Pfizer Inc.'s general counsel will no longer oversee the company's compliance program, under the terms of the company's $2.3 billion settlement agreement resolving allegations that Pfizer's executives and sales staff illegally marketed the painkiller Bextra and several other drugs.
Instead, the chief compliance officer at the world's largest drug maker will report directly to the CEO. The move is required by Pfizer's corporate integrity agreement with the office of the inspector general of the U.S. Department of Health and Human Services, which is part of the company's civil and criminal settlement with the U.S. Department of Justice.
The change is intended to eliminate conflicts of interest, and prevent Pfizer's in-house lawyers from reviewing or editing reports required by the agreement, says Lewis Morris, chief counsel for the inspector general's office. Officials at Pfizer did not respond to requests for comment.
"The lawyers tell you whether you can do something, and compliance tells you whether you should," Morris says. "We think upper management should hear both arguments."
Pfizer's historic settlement, the largest in the U.S. for claims of off-label marketing practices, has fueled calls for changing how drug companies do business, just as President Barack Obama prepared to address a joint session of Congress on health care reform Wednesday night. Republicans and Democrats alike have said the country could see huge savings in health care costs if the Obama administration cracked down on fraud.
A "corporate integrity agreement" is an administrative alternative to excluding Pfizer from participating in federal health care programs, such as Medicare and Medicaid, Morris says. It's a step that HHS isn't eager to take with any large drug company accused of breaking the law. Many large drug companies have also entered into corporate integrity agreements, such as Schering-Plough Corp., Eli Lilly and Co., and Bristol-Myers Squibb Co.
Excluding a drug giant like Pfizer from such programs wouldn't just be a death knell for the company, says Morris. It would also have a profound adverse impact on the health and welfare of the people who need Pfizer's drugs.
This is Pfizer's fourth settlement with the Justice Department over illegal marketing activities since 2002, and its third corporate integrity agreement. The other agreements were similar in most respects, Morris says. But this is the first one that compels Pfizer's chief compliance officer to report to the company's chief executive, instead of the general counsel.
Pfizer will have to hire an independent review organization, such as an accounting auditing, consulting firm, to perform reviews required by the agreement. The inspector general's office has the right to reject the organization's work if it's found to be inadequate.
But Morris admits there are no guarantees that Pfizer's executives and sales representatives won't illegally market drugs again. Still, he says this time there are additional measures to track how drugs are marketed that will hopefully reduce the risk of mischief. If any wrongdoing is discovered, Pfizer could be prosecuted.
"We think we've done an even better job than before, although I would have to acknowledge it's a contract," Morris says. "There is some level of faith we have to put in the opposite party in the agreement. But we're not just sitting back and hoping Pfizer will behave themselves."