At a congressional hearing in September 2004, a senior executive at Forest Laboratories Inc. insisted that his company didn't market its antidepressant drugs to children and teenagers.
"I want to emphasize that, because the FDA has not approved pediatric labeling for our products, Forest has always been scrupulous about not promoting the pediatric use of our antidepressant drugs, Celexa and Lexapro," said Dr. Lawrence Olanoff, then chief science officer and executive vice president at the New York-based firm. "That is the law, and we follow it."
But that statement, federal regulators now say, was patently untrue. They accuse the company's Earth City-based marketing arm — Forest Pharmaceuticals — of actively promoting its antidepressants for children's usage.
Not only that, regulators said, but the company's management concealed a negative pediatric study on Celexa, duped physicians about the drug's clinical trials and encouraged sales reps to pay illegal kickbacks to pediatricians to induce them into prescribing antidepressants to children and adolescents.
New documents offer a glimpse into the push for profits at a little-known Earth City company while at the same time shedding light on aggressive marketing tactics used by the U.S. pharmaceutical industry.
According to whistle-blowers who bolstered the government's case against Forest, each sales agent was armed with a budget exceeding $240,000 per year — money that was spent on lavish gifts, speaker's fees and other inducements to physicians.
For decades, Forest Pharmaceuticals prospered without fanfare, employing hundreds of people in the St. Louis area. Few locals were familiar with the drugmaker's low-profile operations here, its occasional manufacturing snafus in Ohio and an aggressive sales force that now numbers about 2,700 representatives nationwide.
But the company's guilty plea to federal criminal charges and its agreement to pay more than $300 million in criminal and civil penalties has changed all that.
Forest is the latest drug company to have acknowledged illegal conduct in making and selling prescription drugs and over-the-counter remedies. Its guilty plea in federal court in Massachusetts follows a slew of criminal admissions, recalls, settlements and corporate integrity agreements in recent years, ranging from industry stalwarts such as Pfizer Inc. to lesser-known firms like Bridgeton-based KV Pharmaceutical Co.
"Sometimes companies forget the true purpose of their drugs, which is to help people, and they end up focusing on an alternative purpose, which is to make money for their shareholders. And that always comes back to haunt them," said Dr. Jeffrey Bishop, a biomedical ethicist and physician who heads St. Louis University's Center for Health Care Ethics. "It moves beyond ethics into criminality."
The U.S. attorney's office in Boston announced on Sept. 15 that Forest Pharmaceuticals pleaded guilty to one felony count of obstructing a federal probe into its drug manufacturing problems; a criminal misdemeanor for illegally distributing and promoting Celexa for use in treating children and adolescents suffering from depression; and a criminal misdemeanor for selling the unapproved drug Levothroid after being warned repeatedly by regulators of its health risks and ordered to stop.
"Forest Pharmaceuticals deliberately chose to pursue corporate profits over its obligations to the FDA and the American public," U.S. Attorney Carmen Ortiz in Boston said in a statement.
No individuals have been charged. But the U.S. attorney's office in Boston is investigating the involvement of Forest executives and managers in the marketing of Celexa and Lexapro.
Besides taking criminal action, the Justice Department, 20 states and the District of Columbia accused Forest and its top executives in a civil complaint of engaging in an illegal marketing scheme by encouraging its sales force to pay kickbacks including cash and gifts to doctors.
Forest denied those allegations but agreed to pay more than $149 million to settle the civil complaint as part of last month's deal with authorities. A company statement said it "is committed to adhering to the highest ethical and legal standards, and off-label promotion and improper payments to medical providers have consistently been against Forest policy."
In addition, Forest faces 48 wrongful death lawsuits nationwide alleging Celexa or Lexapro caused or contributed to individuals committing or attempting to commit suicide, or caused a violent event, according to a company filing with the Securities and Exchange Commission.
Company spokesman Frank Murdolo declined to return repeated phone calls. Howard Solomon, 82, Forest's chairman and chief executive since 1977, was also unavailable for comment.
The drugmaker treated the U.S. attorney's announcement as a cost of doing business. Reserves for the settlement had been set aside before the announcement, and as bad as the charges looked on paper, Forest's stock did not appear to be affected by the news of its guilty plea.
"All these pharmaceutical companies have been investigated numerous times, They get their wrist slapped, they pull back and change their practices and do something else. Investors could care less," said Annabel Samimy, an analyst in the New York office of St. Louis-based brokerage house Stifel Nicolaus. "It doesn't affect the business … It's sort of par for the course."
Checkered acquisition
Founded in 1956, Forest Laboratories boosted its national sales force in 1984 with the purchase of O'Neal, Jones & Feldman Pharmaceuticals of Maryland Heights.
O'Neal had a checkered history: In 1984, a federal investigation resulted in one of its drugs being recalled — and the firm was put on the market. Two of its executives were indicted by a federal grand jury for distributing the unapproved drug E-Ferol, which was linked to the deaths of 38 infants. O'Neal had never scientifically tested E-Ferol or asked the FDA for approval to market the drug, which was used to treat prematurely born babies. The firm's president and vice president were convicted and ordered to spend six months in jail.
In 1996, Forest acquired a license to promote a new antidepressant developed and patented by Danish drugmaker H. Lundbeck. Two years later, the company launched the drug under the brand name Celexa.
However, the Food and Drug Administration never approved Celexa for pediatric use, and the agency in October 2004 ordered the drug and other similar antidepressants to carry a "black box" warning stating that its safety and effectiveness among children has not been established, and that such antidepressants (serotonin reuptake inhibitors) "increased the risk" of suicidal thinking and behavior. A similar warning was ordered for Forest's antidepressant Lexapro, another drug licensed from Lundbeck, but in 2009 the agency approved Lexapro for depressed adolescents.
Yet, Forest waged an aggressive campaign from 1998 through at least 2005 to promote the use of Celexa and Lexapro in children and teenagers, although neither drug was approved for pediatric patients, according to regulators.
With the aid of about 1,500 sales representatives, Celexa sales skyrocketed from $92 million in 1999 to $1.6 billion in 2002 — making it a blockbuster drug. But the firm was under pressure to sell as much Celexa as possible because the U.S patent on the drug would expire in 2004.
Seeking greater market share, Forest and Lundbeck had undertaken two pediatric studies. Forest's 2001 study by a Texas child psychiatrist was positive, indicating that Celexa was more effective than a placebo in treating depressed children. But the FDA concluded that the Lundbeck study, which was concluded in mid-2001, was "clearly negative" and showed no basis for using Celexa to treat depression in children and adolescents.
In the Lundbeck study, 14 children taking Celexa attempted suicide or had suicidal thoughts compared with only 5 patients taking placebo.
A small circle of Forest's top executives, including Olanoff, were aware of the negative study, regulators said, but failed for the next three years to tell company sales agents about the findings.
Instead, senior executives misrepresented the safety and effectiveness of Celexa to the firm's executive advisory board of leading psychiatrists, its professional affairs unit that is responsible for providing "balanced" information to physicians, and pediatric specialists whom the company hired to give promotional speeches on Celexa and Lexapro.
As a result, regulators said, pediatricians nationwide were misled into thinking that Celexa had been found safe for children.
Olanoff, who is now Forest's president and chief operating officer, did not return repeated phone calls.
Marketing the drug
Efthimios Parasidis, an assistant professor at St. Louis University School of Law, described the financial pressures on U.S. drugmakers. "The necessity of the drug industry to closely protect its intellectual property," he said, "causes the industry to be mindful of what information it releases to the public — and when. One bad study can make or break a company."
When asked about the U.S. attorney's allegations that Forest concealed the results of the Celexa study, Lundbeck declined to comment.
"Forest marketed Celexa as well as Lexapro completely on their own, and we've been completely satisfied with the partnership," Lundbeck spokesman Mads Kronborg said Friday.
According to the U.S. civil complaint, Forest used its sales agents to target pediatric specialists and paid them to give promotional speeches to other physicians on prescribing Celexa and Lexapro for children.
From 1999 through 2006, Forest paid Dr. Jeffrey Bostic, medical director of the Massachusetts Child Psychiatry Access Project at Massachusetts General Hospital more than $750,000 to give about 350 talks and presentations in 28 states, many of which addressed the pediatric use of Celexa and Lexapro, regulators said. He also allegedly met privately with physicians to ease their concerns about prescribing Celexa or Lexapro off-label for children.
Bostic, a faculty member at Harvard Medical School, declined to comment.
All told, Forest "had more than 500,000 promotional sales calls or 'details' with pediatric specialists," regulators said. Forest monitored the return on investment from its sales agents and paid bonuses to those whose doctors wrote the most prescriptions for its drugs.
Yet, selling antidepressants to children and teenagers was just one aspect of Forest's aggressive sales push.
Sales agents, regulators said, attempted to induce doctors to write more prescriptions for Celexa and Lexapro by spending their marketing budgets on gifts and payments. The alleged kickbacks included tickets to Cardinals and Boston Red Sox games, restaurant gift certificates, subsidies for physician office parties, deep-sea fishing trips, Broadway theater tickets, and other forms of lavish entertainment for physicians and their spouses.
Between 1999 and 2003, regulators said, Forest also gave grants of as much as $1,000 each to individual physicians who allowed sales agents to observe them at work and monitor how they were prescribing the antidepressants.
Some physicians were paid for giving speeches they never made and for observation services they never provided, regulators and whistle-blowers said.
Because of Forest's fraudulent sales campaign, regulators said, thousands of false claims for Celexa and Lexapro were submitted to federal health care programs such as Medicare, Medicaid, and the Tricare program for military personnel and their dependents — claims that were ineligible for reimbursement.
Congress passed the federal anti-kickback statute in 1972 after concerns arose that payments and gifts of any kind to those who can influence health care decisions corrupts medical decision-making and may result in medically unnecessary goods and services — and could even be harmful to patients.
Last year, the U.S. Senate Special Committee on Aging made public a Forest document marked "confidential" that outlined Forest's 2004 marketing plan for Lexapro. That strategy included $36 million for so-called "Lunch & Learns" in which doctors' lunches are paid, and also how the firm gave away 52 million samples of Celexa in 2002, and 32 million samples of Lexapro. Such practices, to one degree or another, are common in the industry.
The report detailed how Celexa had a healthy share of the children's antidepressant market but noted that Lexapro was "underperforming in the under 20 age segment (children and adolescents, from infants to age 20)." It concluded that efforts should be made to generate more data on child usage of Lexapro and "pursue indications as necessary."
The firm's Lexapro promotion budget included $100,000 to develop and ghost-write articles about depression and anxiety for "thought leaders" in the medical community; $200,000 for the placement of company-generated "advertorials" on radio programs and other media; $1 million on continuing medical education programs about new treatments for depression; and $34.7 million in payments to 2,000 psychiatrists who agreed to tout the benefits of Lexapro.
Jill Fisher, a professor at Vanderbilt University and an expert in clinical trials, said "companies have had to become much more clever about their marketing, and they are trying to minimize negative clinical trials. They want to control their data."
But the federal probe of Forest went beyond its marketing operations. Two of the three criminal counts were related to Forest Pharmaceutical's illegal conduct at its manufacturing facilities.
The FDA had warned Forest in 2003 to stop making and selling Levothroid, an unapproved drug used for thyroid hormone deficiency, due to the drug's problems with stability and potency.
Very small differences in potency could mean the difference between a therapeutic dosage and toxicity. The drug was sensitive to high temperatures and humidity, and some of Forest's tablets had inadequate potency.
Equipment malfunctions at Forest's manufacturing plant in Cincinnati had resulted in unacceptable humidity levels, so managers gave false data to the FDA about its production. Managers used a portable home humidifier to help rectify those problems but lied to FDA inspectors about the humidifier's purpose.
When the agency ordered Forest to halt all production of the drug on Aug. 8, 2003, the company instead increased its manufacture of the tablets. Employees were ordered to continue shipping as much Levothroid as possible and were paid overtime to work into the early hours of the next day.
All companies reach a point where they can choose to do the right thing or the wrong thing, said Jackson Nickerson, a professor of organizations and strategy at Washington University's Olin School of Business.
"If someone chooses the unethical decision, it makes it easier for someone else within the organization to make the wrong decision — and that decision may lead to a greater unethical act the next time."
