Healthy Skepticism Library item: 11341
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: news
Pharma behaving badly
FT.com 2007 Aug 29
http://biz.yahoo.com/ft/070829/fto082920070556310863.html?.v=1
Full text:
Wednesday August 29, 5:45 am ET
In most industries, word of an investigative subpoena or a regulatory inquiry can send share prices tumbling. In the pharmaceutical industry, it is more likely to generate a shrug or even a yawn.
Almost every major drugs company that does business in the US is facing at least a couple of federal and state investigations into their sales, pricing or distribution practices. Several, including Schering-Plough (NYSE:SGP) and Purdue Frederick, have recently pleaded guilty to corporate criminal charges and paid hundreds of millions of dollars in fines. Bristol-Myers Squibb (NYSE:BMY) recently completed a two-year probation period that put a government monitor in its boardroom. Is it any wonder that Pfizer (NYSE:PFE) and Merck recently promoted lawyers to the roles of chief executive and global number two respectively?
The plethora of investigations stems partly from competition between state and federal regulators. But cut-throat sales wars also played a role: some pharma companies pitched drugs for unapproved uses or cut bulk deals with benefit managers that violated laws requiring suppliers to give state-run Medicaid programmes the best price. Such issues have been less common in European markets dominated by state-run systems, where individual doctors and companies have less influence over drug choice.
Competition can breed criminal behaviour as well as innovation. Now it appears that the shenanigans are spreading to emerging markets. Chinese drug companies routinely pay kickbacks to doctors to induce them to prescribe particular medicines and to hospitals for access to markets. Giving goodies to doctors was common in the US as well, until enforcers cracked down. Now US prosecutors are said to be looking at the Chinese problem. Under anti-corruption laws, it is illegal for companies that sell shares in the US to bribe foreign officials, including government doctors. Past bribery cases have involved oil and defence, but the DoJ has recently begun moving into the consumer sectors. The recent spate of fines for big multinational drug companies in the US may just be the beginning.
