Pfizer Settles AG Paxton Lawsuit For $41.5 Million; Adulterated ADHD Drugs 2012-2018

Pfizer and Tris Pharma agreed to a $41.5 million settlement in a case filed by the Texas Attorney General Ken Paxton in 2023, alleging the pharma companies violated the Texas Health Care Program Fraud Prevention Act (THFPA) by selling adulterated ADHD drugs to children. Quillivant is an ADHD drug that was first developed by NextWave Pharmaceuticals. Tris Pharma owned a 5% share in NextWave, and Pfizer acquired Tris Pharma in 2012.

The lawsuit alleged that Tris Pharma was issued an FDA citation for failing to achieve manufacturing consistency of the product and for manipulating the testing process so the product improperly passed regulatory standards. The violations were alleged to have occurred between 2012 and 2018. Despite agreeing to the settlement, Pfizer and Tris Pharma do not admit wrongdoing.

The lawsuit stemmed from a whistleblower complaint filed by a man who served as the head of technology at Tris Pharma from 2013 until 2017 and also served on the executive committee, quality committee, and commercial committee during his tenure with the company. After the company failed to address his concerns about “substandard manufacturing processes,” the whistleblower contacted Attorney Jason T. Brown at Brown, LLC.

Brown told The HighWire that the whistleblower contacted his firm seven or eight years ago regarding his concerns, and they filed a comprehensive federal complaint under seal. The federal case is still ongoing, but Brown contacted the state of Texas while the case was under seal to discuss the possibility of splitting off a portion of the lawsuit for state-level litigation. “Texas, God bless them, worked really hard and ran with the ball on this in concert with us and our whistleblower to obtain this result,” Brown said.

Brown said the whistleblower attempted to resolve the manufacturing issue internally, but quickly learned his concerns would not be taken seriously. “He addressed it, and he felt like his claims were not being heralded,” Brown said. “There was actually a precipitating event in which the FDA physically came to inspect the facility, and he believed at the time that they had deliberately adulterated the testing to pass it without doing a root cause analysis about fixing the problem. At that juncture, he recognized that internally there was going to be no mechanism, in his belief, to fix it, so he needed to contact the authorities and use us as a conduit.”

Brown said his firm is the second most prolific in the country for claims like this, which typically involve working with whistleblowers from different industries. According to the Securities and Exchange Commission, Quillivant DR had about 627,000 prescriptions in 2017 and gross sales of $193.3 million, which represented about 0.9% share in the ADHD market.

Many researchers have analyzed the incentives that come from a culture in which a corporation’s primary goal is increasing profits and share value. Corporations, however, can’t be criminally prosecuted, and thus, when the profit of an illegal action dwarfs the cost of potential settlements, it can be seen as “the cost of doing business.” Colombia Law School Professor John C Coffee tackled this concept, as did three Stanford Graduate School of Business finance professors.

“I happen to be not as jaded as some of my colleagues are,” Brown told The HighWire. “I do believe some of the pharmaceutical companies, some of the executives are trying to do the right thing, and they will incorporate learning lessons from what’s here. It’s important to note in the 1031 matter, neither party admitted liability. From our perspective, paying the money is not an admission but indicative of something, even though they’re not admitting liability. But I’d like to think that they’re going to learn.”

Brown said working with state-level prosecutors like AG Paxton is beneficial for the taxpayer and benefits the entire system. Litigation at the federal level can remain sealed for long periods of time, and working collaboratively with state prosecutors can bring more attention to the case as well as justice for the whistleblower and taxpayers.

“There’s no guarantee of success when you file these,” Brown said. “If you look at the numbers, maybe only one in eight of these cases succeed for one reason or another. But yeah, I think it’s important when counseling an individual, say, here’s the pros, and the pros are if you’re motivated by justice, we may be able to obtain justice, we may be able to correct wrongful misconduct, we may be able to get monies back for the taxpayers, but here’s the cons, which are you’re putting yourself out there. Ultimately, your identity probably will be disclosed. I’m not 100% certain. There’s other alternatives that you may have, but your identity may be out there, and it may have a negative impact. Even though the statute explicitly prohibits retaliation for invoking your rights under a False Claims Act statute, realistically, defendants often do things like that.”

Brown said he wouldn’t ask anybody, including whistleblowers, to do anything he wouldn’t do himself. He served as an FBI agent in undercover activities and continues to do this job because he loves seeking justice on behalf of the American taxpayers. Brown said this is one unique area of law that has bipartisan support.

“When you put the safety of children at risk – that is something that parents, people would expect the highest degree of vigilance,” Brown said “And any retroactive excuse is only going to infuriate a jury when you get there. So I think it’s important for companies to learn that there is a great deal of trust put into them, and they can’t continue to betray that trust without expecting bad things to happen to them down the road.”

Brown said litigation related to the False Claims Act is a large portion of their practice, with pharmaceuticals representing a large subset of that. AG Paxton has brought several cases against pharmaceutical companies during his tenure as Texas AG, including recent lawsuits against Eli Lilly for an alleged “quid pro quo” scheme, Tylenol manufacturers for allegedly not properly warning pregnant consumers about neurological harms, and Pfizer for allegedly misrepresenting the efficacy of the COVID-19 vaccines.

“I will never back down from taking on the biggest corporations in the world that deceive and take advantage of Texans. Pfizer and Tris Pharma provided adulterated drugs to children for years and changed test results in order to obtain the benefit of taxpayer-funded Medicaid reimbursement,” said Attorney General Paxton. “Under my watch, Big Pharma will not escape justice for lying about the effectiveness of its drugs.”