Whistle-blowers expose huge drug company scam - The Buffalo News

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Whistle-blowers expose huge drug company scam

For nine years, Judith Doetterl kept a secret.

She never said boo about the drug she was selling or the allegations that her employer, a pharmaceutical giant, was wining and dining doctors to boost sales.

She never told anyone she was working undercover with federal investigators or that she was one of five employees at the center of one of the biggest pharmaceutical whistle-blower cases ever.

Monday, the Buffalo woman went public with her tale of intrigue, risk and great reward.

“They wanted to right a wrong,” Daniel C. Oliverio, Doetterl’s lawyer, said of the five former employees in the case. “To this day, their primary goal was, ‘This must end.’ ”

Overnight, Doetterl and the others – including Camille McGowan, Oliverio’s other client in the case – went from little-known former sales representatives for Johnson & Johnson to whistle-blowers now credited with exposing one of the biggest pharmaceutical scams in years.

They also are at the root of a $2.2 billion civil and criminal settlement believed to be the second-largest ever involving a drug manufacturer. Pfizer once paid out $2.3 billion.

The deal, announced Monday by U.S. Attorney General Eric Holder, settles a wide range of federal and state investigations into Johnson & Johnson’s marketing of an anti-psychotic drug called Risperdal.

“Put simply, this alleged conduct is shameful, and it is unacceptable,” Holder said Monday. “It displayed a reckless indifference to the safety of the American people. And it constituted a clear abuse of the public trust.”

The allegation is that Johnson & Johnson and one of its units, Janssen Pharmaceuticals, marketed Risperdal for uses not approved by the Federal Drug Administration and then paid kickbacks to doctors and pharmacists who prescribed or promoted the drug.

The company also is accused of downplaying the side effects of the drug – there’s research linking it to breast development in male children – when dealing with physicians and patients.

“Judith was working for J&J selling Risperdal,” said Oliverio. “She became concerned early on that what she was doing violated the law.”

She spoke first to McGowan, who was a Janssen district manager based in Pittsburgh, and they agreed they should bring their fears to the company.

“They went up the chain with their concerns, and they were stonewalled,” Oliverio said. “They felt frustrated and angry, and they felt in some way betrayed by the company.”

That’s when they went to Oliverio. It was the summer of 2004, and the former federal prosecutor quickly realized how big a case he had.

“Originally, this was David and Goliath,” he said. “This was Johnson & Johnson, one of the most iconic companies in the world.”

At his direction, Doetterl and McGowan filed a civil suit in Buffalo that was immediately placed under court-ordered seal until federal prosecutors could decide if they wanted to join the case.

They did, and the local case was eventually consolidated with three other similar cases from across the country.

Federal prosecutors also decided to open a separate criminal investigation into what Johnson & Johnson was doing, and that’s when they asked Doetterl and two others to go undercover, with the civil suit still under seal initially so that Johnson and Johnson didn’t know about it.

Early on in the case, Doetterl wore a recording device while attending a two-day national sales conference in Texas.

Oliverio, who handled the case with Hodgson Russ colleagues Joseph V. Sedita and Robert J. Fluskey Jr., said he can’t comment on the value of those recordings, but he’s not shy about describing his client’s actions as “gutsy.”

“Here’s a 34-year-old woman with a tremendous job, putting her career on the line and wearing a wire, all in order to do the right thing,” he said.

The civil case continued for several years and, in many respects, lay dormant while the corresponding criminal investigation unfolded.

The FDA had approved Risperdal for psychotic disorders such as schizophrenia in 1993, but investigators came to believe that Johnson & Johnson, eager to expand its market, had started what sales people call an “off-label” campaign.

The allegation is that the company set out to convince doctors that Risperdal could be prescribed for other illnesses, including bipolar disorder, dementia, and mood and anxiety problems.

Investigators also believe Johnson & Johnson minimized or concealed the drug’s risks – Risperdal has been linked to diabetes, weight gain and increased chance of stroke – and that it improperly marketed the drug to inappropriate users.

“This settlement should serve as a warning to pharmaceutical corporations: The illegal promotion of drugs for off-label uses must stop,” New York Attorney General Eric T. Schneiderman said Monday.

New York, one of several states party to the settlement, is expected to receive about $128 million.

Broken down, more than half of the $2.2 billion settlement – about $1.27 billion – will go to settle civil claims against the company.

The rest, about $900,000, will settle the criminal case.

Doetterl, McGowan and the three other whistle-blowers – or “relators” as they’re known in the law – are expected to walk away with eight-figure settlements.

“The relators in this case accomplished what they set out to do,” Oliverio said. “They righted a wrong in the marketplace.”

Even before Monday’s announcement by Holder, Risperdal had become the focus of other lawsuits around the country.

In 2010, Louisiana won a $257 million award against Johnson & Johnson for not disclosing Risperdal’s health risks and defrauding the state’s Medicaid program.

Two years later, Arkansas won a $1.2 billion award against the company, most of it for Medicaid fraud.

“These companies lined their pockets at the expense of American taxpayers, patients and the private insurance industry,” Holder said Monday. “They drove up costs for everyone in the health care system and negatively impacted the long-term solvency of essential health care programs like Medicare.”

email: pfairbanks@buffnews.com

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