US high court leaves intact $142 million verdict against Pfizer

WASHINGTON (Reuters) - The U.S. Supreme Court on Monday left intact a $142 million jury verdict against Pfizer Inc over the marketing of the epilepsy drug Neurontin.

The Pfizer logo is seen next to a U.S. flag in a conference room at their world headquarters in New York November 5, 2013. REUTERS/Adam Hunger

The jury had ruled in favor of an insurer who said it had been misled into paying for the drug for “off-label” uses, or uses for which it was not approved.

In 2010, the jury in Massachusetts found that due to Pfizer’s marketing of the drug for off-label uses, Kaiser Foundation Health Plan Inc, one of the nation’s largest health maintenance organizations, and affiliates were damaged because they paid for prescriptions relating to conditions Neurontin did not effectively treat.

The Supreme Court’s refusal to hear Pfizer’s appeal means similar claims brought against the company by insurer Aetna Inc and Harden Manufacturing Corp can also go forward.

“While we are disappointed with the court’s decision denying the petition, the company has strong defenses on the merits in the cases that will now proceed in the lower court,” Pfizer said in a statement. “Plaintiffs face significant hurdles before they even reach trial.”

Pfizer shares were unchanged at $31.54 in afternoon trading.

Pfizer asked the high court to weigh whether lower courts correctly concluded that the company could be held liable under federal racketeering law. Pfizer said the claims made under the Racketeer Influence and Corrupt Organizations Act, known as RICO, did not make a sufficient connection between the alleged inaccurate marketing and the increase in what Kaiser had to pay out for prescriptions.

In an April ruling, the 1st U.S. Circuit Court of Appeals upheld the jury verdict, finding that Pfizer should cover costs for the marketing and prescribing of Neurontin for unapproved uses, a practice that has also earned the company a hefty criminal fine.

In the related cases, the appeals court revived similar claims made by Aetna and a class-action suit filed by Harden.

The jury in Massachusetts found that Pfizer had marketed Neurontin for bipolar disorder, migraines and neuropathic pain, none of which had been approved by the U.S. Food & Drug Administration.

Kaiser Permanente, a managed care company, said the ruling was a reminder to pharmaceutical makers to abide by their legal and ethical obligations or pay the cost. “The manipulated research and information behind the marketing of Neurontin misled physicians, pharmacists and patients alike into using this expensive drug for off-label uses where the evidence did not support it,” it said in a statement. Kaiser Foundation Health Plan Inc is part of Kaiser Permanente.

The verdict followed a $240 million criminal fine in 2004 paid by Pfizer’s Warner-Lambert unit, as well as a $190 million civil fine paid by Pfizer in connection with the off-label marketing.

Off-label uses included bipolar disorder, Lou Gehrig’s disease, restless leg syndrome, attention deficit disorder and drug and alcohol withdrawal seizures.

Pfizer said the illegal marketing was conducted by Warner-Lambert before Pfizer acquired the company in 2000. Neurontin was developed by Warner-Lambert and was approved in 1993 to treat seizures at a maximum dose of 1,800 milligrams per day.

Doctors are allowed to prescribe drugs for uses that have not been approved by U.S. health regulators, but companies are prohibited from marketing their products for such purposes.

Morningstar analyst Damien Conover said most big payouts by drugmakers for improper marketing of their products have been as a result of government probes.

“I’m a little concerned these litigation trends could spread more widely to private entities,” Conover said. Should Kaiser and other private plaintiffs prevail in their Neurontin battles with Pfizer, more insurers might feel motivated to seek financial recoveries of their own for other improperly marketed drugs, he said.

Conover also said Pfizer could easily afford the $142 million judgment in the Kaiser case. The largest U.S. drugmaker has annual sales of $50 billion.

Conover said he hoped more safeguards were in place to prevent improper marketing of medicines, following major settlements in the past decade that came as a result of whistleblowers and their disclosures of such practices.

In 2009, Pfizer agreed to pay $2.3 billion to settle civil and criminal allegations that it had improperly marketed painkiller Bextra and other drugs, including Lyrica (pregabalin), a medicine chemically similar to Neurontin which is used to treat nerve pain.

The case is Pfizer Inc. v. Kaiser Foundation Health Plan Inc, U.S. Supreme Court, No. 13-289.

Reporting by Lawrence Hurley. Additional reporting by Nick Brown, Ransdell Pierson and Caroline Humer; Editing by Howard Goller and John Wallace