HARRISBURG - Two pharmaceutical companies
paid nearly $14,000 into an unauthorized state bank account that was
used by state mental health officials for travel, meals and other
expenses at a time when the drugmakers were courting state business,
Janssen Pharmaceutica and Pfizer Inc., also paid at least $10,000
to two state officials who helped win approval for a mental-health
treatment plan that uses drugs manufactured by the companies,
according to interviews and a review of documents from the state
Office of Inspector General. Those payments - some of which went to
charity and the general state fund - were for speaking engagements
and attendance at company meetings.
State and federal officials are examining the connection between
the payments and the state's program.
The state Inspector General's Office ended its investigation in
January 2003. The case is being reviewed by the state Ethics
Commission, officials of the Department of Public Welfare said.
The U.S. Department of Health and Human Services referred the
case to the FBI and the Food and Drug Administration, which opened
investigations, according to a Dec. 11 letter U.S. Rep. Tim Holden
(D., Pa.) wrote to a state investigator.
The FBI and the FDA declined to comment. A spokesman for the
Health and Human Services Office of Inspector General said the
matter remained under review.
There is no indication the drug companies are the subject of the
Doug Arbesfeld, a Janssen spokesman, said the company received a
request for information from the state in 2002.
"We complied and we have not heard anything since," he said. "We
think it's appropriate for the industry to provide support for
physician education on treatment guidelines."
In the mid-1990s, some of the largest drugmakers began selling
the state on a new generation of drugs to treat schizophrenia and
In 1996, public health officials in Texas, with funding from drug
manufacturers, had developed a medication program. Within a few
years, the program caught the attention of Pennsylvania officials,
but the program would require them to rewrite Pennsylvania's
prescription guidelines to encourage doctors to use the drugs.
The state began the program in the Department of Corrections. In
August 2001, it was expanded to Allentown State Hospital.
More than 85 percent of the state's mental patients now take the
medications, state officials say. About 4,000 inmates in the state
prison system are prescribed antipsychotics, with about 1,600 of
them taking the new drugs.
The state welfare department in 2002, the last year figures were
available, paid more than $17 million to the two drugmakers and
other firms, or about $6 million more than the previous year. No
prison costs were available.
Joan Erney, deputy secretary for Mental Health and Substance
Abuse Services, said the program has been a great success and will
save money down the road. "The small amount of data we have suggests
our clients are feeling and functioning better" than they were with
earlier drugs, she said.
The program had the support of the state's top medication
experts: Steven J. Fiorello, a pharmacist who oversees drug policies
at state hospitals; Steven J. Karp, the medical director for the
state's mental health office; Robert Davis, the state's psychiatric
physician manager; and Frederick R. Maue, who directs clinical
services for the state Department of Corrections. Fiorello, Karp and
Davis are also members of a 21-member committee that decides what
types of drugs patients receive at the state's hospitals.
Department of Public Welfare officials, who discovered the
unauthorized account, said they asked the state inspector general to
investigate in January 2002, a month after the payments and the
unauthorized account raised questions at the department.
Welfare department officials "were concerned about the
relationship between the drug companies and some department
officials," Erney said.
Since April 2003, the welfare department has not taken money from
drug companies, Erney said. "We do not want to do anything that
would be perceived as making any decision based on anything other
than the well-being of our clients," she said.
Corrections Department officials investigated the $6,000 in
honoraria that drug companies paid to Maue, but found no evidence
the funds swayed his decision to use the drugs in the state's
prisons. Maue says he gave the money to the state's general
State ethics officials say state law prohibits public employees
from taking honoraria, even if the money goes to charity or the
state. It is a misdemeanor, punishable by a $1,000 fine and not more
than one year in jail.
All four men remain in their state jobs. They did not return
phone calls for this article.
Allen L. Jones was the lead investigator for the state Inspector
General's Office. He began his inquiry in July 2003 and was removed
from the case in mid-September. He alleged political interference
from his supervisors. He has since filed a federal whistleblower
suit and made his files available to The Inquirer. The case was
first reported by the New York Times.
His investigation focused on use of the unauthorized account,
which was opened in November 1999 under the name of Harrisburg State
Hospital until officials in the Department of Public Welfare froze
the account in December 2001, Erney said.
The state has strict guidelines governing the opening of
accounts, including notification of the Comptrollers' Office and the
Bureau of Financial Operations.
Karp opened the account and told state investigators he followed
the rules in creating it.
"It was an unauthorized account because it was done without the
knowledge of then-Deputy Secretary Charles Currie, and it is
currently being investigated," Erney said, referring to the ethics
The account was officially closed in October 2003 and officials
used the balance for indigent care at the hospital.
Over two years, the account took in $13,765.75, much of it from
Pfizer and Janssen. Investigators do not know who made two deposits
For example, Janssen paid $4,000 into the account in May 2001.
Fiorello and Davis used the money to attend a conference in New
Orleans, where they delivered presentations and met with Texas
officials over dinner to discuss adopting the drug program.
Overall, Fiorello and possibly others spent $5,493.39 from the
account, according to records.
Fiorello endorsed checks for a $249.99 Palm Pilot, $240 for box
lunches, and $40.50 for picture frames, among other items,
investigator Jones said.
On at least one occasion, Fiorello requested a $3,000 educational
grant from Pfizer, according to an Oct. 2, 2001, letter from the
company to Fiorello. Those funds were deposited into the account on
Oct. 16, 2001, according to records.
Fiorello also told Jones that he acted as a paid consultant for
Pfizer and Janseen. Pfizer paid him to travel with a salesman to
meet with Maryland officials about the Pennsylvania program. And
Pfizer paid for two trips he took to the company's headquarters in
New York. He did not recall the amount, but it was less than $1,300
per visit, he told Jones.
In December 2000, Karp joined an advisory board of a
Janssen-funded newsletter, Mental Health Issues Today, and he flew
to Seattle; Tampa Bay, Fla.; and Washington, D.C., for board
meetings. He resigned in 2002 after he became uncomfortable with a
Janssen executive attending the meetings, he told a state
The issues raised by payments to public officials is so thorny
that the U.S. Department of Health and Human Services issued
guidelines last year to help public officials steer clear of
violations. The agency warns that money given to officials to
generate business could violate the federal antikickback
"Any remuneration from a manufacturer or its agents directly or
indirectly to a person in a position to influence formulary
decisions related to the manufacturers' products are suspect and
should be carefully scrutinized," the guidelines say.
Advocates understand the concern. "The hands of pharmaceutical
companies are everywhere," said Mary Hurtig, the policy director for
the Mental Health Association of Southeastern Pennsylvania.
But, she said, "none of these programs could exist without drug
"What the state is doing is done with the best possible motive,"
she said. "I'm sorry there are no other ways to pay for these
programs, but there just aren't."