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Pharma displaying ‘pathological lack of corporate integrity’

Published on 19/12/13 at 08:36am
sidney wolfe image
Dr Sidney Wolfe, founder and senior adviser to the Health Research Group at Public Citizen

The system that hands out financial penalties to drug companies for illegal activities is failing to deter companies from repeatedly breaking the law, argues a senior doctor.

Writing in the BMJ Dr Sidney Wolfe, founder and senior adviser to the Health Research Group at Public Citizen, says there is a ‘pathological lack of corporate integrity’ in many drug companies.

His views are based on a slew of multi-billion dollar fines and criminal activities involving pharma in recent years. Most recent of which is a $2.2 billion fine for Johnson & Johnson: and GSK - the most prolific of offenders in this area - was hit with a $3 billion fine in 2012 and is under investigation in China for bribery. 

But Wolfe argues that these fines have come despite monitoring under corporate integrity agreements (CIAs), which are designed to prevent repeat offending.

“It seems that for some companies, commission of such criminal and civil violations has become part of their business models,” he writes.

In 2012 Wolfe and his colleagues recorded all civil and criminal penalties paid to the US federal and state governments by pharma firms from January 1991 to July 2012 - bringing a total of $30.2 billion.

More than half of the penalties were for illegal promotion or overcharging government programmes for drugs, such as the US system of Medicaid which helps the poorest in the US gain access to medical care.

Criminal penalties have seen a lot of growth for the industry, leaping more than fivefold from $920 million in 2005-2008, to $5.1 billion from 2009 to mid-2012.

GlaxoSmithKline topped the list of repeat offenders with total criminal and civil penalties of $7.56 billion since 1991. Pfizer was the second highest with $2.96 billion. 

Overall since 1991, 11 other pharma companies also had criminal or civil settlements (or both) that exceeded $50 million on at least two occasions.

An analysis of the repeat offences by GSK and Pfizer based on publicly available government documents “illustrates the failure of such large penalties and the parallel failure of the accompanying CIAs to curb such behaviour”, writes Wolfe.

It shows that from 2002, both GSK and Pfizer were repeatedly fined - the total exceeding billions of dollars - by the US government for illegal conduct, such as fraudulent drug pricing, illegal off-label marketing of drugs, and paying kickbacks to healthcare professionals to induce them to promote and prescribe certain drugs.

During this time both companies signed a series of CIAs, designed to prevent recurrences of such behaviour.

Fines not tallying with profits

Wolfe points out that profit in 2012 alone for GSK amounted to $7.7 billion - and for Pfizer $10 billion - both greater than the entire amount the companies paid to the government during the 21 plus year interval from January 1991 to mid-2012.

He and his colleagues are currently pursuing litigation against the government to obtain documents relating to the degree of ‘compliance’ with Pfizer’s 2004 CIA.

“These escalating patterns of repeated criminal violations and civil settlements to resolve serious allegations of civil lawlessness hardly bespeak corporate integrity for GSK, Pfizer or the many other companies who are also repeat offenders,” argues Wolfe.

“We are forced to conclude that neither the current level of penalties nor corporate integrity agreements are effective and that there is a pathological lack of corporate integrity in many drug companies.”

Ben Adams 

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