A lengthy New York Times story on Saturday (Jan. 28) disclosed that prosecutors are investigating possible criminal violations by Novo Nordisk. Last month Novo said it had received a subpoena from US attorney for the Eastern District of New York for documents related to its marketing of its insulin products.
According to the Times, Novo has tried to boost insulin sales by paying at least one Rite Aid pharmacist to switch patients from competing products or from its own lower-priced insulin. The story also alleged that Novo paid doctors’ assistants when prescriptions were switched. The Times cited company documents and quotes former sales reps and company officials.
Novo said it “believes the (prosecutors’) investigation is limited to its insulin products.” It denied any wrongdoing in its dealings with Rite Aid, saying the program was designed to educate patients or improve care. The company declined to comment on questions about payments to doctors’ assistants.
While Novo’s ultimate culpability is to be determined, the story paints a damning picture of the company. Novo has long played the underdog card against giant Eli Lilly, using aggressive marketing to steal market share. (Novo’s Novolog competes directly against Lilly’s Humalog – two similar fast-acting synthetic insulins.) Novo, for example, invariably has the most lavish vendor displays at diabetes’ conventions, while it sponsored a book about children with diabetes. Lilly’s own lethargy – some say arrogance – has also allowed Novo to make huge inroads. As the Times points out, from December 2001 through November 2005, Novo’s insulin sales rose 364 percent to $963 million while Lilly's insulin sales rose only 13 percent to $1.43 billion (albeit, from a much larger base).
But it’s possible Novo benefited from more than creative marketing. Indeed the specter of possible illegal or unethical activity casts a shadow over the company at a time when authorities are already scrutinizing drug and medical devise companies that pay consulting fees to doctors. The authorities are also trying to crack down on any activity that might compromise patient safety for profits.
According to the Times, Novo established contacts in medical offices, usually nurses or medical assistants, who would receive as much as $25 for each prescription they switched to a higher-priced Novo product. The Times quoted an email from a Novo district manager: “Our goal is 50 or more scripts per week for each territory. If you are not achieving this goal, ask yourself if those doctors that you have such great relationships with are being fair to you. Hold them accountable for all of the time, samples, lunches, dinners, programs and past preceptorships that you have provided or paid for and get the business!! You can do it!!”
In the article, Dr. David Nathan notes, switching a patient from an older, slower-acting insulin (like Humulin) to a fast-acting insulin like Novolog can be dangerous if the patient doesn’t realize the properties of the new medication. In fact, if switches like this really happened, that would indeed be dangerous - we suspect switches from Humalog to Novalog are more likely, which wouldn't be considered dangerous, although certainly would be irritating if done unknowingly, for marketing reasons. The article questioned, in fact, whether a move to an analog was really necessary and painted it as perhaps "convenience" to earn high profits (as the analogs cost more) - we were surprised to see analogs characterized that way.
Novo’s partnership with Rite Aid in 2002 followed a similar one between Lilly and Eckerd. At the time, Novo said Rite Aid pharmacists will “actively intervene to introduce Novo Nordisk products.” According to three former Novo sales reps, a pharmacist in Maryland was paid by Novo to identify diabetics in Rite Aid’s database and to call their physicians to switch them to Novo’s higher-priced insulin products. In some cases, patients were informed of the switch only after they arrived at the pharmacy, though no patients were harmed, according to the Times’ sources.
A Rite Aid spokesman said that no official at the company knew that the pharmacist was being paid by Novo. The pharmacist himself confirmed that he had “pushed Novo Nordisk” products but said he had acted ethically.
If prosecutors are able to confirm quid pro payments between Novo and any pharmacist or health care provider, the consequences could be serious.
+++++++ The original story is below.
January 28, 2006
Drug Maker's Efforts to Compete in Lucrative Insulin Market Are Under Scrutiny
By GARDINER HARRIS and ROBERT PEAR
WASHINGTON — For years, Novo Nordisk, a Danish company and one of the earliest makers of insulin, has raced behind Eli Lilly to capture the lucrative insulin market in the United States.
When in 1996 Lilly started selling Humalog, a synthetic insulin with speedier blood-sugar control, Novo needed four more years to get approval to market a similar product.
When Lilly's huge sales force put Novo at a disadvantage, Novo fought back. The company hired hundreds of sales representatives. When Lilly struck a marketing deal with the Eckerd pharmacy chain, Novo responded with a partnership with Rite Aid.
But in its race, several former Novo sales representatives say, Novo may have crossed the line. Sales representatives paid at least one Rite Aid pharmacist to encourage switches from Lilly products or Novo's own lower-priced versions to higher-priced ones, according to documents and former and present company officials. Novo also paid doctors' assistants when prescriptions were switched, according to two former sales representatives.
Several former sales representatives said they were told by pharmacists and doctors' assistants that some patients first became aware of the switches when they picked up the new medicines at a pharmacy.
Officials from Novo and Rite Aid said that their activities were intended primarily to educate patients or improve care and that similar programs were common in the industry.
Karen A. Rugen, a spokeswoman for Rite Aid, said, "Our alliance with Novo Nordisk is standard industry practice." Ms. Rugen said, however, that Novo had paid one of Rite Aid's pharmacists directly, although she said that top Rite Aid executives had been unaware of the practice.
Susan Jackson, a spokeswoman for Novo Nordisk, said that the overall agreement between Novo Nordisk and Rite Aid "has benefited many people with diabetes."
Ms. Jackson would not address questions about payments made to doctors' assistants or a Rite Aid pharmacist, nor would she say how much Novo paid Rite Aid. But she said the partnership "is not unlike other agreements common in the industry that provide 'preferred status' for branded drugs."
But prosecutors are now investigating possible criminal violations. On Dec. 20, Novo said it had received a subpoena from the United States attorney for the Eastern District of New York for documents relating to its marketing practices.
The company said that it "believes that the investigation is limited to its insulin products." The subpoena indicated that "the documents are necessary for the investigation of potential criminal offenses," the company said.
Drug companies may pay for consulting or educational services, but federal anti-kickback statutes prohibit them from offering financial incentives to doctors or pharmacists to encourage or reward the prescribing of particular drugs, according to a 2003 guidance from the Department of Health and Human Services.
"In short, practices that may be common or longstanding in other businesses are not necessarily acceptable or lawful" in health care, the guidance states.
A Marketing Battle
The rivalry between Novo and Lilly illustrates the efforts companies will undertake to become No. 1 in a drug market, especially for chronic diseases like diabetes, which in the United States is a $3.3 billion market annually, according to IMS Health, a pharmaceutical information and consulting company.
From a business perspective, Novo's efforts were a great success. From December 2001 through November 2005, Novo's insulin sales rose 364 percent to $963 million while Lilly's insulin sales rose only 13 percent to $1.43 billion, according to figures provided by IMS Health.
The marketing programs were detailed in dozens of internal Novo and Rite Aid documents obtained by The New York Times. Three former Novo sales representatives described the programs. These people, some of whom spoke to The Times separately from one another, do not wish their names to be used because all still work in the industry and fear retribution. Parts of the programs were also confirmed by company officials and another sales representative who allowed their names to be used. The former sales representatives would not comment on whether they had filed whistle-blower lawsuits against Novo.
In its marketing battle with Lilly, Novo's sales representatives undertook a variety of efforts to persuade doctors to prescribe Novo's insulin products, one of which was known as the "anchor in the office" program.
Under this program, Novo sales representatives established contacts in some medical offices that served many diabetics, three former sales representatives said. The contacts were generally nurses or medical assistants responsible for monitoring diabetic patients. Officially, Novo paid these "anchors" to educate patients about Novo's products.
But two of the three former sales representatives who participated in the program said that Novo paid anchors as much as $25 for each prescription they helped switch to higher-priced insulin products.
Vikki Tolbert, a Novo district sales manager, said in an interview that "people are up in arms for no reason."
"Novo, like other companies, used to have a program to reimburse nurses and medical assistants," Ms. Tolbert said. "The purpose was not to switch patients, but to educate them and train them on insulin and insulin devices."
The formal program and the payments ended several years ago, Ms. Tolbert said, but some sales representatives still wanted to have trainers, or "anchors in the office."
"We would never tell a sales rep to pay anyone," Ms. Tolbert said. "That's crazy. But some reps do things of their own volition. They are out in the field by themselves every day. Managers are not with them. A pharmaceutical company cannot know what each individual sales rep is doing."
Deals Becoming Routine
A number of drug companies are running afoul of the anti-kickback law. In October, Serono Laboratories pleaded guilty to two counts of conspiracy and agreed to pay $704 million to settle criminal charges that it engaged in an elaborate kickback scheme to encourage sales of its AIDS drug, Serostim. In 2004, prosecutors accused Pfizer of paying doctors to prescribe its epilepsy drug Neurontin, and the company pleaded guilty to two criminal charges and paid $430 million.
State and federal prosecutors are investigating scores of other criminal and civil cases of marketing abuse, all of which are under seal. The possible health consequences for patients are rarely emphasized, however. For instance, physicians say aggressive marketing of insulin products can hurt patients.
Dr. David M. Nathan, director of the diabetes center at Massachusetts General Hospital and professor at Harvard Medical School, said that switching insulin prescriptions without providing thorough counseling to patients can be dangerous.
Newer, more expensive rapid-acting insulins begin working within five minutes. Older, cheaper insulins take 30 to 40 minutes to lower blood-sugar levels. Patients who are switched from older to newer insulins without their knowledge may wait too long to eat, Dr. Nathan said.
"If their blood-sugar levels drop too low, they can become confused, lose coordination, lose consciousness and have seizures," Dr. Nathan said. "This can result in accidents and even death."
Drug makers routinely provide financial incentives to managed-care firms for greater sales, but providing similar incentives to pharmacy chains can raise legal and ethical questions in part because pharmacists' advice to patients, like that of doctors', is supposed to be based on the best interests of patients, not pharmacists.
Still, deals between drug makers and pharmacy chains are now routine. As part of these deals, drug companies pay pharmacy chains for drug promotions that can range from simple refill reminders to efforts to switch patients to higher-priced drugs. If sales then rise, payments can increase, said Jeffrey Krinsk, a lawyer in San Diego who specializes in suing over the deals.
The companies say that these arrangements benefit patients, but some pharmacy regulators disagree, saying the partnerships may result in prescriptions being switched inappropriately, hurting patients.
David R. Work, executive director of the North Carolina Board of Pharmacy, said that his board had tried unsuccessfully to restrict such deals, one of the few boards to make such an effort. The practice of pharmacy, like that of medicine, is regulated by state boards.
"These switches have nothing to do with patient interest, they're all about money," Mr. Work said.
Novo's marketing campaigns also highlight the conflicting loyalties of many health care professionals. Doctors and their staff often consult for or receive gifts from drug makers, which may affect prescribing decisions. Pharmacists sometimes suggest one drug over another to patients for financial, not medical, reasons, pharmacy regulators say.
In April 2004, Novo Nordisk sent information to its field managers and sales representatives about marketing guidelines issued by the federal government and by a trade association for the pharmaceutical industry.
After reviewing the guidelines, a Novo sales representative sent an e-mail message to Ms. Tolbert, the Novo district manager, asking, "Are we allowed to do the anchors in the office then?" Ms. Tolbert replied, "As far as I know, and in discussing it with other managers, we are allowed to compensate for patient education."
In March 2004, Ms. Tolbert sent an e-mail message to sales representatives describing the purpose of Novo's marketing efforts.
"Our goal is 50 or more scripts per week for each territory," Ms. Tolbert wrote, according to a copy of the message provided to The Times. "If you are not achieving this goal, ask yourself if those doctors that you have such great relationships with are being fair to you. Hold them accountable for all of the time, samples, lunches, dinners, programs and past preceptorships that you have provided or paid for and get the business!! You can do it!!""
Preceptorships are consulting arrangements with doctors.
After Novo announced its partnership with Rite Aid in March 2002, Ms. Jackson, the Novo spokeswoman, was quoted in Diabetes Health magazine explaining that Rite Aid pharmacists "will actively intervene to introduce Novo Nordisk products."
Novo Nordisk produces a variety of insulin products, including preloaded syringes and synthetic versions. These products are often more convenient to use but are also more expensive than standard insulin. Since diabetes is a difficult disease to manage, convenience is important. But some doctors question whether the convenience of the new products is worth the premium prices.
One Pharmacist's Role
Lawrence M. Schultz, a Rite Aid pharmacist in Maryland, was paid by Novo to identify diabetics from databases in Rite Aid pharmacies, according to the three former Novo sales representatives.
Mr. Schultz or a pharmacy technician then contacted doctors to persuade them to switch their patients to higher-priced insulin products, according to the three former sales representatives. It is not known why doctors agreed to the changes, but the sales representatives say that they may have assumed the switch was required under the patient's insurance policy.
Two former sales representatives who contracted with Mr. Schultz and hired "anchors" say that Mr. Schultz, doctors' assistants and others told them that patients often only became aware that their prescriptions had been switched to a different insulin when they arrived at the pharmacy to pick up their medicines. The sales representatives said they knew of no patients who were directly harmed by these surprise switches.
Ms. Rugen of Rite Aid acknowledged that Rite Aid has a partnership with Novo but says that "no official at Rite Aid knew that Larry Schultz," the Rite Aid pharmacist, "was being paid by Novo Nordisk."
Mr. Schultz confirmed that he had "pushed Novo Nordisk" products. He refused to give details, but said: "Everything I did was done completely ethically. The one thing I would never do is put my job, or Rite Aid, in jeopardy."
Three Novo sales representatives who described Mr. Schultz's efforts on their behalf said they knew of no other Rite Aid pharmacist who received payments directly from Novo. But internal documents from Rite Aid provided to The Times show that Rite Aid executives urged pharmacists throughout the chain to dispense Novo products.
Rite Aid encouraged pharmacists to run computerized "drug utilization reports" to identify patients who could be switched, documents show.
Rite Aid had powerful financial incentives, documents show. In a letter to Rite Aid pharmacists in February 2005, top Rite Aid executives said, "Each Novo Nordisk product we dispense brings us 20 to 40 percent better profit margin." Moreover, they said, such sales add millions of dollars to Rite Aid's "bottom line."
Ms. Jackson, the Novo spokeswoman, said the company was "pursuing this matter with great urgency" and intended "to take remedial action in the event we find violations of our policies."
Carmen Catizone, executive director of the National Association of Boards of Pharmacy, said marketing deals between drug companies and pharmacy chains had often misled doctors and hurt patients. .
"We are opposed to plans where the financial interest of the manufacturer takes precedence over the patient's health," Mr. Catizone said. "To call a physician and say that we're changing a patient's medication and make it seem as if it's on behalf of the patient when it's actually part of this marketing deal is not right."