A Drug-Maker's Ethical 'Mistakes'

08/06/2012 12:17 pm ET | Updated Oct 06, 2012

Pharmaceutical giant GlaxoSmithKline recently agreed to pay the government $3 billion in a record health care fraud settlement. Its public response followed the usual pattern for official contrition. Chief executive Andrew Witty expressed the company's "regret" and gave assurances that "we have learned from the mistakes." Investors have to hope he is right, despite cause for doubt: this is the fourth such settlement in the past few years. Since shareholders -- and other constituencies -- often suffer when firms draw the wrong conclusions from their failures, it is worth asking just what "mistakes" Glaxo made.

According to the government, Glaxo employed illegal marketing tactics to boost sales of various drugs and withheld critical safety data about one of its most popular medications. Like other pharma companies, Glaxo pressed doctors to prescribe a number of its drugs for purposes not approved by the Food and Drug Administration. It enticed many of the doctors to embrace these "off-label" uses by offering them perks such as free spa privileges, ski trips, and concert tickets.

In the case of Paxil, an antidepressant approved only for use by adults, Glaxo represented it as safe for children, even giving free samples to psychiatrists, when clinical trials pointed to an increased risk of suicide. It urged physicians to prescribe another antidepressant, Wellbutrin, for assorted off-label uses, including treatment of obesity, sexual dysfunction, substance addiction, and attention deficit hyperactivity disorder. Among other charges Glaxo settled are that it paid kickbacks to doctors and that it suppressed studies of cardiovascular risks of top-selling diabetes drug Avandia -- studies that eventually led to tight restrictions on its use in the U.S. and outright prohibition in Europe.

It isn't clear from a survey of Glaxo's misconduct just what mistakes Mr. Witty was referring to. The firm did not mistakenly believe the practices were legal, nor could it have been under a misapprehension that it wasn't running a serious legal risk by engaging in them.

If Glaxo honestly wants to identify cognitive failures ("mistakes") that forced it into a multibillion-dollar settlement, it needs to appreciate why so many people outside the industry -- in government, the media, and the general public -- were so outraged by its flagrant and years-long behavior. A chief reason for the reaction was that they saw Glaxo as callously causing patients to be exposed to unnecessary or unknown health risks. In their view, Glaxo evidently was unconcerned about the potential harm to patients when it induced doctors to prescribe its drugs for unapproved or inappropriate uses or when it hid from regulators material information on a drug's risks.

Assuming Glaxo executives are not wicked people who don't care if their actions endanger others, then it must be that they saw nothing wrong with the aggressive measures Glaxo took in trying to reach its sales targets. No doubt this is partly due to the fact that, in the late 1990s and early 2000s (when much of the misconduct occurred), its main competitors relied on the same marketing tactics, so that such things as promoting off-label uses and incentivizing doctors were industry norms.

But it also must be that Glaxo's senior managers believed that the company was not responsible for ill effects on patients when doctors, swayed by Glaxo's blandishments, followed the firm's self-serving recommendations in writing prescriptions. Most likely, they convinced themselves that, because physicians make the decisions about what to prescribe for their patients, the physicians alone are responsible for any harms resulting from their decisions. It's the doctor's job to look after the health of patients, they may have reasoned, and it's our job to maximize profits for investors by selling as many units of our drugs as we can.

In that case, one of Glaxo's key mistakes was a failure to recognize that, by creating conflicts of interest for doctors or concealing risk data, it impaired the physicians' professional judgment, compromising their ability to prescribe treatment based solely on the needs of their patients. It was a mistake not to grasp that, in providing doctors personal benefits for prescribing Glaxo's drugs -- including for off-label uses -- the company was manipulating the doctors to serve its own interests.

It's a disingenuous stance. Glaxo intentionally conflicted physicians, giving them incentives to make prescription decisions based on their own interests rather than what was best for their patients. Thus, Glaxo profited by undermining the doctors' autonomy -- their capacity to make professionally sound, unbiased decisions. At the same time, company executives could allay any ethical concerns by convincing themselves that the conflicted doctors exercised complete autonomy in writing prescriptions, which would absolve Glaxo of any responsibility for the consequences.

The fact is, Glaxo made profits in ways that manipulated the choices of doctors and sometimes resulted in patients' being subjected to significant risks without their informed consent. Of course, this does not remove the physicians' culpability for succumbing to the conflicts of interest. But, in the terminology of Kant, Glaxo's behavior was wrong because it used both physicians and patients as "mere means to an end," treating them only as instruments for financial gain rather than as fellow human beings. Failing to understand this was Glaxo's fundamental "mistake" -- and an inexcusable moral failure by its leaders.