What Do Pfizer and the Mafia Have in Common?

While illegal marketing of drugs might not be as bad as murder, it’s still a crime.

By Brian Orelli, PhD
Motley Fool

Pfizer (NYSE: PFE) has joined the Gambino crime family in the ranks of those who’ve lost a lawsuit under the Racketeer Influenced and Corrupt Organizations Act (RICO). Pfizer didn’t take out a hit on the CEOs of rivals Merck (NYSE: MRK) and GlaxoSmithKline (NYSE: GSK), but it doesn’t appear to have acted within the law, either.

In the ruling that came down yesterday, Kaiser’s health plans and hospitals sued Pfizer for marketing epilepsy drug Neurontin for migraines and other indications for which the Food and Drug Administration hadn’t approved it. Kaiser claims that the marketing caused it to overpay for treatment, and was awarded $47 million, which was automatically tripled to $141 million under RICO.

Doctors are allowed to prescribe drugs for any indication that they feel will help the patient, but drug companies are only allowed to market their drugs for indications approved by the FDA.

Pfizer claims that Kaiser’s doctors continue to prescribe the drug off-label, so Kaiser is being a bit hypocritical in claiming that it was wronged. That’s kind of like the mafia pointing out that the government collects taxes without asking, so they should be able to take money, too. Sorry Pfizer, it doesn’t work that way. Take your lumps and move on.

This isn’t Pfizer’s first run-in with off-label marketing. In 2004, Pfizer pleaded guilty to illegally marketing Neurontin, and it recently settled with the Department of Justice over the marketing of its antipsychotic Geodon. Pfizer’s not the only company in trouble for illegally marketing drugs, either: Merck, Eli Lilly (NYSE: LLY), Johnson & Johnson (NYSE: JNJ) and others have all been investigated by the DOJ over marketing issues.

I get the feeling that drug companies have mostly cleaned up their acts, but current shareholders still have to pay for past transgressions. Unfortunately, that’s just part of being in an investing family.

Find out how Matt Koppenheffer’s addiction to Mafia Wars turned into an investment lesson.

This entry was posted in Uncategorized. Bookmark the permalink.