextra? “ set them off and the second agent was particularly interested in what I’d written about one particular special agent, Beth Ann Irvine. This agent also wanted to know what I knew about “Scanlan.”

I have no idea about anyone or anything called “Scanlan,” but I’ve done some research and there is a group of companies in the healthcare area using that name. This may mean nothing, or maybe more things are going on . . . who knows.

Please note that any target for an investigation is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

FBI investigating Pfizer's Celebrex and Bextra?

I received the message below, but no documents verifying the story, not that it is likely anyone outside the FBI and DOJ would have access to such documents. I was also unable to find the FBI agent's name through various Internet searches. That is interesting, because it means it would have been hard for someone to make up his name.

So I called an FBI agent I have worked with in Boston in the past and received confirmation that there is, indeed, an FBI agent up there by the name of "Paul Baumrind."

I also confirmed that "Beth Ann Irvine" is a Special Agent, Office of Inspector General.

And of course, those guys aren't going to tell me or any other journalist what cases they're working on, however, the fact that the names were genuine certainly lends credibility to the information below. Additionally, the information is eerily similar to my story, "$400 Million Pfizer Settlement for Bextra/Celebrex Kickbacks to ExpressScripts?"

So here's the information I received:

Earlier this year, I was asked to testify in front of a grand jury in Boston. They were very interested in the Celebrex and Bextra promotions. I was shocked at how much information they had. It seems to me that at least one DM, one RM, and someone higher up the chain, possibly from marketing are the targets of the investigation. Seems like they are going after at least 3 individuals as well as the company and its marketing practices.

The FBI agent's name is Paul Baumrind.
The Health and Human Services agent's name is Beth Ann Irvine.

I haven't been at Pfizer for years, I'm not bitter, and I have no axe to grind with anyone. Other than the price of the stock, I simply don't care that much what happens at Pfizer. I left the company on my own and found a much better job. No Peter Rost-type agenda here. These 2 contacted me at home and asked me questions in my dining room for about 5 hours. If they hadn't come to me, I never would have gone forward. I could really care less.

So why did I do it? After a while, a person can become a bit numb as to how many unethical, illegal, and immoral things he or she does in the course of a day, a month, or a career. I knew every day that I was over the line in what I did. The problem was, I was so far over the line, that I couldn't even see it anymore. Nor could I remember where I was the first time I crossed it. Pfizer really turned me into the kind of person that I really didn't want to be. And in hindsight, I have to admit, that it really felt good to get this stuff off my chest.

The following week, I went to Boston where the same questions were asked (and answered) in front of a federal grand jury.

I have no idea when the investigation will conclude or what will happen. Just thought you might like to know. I know there have been others who have done the same. My name must have come up during someone else's testimony. How else would they have known to contact me?

$400 Million Pfizer Settlement for Bextra/Celebrex Kickbacks to ExpressScripts?

Most of you know about the $35 Genotropin settlement between the Department of Justice and Pfizer. About $20 million of that settlement relates to kickbacks to a pharmacy benefit manager, to improve formulary position.

What you don't know is what will happen next, and who that pharmacy benefit manager is, or COMPANY Q as it is called in the non-prosecution agreement.

Of course, I'll tell you the name of COMPANY Q: It is ExpressScripts.

And here's what happened, according to the deal between DOJ and Pfizer: Genotropin overpaid ExpressScripts to improve formulary position. See Pfizer's settlement agreement below.

And what will happen to ExpressScripts, you may now wonder? One major competitor, Caremark, already agreed to pay $137.5M to settle kickback charges.

So of course it is logical if ExpressScripts is next, after all, ExpressScripts has repeatedly disclosed to the Securities and Exchange Commission that they are under investigation by the DOJ for this type of issue.

But the story doesn't end there.

Genotropin didn't simply pay that extra money, a couple of million dollars every year, out of the Genotropin budget. No, for some interesting reason, the money came from the Bextra/Celebrex budget.

I still don't know quite what went on here, but it sure looks to me like Bextra/Celebrex got something out of the deal. Like improved formulary placement . . . sooooooooooo is it just me or is a Department of Justice settlement related to both Pfizer's Bextra/Celebrex and ExpressScripts next?

And here is where things get really interesting. Genotropin sales in the US have been around $200 million. Bextra/Celebrex sales at its peak were over $4 billion and are now around $2 billion. So 10 to 20 times as much money.

Does that mean Pfizer will end up ponying up 20 times what they paid for the Genotropin kickback charges, or around $400 million? And will ExpressScripts pay maybe $50 to $100 million?

And why have they not settled yet?

Here's a complication: With Genotropin Pfizer could easily just blame Pharmacia. Even though they allegedly continued some of the inappropriate selling to anti-aging docs long after they bought Pharmacia, DOJ let them off the hook on that one. But with Bextra/Celebrex Pfizer was part of the marketing from the beginning, as a 50% co-promotion partner with Pharmacia. No place to hide. So I would guess Pfizer is right now negotiating with DOJ about how they can avoid being named. And who knows. DOJ wants a big settlement. Don't we all? So maybe Pfizer can buy themselves out of this one too . . . kind of like, OK, OK we'll pony up $400 million, on the condition that DOJ agrees to put out this nice press release we have written blaming Pharmacia, and if we can get this nice non-prosecution agreement in which DOJ agrees it was Pharmacia management who were the bad boys and girls.

When that deed is done, you'll see the settlement in the news.

What is Pfizer's comment on this?

It is right there, in their most recent annual report: "We have been considering various ways to resolve these matters":

"Since 2003, we have received requests for information and documents from the Department of Justice concerning the marketing of Genotropin as well as certain managed care payments. In 2005, the Department of Justice informed us that it is investigating Pharmacia’s former contractual relationship with a healthcare intermediary. We are in discussions with the Department of Justice seeking to resolve the Genotropin and healthcare intermediary matters.

Since 2003, we have received requests for information and documents concerning the marketing and safety of Bextra and Celebrex from the Department of Justice and a group of state attorneys general. We have been considering various ways to resolve these matters."