Yet Another Drug Maker Pays Billions—Will It Change Anything? : Exclusive Renegade Health Article

Monday Jul 16 | BY |
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GlaxoSmithKline joins the ranks of drug makers paying billions of dollars in fines—but will they change how they do business?

On June 4th, 2012, we reported on the billions of dollars in fines paid by drug makers over the last few years—fines enforced by the government for illegal activities like promoting off-label uses and paying kickbacks to doctors and nursing homes.

Now, we have yet another company paying yet another fine—this time, the biggest to date ever paid by a drug maker. GlaxoSmithKline, maker of antidepressants Paxil and Wellbutrin, will pay a $3 billion fine for failing to report safety data, misbranding drugs, and marketing the products for the treatment of conditions that had not been approved by the FDA.

The question is—will this fine do anything to change business practices at GlaxoSmithKline? The new powers that be at the company assure us that things have changed.

Are we wrong to be skeptical?

The Details of the Fine
According to several reports from CNN News, CBS News, The New York Times, and more, British drugmaker GlaxoSmithKline (GSK) agreed to plead guilty to criminal charges and to pay $3 billion in fines—$1 billion will settle criminal wrongdoing, and the other $2 billion will settle civil liabilities.

The claims against the company included:

  • Promoting off-label uses. Specifically, Paxil was approved to treat depressive and anxiety disorders in adults—the company marketed it to children and adolescents. They also allegedly published and distributed a misleading medical journal article misrepresenting the drug’s effectiveness in treating adolescent depression. Wellbutrin was also approved as an antidepressant—the company marketed it as a weight-loss aid.
  • Failing to report safety data. As is often the case with newer drugs that are rushed through the approval process, Avandia—one of GSK’s diabetes drugs—was associated with several cardiovascular side effects after it was launched. The company was accused of failing to adequately report to the FDA safety data from studies that detailed the risks. between 2001 and 2007.
  • Paid doctors. The Justice Department also accused of paying millions to doctors to promote Wellbutrin for off-label uses by funding meetings, sometimes at lavish resorts.

A review of these claims reveals that they are similar to the claims brought against other drug makers, such as Abbott Laboratories, who was fined for promoting anti-seizure drug Depakote for the treatment of elderly dementia when such a use was not approved by the FDA. Pfizer was fined for illegally marketing the painkiller Bextra, and Eli Lilly was fined for illegally promoting Zprexa for the treatment of elderly dementia, when it had been approved only as an antipsychotic drug.

Assurances of Change
The Justice Department is proud of themselves. “Today’s multi-billion dollar settlement is unprecedented in both size and scope,” said James M. Cole, deputy attorney general. “It underscores the Administration’s firm commitment to protecting the American people and holding accountable those who commit health care fraud.”

GSK is suitably apologetic. “On behalf of GSK,” said CEO Andrew Witty, “I want to express our regret and reiterate that we have learnt from the mistakes that were made.” Witty went on to note that the company has changed its procedures for compliance, marketing, and selling. Forbes Magazine noted that Witty’s statement was unusually forthright, and that those in the industry rarely see fit to apologize for anything.

Will the fines really make a difference? Some critics argue they won’t. According to the New York Times, the fines aren’t large enough to make a difference in corporate behavior. What sounds like a large $3 billion settlement represents only a portion of what the company made on the drugs. Avandia totaled $10.4 billion in sales, and Paxil totaled $11.6 billion during the years covered by the settlement.

Holding Individuals Accountable
The only thing that will really encourage change, critics say, is when prosecutors single out individual executives for punishment. This has happened a few times in the past, such as when a former chief executive for K.V. Pharmaceutical was sentenced to 30 days in jail and fined $1 million for selling misbranded morphine tablets.

Indeed, it was individuals who blew the whistle in the first place. The settlement came about because of claims made by four GSK employees, including a former senior marketing development manager and a regional vice president. Both tipped off the government about improper practices.

To their credit, GSK has agreed to withdraw bonuses from top executives if they engage in or supervise illegal behavior—something no other company has agreed to do.

What do you think of this latest fine? Will it cause anything to change in the pharmaceutical industry?

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Photo courtesy sameold2010 via Flickr.com.

Sources
Katie Thomas, ” Glaxo Agrees to Pay $3 Billion in Fraud Settlement,” The New York Times, July 2, 2012, http://www.nytimes.com/2012/07/03/business/glaxosmithkline-agrees-to-pay-3-billion-in-fraud-settlement.html?pagewanted=all.

Charles Riley and Emily Jane Fox, “GlaxoSmithKline in $3 Billion Fraud Settlement,” CNN Money, July 2, 2012, http://money.cnn.com/2012/07/02/news/companies/GlaxoSmithKline-settlement/?iid=EL.

Derek Lowe, “The GlaxoSmithKline Settlement,” Seeking Alpha, July 3, 2012, http://seekingalpha.com/article/699711-the-glaxosmithkline-settlement.

Kevin Gianni

Kevin Gianni is a health author, activist and blogger. He started seriously researching personal and preventative natural health therapies in 2002 when he was struck with the reality that cancer ran deep in his family and if he didn’t change the way he was living — he might go down that same path. Since then, he’s written and edited 6 books on the subject of natural health, diet and fitness. During this time, he’s constantly been humbled by what experts claim they know and what actually is true. This has led him to experiment with many diets and protocols — including vegan, raw food, fasting, medical treatments and more — to find out what is myth and what really works in the real world.

Kevin has also traveled around the world searching for the best protocols, foods, medicines and clinics around and bringing them to the readers of his blog RenegadeHealth.com — which is one of the most widely read natural health blogs in the world with hundreds of thousands of visitors a month from over 150 countries around the world.

7 COMMENTS ON THIS POST

Comments are closed for this post.

  1. Heather says:

    It is a great start – but the budget allowance for these sort of penalties has barely been touched. So I doubt very much that anything will change.

    The Board still gets their payments – and to go home at night – the shareholder’s dividends are not really affected.

    Real change may come when the Law changes to ‘unperson’ corporate entities. It is the Board of the company, sometimes pressured by majority shareholders, that decides how much the company can risk – and so how much off label use etc to promote.

    My opinion is that a company cannot be incarcerated and is therefore not a person.

    Damages are assessed at several levels.

    When the costs of wrongdoing (including time in Jail) will be borne personally by the board members present at the time of making the wrong judgement call we might see change.*

    Punitive damages against the companies in question should still be raised – for recompense of the victims of the crime or their dependents.

    As for the level of penalties raised against the company, those raised thus far are manifestly inadequate. Companies maintain a ‘slush fund’ for just in case they are caught out! The penalty should be sufficient to strip back the profit for the product incorrectly used or insufficiently researched or studied to ZERO .

    This would send a shock wave through the pharmaceutical and vaccine sectors where profit is king and much is dared to boost the bottom line.

  2. Derek says:

    I’m not sure we’ll see significant change until the general population decides to take their health into their own hands and stop relying on drugs to remedy their health problems. It’s a complicated matter, but hopefully the fine will create more public awareness of the true nature of how some drug companies are operating and prompt people to take control of their health.

  3. Larry Fishman says:

    This fine is just a slap on the wrist for GSK. I doubt that there will be any meaningful change until people are jailed and held criminally liable. But just like the bankers (there have been no bankers jailed or held criminally liable), the drug people (and bankers) will keep doing business as usual.

    President Obama (Bush III) and the Democrats will do absolutely nothing because they depend on bankers, corporate executives (thieves) for campaign contributions. Also the FDA and agriculture department no longer protect the people, but instead perpetuate a revolving door policy that protects corporate profits at the expense of people’s health.

    That is why I no longer support Democrats or Republicans, but instead support Green Party candidates.

  4. Arline says:

    What about Gardasil? Hundreds of thousands of people across the country are demanding that their young girls be vaccinated with it, but no one knows how long it will be effective; it only protects against 4 out of nearly 100 HPV strains, all of which are potentially carcinogenic; and it is linked to “adverse side effects” like death, paralysis, Epstein Barre and more. All this for a vaccine that is supposed to protect a woman against cervical cancer, a disease that is relatively rare and which is easily caught by yearly Pap smears, not to mention the vaccine being the most expensive on the market today. Why are our children being sacrificed on the altar of pharmaceutical greed?

  5. Robin says:

    $3 billion fine? Loss of bonuses? Big whoop. Big Pharma is so rich, so powerful, so supported by FDA, AMA, etc. No big deal. Just a blip on the radar for GSK.

    I often wonder how these people go home to their families with a clear conscience. It’s all about money.

    The acvitity fine is really olde news. The fact they got caught? Others have been caught. Maybe fine, etc. is groundbreaking, but not profit breaking.

    It will take so much more for change.

  6. Seppo says:

    Sorry to say but I have to agree with the sentiment here. Is this fine big enough? Hard to say. GSK 2011 after-tax profit was about 5.4 billion GPB. So a $3B is not a chump change. It’s about 1/3 of their annual profit. Is it enough? Hard to say.

    Some form of personal liability for the CEO would go a long way in fixing these issues. I understand that it’s a tricky issue, but something needs to change.

  7. Liz H. says:

    I wish we could come up with a way to pool our resources & buy out companies like Monsanto & the big pharma offenders. A lot of small stock purchases by a lot of people sharing the same agenda could make a huge difference. Turn Monsanto into an organic research company or something. Or just dismantled them & sell off their equipment piece by piece.

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