Reference no: EM132272375

Consider the whistle-blower’s actions in the case "A Whistle-Blower's Quandary.” In each, was the whistle-blower in compliance with the duty of loyalty? What about the virtue theory of loyalty? Why or why not?

Case: As a vice president for Pharmacia (which was acquired by Pfizer in 2003), Dr. Peter Rost was in charge of worldwide marketing for the drug Genotropin, which is a synthetic human growth hormone that is used to treat a limited range of hormonal deficiencies in children and the elderly.44 Beginning in 1997 and continuing until 2003, Pharmacia aggressively promoted Genotropin for conditions beyond those for which the drug had received approval from the FDA. Physicians may legally prescribe an FDA-approved drug for such “off-label” use, but pharmaceutical compa- nies are strictly prohibited from any promotional activities designed to encourage physicians to prescribe a drug for any but approved uses. However, Pharmacia attempted to persuade physicians to prescribe Genotropin for short chil- dren without any hormonal deficiency as well as for elderly patients as an antiaging therapy. Among the means used to increase prescriptions were kickbacks to physicians in the form of all-expense-paid company-sponsored conferences, paid participation in drug studies, and lucrative consulting positions. These efforts produced results. During the period from 1997 to 2003, approximately 25 percent of all prescrip- tions for children and 60 percent of prescriptions for adults were for off-label use. Dr. Rost became aware of the illegal promotional activ- ities in his role as head of marketing for Genotropin, and he immediately protested to his superiors. After an investiga- tion by Pharmacia, the off-label promotion activities, including the kickbacks to physicians, were curtailed but not eliminated. Soon after Pfizer’s acquisition of Pharma- cia, which occurred on April 16, 2003, Dr. Rost presented evidence to his new superiors of the illegal off-label mar- keting of Genotropin. Without Dr. Rost’s knowledge, Pfizer conducted its own investigation, and exactly one month after the acquisition, on May 16, 2003, Pfizer voluntarily notified the FDA and the other relevant government agen- cies of the illegal off-label promotion activities and within a few days provided them with extensive documentation of the kickbacks, as well as information about the corrective actions that were being taken. Unaware of his employer’s disclosures to the federal government, Dr. Rost decided to file a complaint under the federal False Claims Act (FCA), which he did on June 5. The FCA allows private individuals to aid the federal gov- ernment in investigating and prosecuting fraud in federal procurement and benefit programs, including Medicare and Medicaid. In return for the service that such whistle- blowers provide in combating fraud—which the federal government cannot practically do on its own—a complain- ant can receive a percentage of the amount recovered. This percentage varies greatly, depending on circumstances, but can range from roughly 10 percent to 30 percent. The FCA requires that any individual receiving an award must pre- sent information that he or she possesses from personal experience that has never been publicly disclosed. That is, a complainant must be the “original” source of the infor- mation and have “direct and independent” knowledge. These conditions are necessary in order to prevent an opportunistic use of the law to collect an award based on publicly available information. Although the promotion of off-label use of a drug is illegal, it is not itself a violation of the FCA. Separately, Pfizer paid $35 million to settle charges of bribery and improper promotion in connection with Genotropin. In a complaint under the FCA, it is necessary to show that the illegal promotional activity caused the submission of a false insurance claim to the government (for reimburse- ment from Medicare/Medicaid). Evidence that a false claim was submitted must be more specific than arguing that the illegal promotional activity was likely to cause the submission of false claims.