Darshak Sanghavi
Slate
December 21, 2009

Years ago, mathematician John Allen Paulos described a brilliant stock scam, in which a crooked broker sends out a huge number of letters to potential clients. Half the letters say the market will rise; the other half predict the opposite. As Paulos explains, “No matter whether the index rises or falls, a follow-up letter is sent, but only to [people] who initially received a correct prediction.” On that half, the scam is repeated. After several iterations, the broker has hooked some fraction of his initial marks—the guy correctly predicted a half-dozen or so market moves!—and the unsuspecting rubes are ready to be fleeced.

Pharmaceutical companies employed a similar ruse to propel sales of drugs for “off-label” indications, or uses not green-lighted by the Food and Drug Administration. The FDA approves new prescription drugs only after clinical trials show a benefit in the form of a pre-specified outcome, such as fewer asthma attacks, better blood sugar control, or some other metric. (For example, Neurontin was approved to control seizures.) Companies are forbidden to advertise or promote the drug for any other problem. However, no law stops doctors from prescribing the drug for whatever reason they like—and they certainly do.

In 1996, a young researcher named David Franklin left Parke-Davis due to his disgust over off-label marketing of the anti-seizure drug Neurontin. (Franklin reported that one company executive told him, “[W]e need to be … holding [physicians’] hands and whispering in their ear, Neurontin for pain, Neurontin for monotherapy, Neurontin for bipolar, Neurontin for everything.”) A resulting class action suit was settled for $430 million in 2004, and thousands of pages of corporate documents soon ended up in a searchable digital library at the University of California-San Francisco.

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