Healthy Skepticism Library item: 17574

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: Electronic Source

Edwards J
Fines Haven't Stopped Drug Company Lawbreaking -- Maybe Jail Time for Executives Would
BNet 2010 Mar 31
http://industry.bnet.com/pharma/10007330/fines-havent-stopped-drug-company-lawbreaking-jailtime-for-executives-might/

Full text:

A curious meme has developed in the business media recently on the topic of whether more pharmaceutical executives should be criminally prosecuted and placed in prison for off-label marketing, defrauding Medicaid and Medicare, and creating kickback schemes with doctors to increase sales.

The answer is yes. If you’re serious about wanting drug companies to stay within the law, then actual imprisonment is something that the Department of Justice and the FDA needs to get serious about. Until now, they haven’t.

Currently, drug companies have no proper incentive to behave. The DOJ has extracted massive settlements – $2.3 billion from Pfizer (PFE) in one case – which, normally, you’d think would be a deterrent to lawbreaking. But drug company revenues are so massive that even these gargantuan fines don’t significantly impact the company. Pfizer makes $50 billion in revenues annually.

Counter-intuitively, these fines may actually encourage illegal drug marketing. Take, for instance, AstraZeneca (AZN)’s settlement with the DOJ over its marketing of Seroquel. The settlement was for $520 million. Seroquel makes $1.2 billion per quarter for AZ. For AZ to limit its financial damage, it must now make sure that Seroquel absolutely maximizes its revenues before its patent expires – and the way to do that, frankly, is to walk right up to the legal line in promoting the drug. Or to step over it entirely.

I’m not suggesting AZ is actually doing that of course. But you can see that the incentives are perverse.

It’s up to the DOJ itself to start bringing these prosecutions. Usually, the company itself pleads guilty and pays a fine. Individual executives go on with their lives as if nothing had happened. Occasionally, they’re prosecuted, as in the OxyContin cases at Purdue Pharma or the Bextra case at Pfizer, but not often.

Recently, federal prosecutor Michael Loucks complained to Bloomberg that drug companies should behave better. (The FDA also has a criminal prosecutions unit.) Well, yes, Mr. Loucks, but if you’re not personally willing to ruin a few individual lives yourself then that’s not going to happen, is it?