In all the commentary today about London-based pharmaceutical giant GlaxoSmithKline agreeing to pay a record fine (an honor previously held by Pfizer ) of $3 billion (as well as pleading guilty to some criminal charges), ex-NY guv Eliot Spitzer’s analysis made the most sense to me. Writes the New York Times in a front page story today:
“What we’re learning is that money doesn’t deter corporate malfeasance,” said Eliot Spitzer, who, as New York’s attorney general, sued GlaxoSmithKline in 2004 over similar accusations involving Paxil. “The only thing that will work in my view is C.E.O.’s and officials being forced to resign and individual culpability being enforced.”
Resign – and jail, we should add. One can hardly argue with this point of view. The fine itself, “for promoting its best-selling antidepressants [Paxil and Wellbutrin] for unapproved uses and failing to report safety data about a top diabetes drug [Avandia]” as well as “civil penalties for improper marketing of a half-dozen other drugs” barely even cuts into the company’s sales revenue for these drugs:
Avandia, for example, racked up $10.4 billion in sales, Paxil brought in $11.6 billion, and Wellbutrin sales were $5.9 billion during the years covered by the settlement, according to IMS Health, a data group that consults for drugmakers.”
“So a $3 billion settlement for half a dozen drugs over 10 years can be rationalized as the cost of doing business,” said [Patrick Burns, spokesman for the whistle-blower advocacy group Taxpayers Against Fraud].
Mr. Burns and others have said that to institute real change, executives must be prosecuted criminally or barred from participating in the Medicare and Medicaid programs, an action known as “exclusion.”
This has occurred in only a handful of cases, and rarely in a case involving a major pharmaceutical company.
Need more evidence that deterrence hasn't yet worked? Just take a look at the recent history of this company since Spitzer's 2004 lawsuit, a company that made over $30 billion in profits last year and whose CEO took in multi-millions in compensation:
- In October 2010, GSK “agreed to pay $750 million to settle criminal and civil complaints that the company for years knowingly sold contaminated baby ointment and an ineffective antidepressant.…Altogether, GlaxoSmithKline sold 20 drugs [including Avandia, Paxil Coreg, a heart drug, and Tabamet for acid reflux] that were made at a huge plant in Puerto Rico that for years was rife with contamination.” The total includes “a $150 million payment to settle criminal charges [which] was the largest such payment ever by a manufacturer of adulterated drugs,” as well as “$600 million in civil penalties. The share to the whistle-blower will be $96 million, one of the highest such awards in a health care fraud case.”
- Speaking of Paxil, in July 2010, the company settled some 800 Paxil lawsuits for more than $1 billion, because the drug caused birth defects in children of women who took it. This settlement, “which would provide an average payout of more than $1.2 million to families of the affected children, leaves more than 100 similar cases pending. The birth-defect settlements bring to more than $2 billion the amount Glaxo has agreed to pay to resolve a variety of Paxil-related suits, including claims the pill caused suicides or attempted suicides and addiction problems….”
- In May 2007, GSK settled a $64 million class action brought by parents who were misled about Paxil's safety for their children, with the company later paying an additional $40 million to insurers “who paid for the drug to be used in children and adolescents.”
- Speaking of Avandia, in July 2010, GSK also “settled about 10,000 of the roughly 13,000 Avandia lawsuits in the US for approximately $460 million.” Avandia, a Type 2 diabetes drug “has been linked to cardiovascular risk, although an FDA advisory panel … voted to allow the controversial diabetes pill to remain on the market, but with warnings.” What's more, a U.S. Senate Finance Committee investigation revealed that GSK knew about these adverse effects for years and failed in their duty to warn patients.
- In September 2006, GSK agreed to pay the IRS approximately $3.4 billion in back taxes, making it the largest single payment made to the IRS to resolve a tax dispute in the agency’s history.
- In September 2005, GSK agreed to pay $150.8 million to settle Justice Department charges that the company set “fraudulent and inflated prices” for Zofran and Kytril, injectible anti-nausea drugs for patients undergoing chemotherapy cancer treatment.
Meanwhile, this British company is running around the United States trying to pass laws to limit its liability when its drugs kill or sicken U.S. customers. According to Sourcewatch, "GSK is on the corporate ("Private Enterprise") board of the American Legislative Exchange Council (ALEC) as of 2011." (Seems every day there's some new ALEC outrage.) John Del Giorno, Vice President of State Government Affairs, represents GSK on the board as of 2011 and is now its Second Vice Chairman.
More specifically, Giorno and Leah Lorber, GSK's Director of Public Policy, have been part of ALEC’s Civil Justice Task Force attending at least the following recent meetings: July 2010, December 2010, April 2011 and August 2011. This task force's purpose is to wipe out liability for corporate crooks like GSK, among others.
Where’s Paul Revere when you need him? Happy Fourth!