Court upholds $142 million verdict against Pfizer over Neurontin

A federal appeals court said Pfizer Inc should pay about $142 million to cover costs for the marketing and prescribing of epilepsy drug Neurontin for unapproved uses, a practice that has also earned it a hefty criminal fine.

A panel of appellate judges in Boston on Wednesday refused to overturn a ruling in favor of Kaiser Foundation Health Plan, which claimed it had been damaged after prescribing Neurontin for conditions it did not effectively treat, based on fraudulent marketing by Pfizer, the largest U.S. drugmaker.

In related appeals, the panel also revived similar claims from insurer Aetna and class action allegations from Harden Manufacturing Corp, restoring lawsuits that had been thrown out by a lower court.

The ruling in the Kaiser case, which deals the biggest immediate blow to Pfizer, upholds a lower court’s decision not to grant Pfizer a new trial after a jury had awarded it $142 million.

The jury 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.

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.

Neurontin, developed by a Warner-Lambert unit, was approved in 1993 to treat seizures at a maximum dose of 1800 milligrams per day. Warner-Lambert was later acquired by Pfizer.

The drugmaker initially forecast about $500 million in revenue generated by Neurontin, but in 1995 began marketing it for off-label uses in an attempt to increase its earning potential—a move that apparently worked, reaping $2 billion from Neurontin sales in 2003 alone, the appellate court said.

Pfizer marketed Neurontin for off-label uses directly to doctors, sponsored misleading informational supplements and suppressed negative information about the drug, the opinion said.

The company’s internal marketing plan for certain drugs, including Neurontin, called for the development of relationships with Kaiser officials “who are not considered whistle blowers,” according to the opinion.

In a statement, Kaiser said it was “very pleased” and that “justice has been achieved for our members and the physicians, pharmacists and staff who care for them.” David Frederick, an attorney for Kaiser, said he was “gratified by the court’s carefully crafted decision.”

Pfizer was less satisfied, saying in a statement it believes “there was no basis in fact or law” for the awards in the Kaiser case.

In the Aetna and Harden cases, Pfizer said it believed the lower court’s dismissals were the right move and that it “disagrees with the conclusions” of the appeals court.

“We are exploring our appellate options in all three of these cases,” the company said.

Pfizer’s attorneys in the case, from law firms Skadden Arps Slate Meagher & Flom and Quinn Emanuel Urquhart & Sullivan, could not be reached.

The Kaiser cases are Kaiser Foundation Health Plan et al v. Pfizer Inc et al, U.S. Court of Appeals for the First Circuit, Nos. 11-1904 and 11-2096.

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By Nick Brown