Earlier this week the Justice Department announced a $3 billion settlement of criminal and civil charges against pharma giant GlaxoSmithKline -- the largest pharmaceutical settlement in history -- for improper marketing prescription drugs in the late 1990s to the mid-2000s.
The charges are deadly serious. Among other things, Glaxo was charged with promoting to kids under 18 an antidepressant approved only for adults; pushing two other antidepressants for unapproved purposes, including remedying sexual dysfunction; and, to further boost sales of prescription drugs, showering doctors with gifts, consulting contracts, speaking fees, even tickets to sporting events.
$3 billion may sound like a lot of money, but during these years Glaxo made $27.5 billion on these three antidepressants alone, according to IMS Health, a data research firm -- so the penalty could almost be considered a cost of doing business.
Besides, to the extent the penalty affects Glaxo's profits and its share price, the wrong people will be feeling the financial pain. Most of today's Glaxo shareholders bought into the company after the illegal profits were already built into the prices they paid for their shares.
Not a single executive has been charged -- even though some charges against the company are criminal. Glaxo's current CEO came on board after all this happened. Glaxo has agreed to reclaim the bonuses of any executives who engaged in or supervised illegal behavior, but the company hasn't officially admitted to any wrongdoing - and without legal charges against any of executive it's impossible to know whether Glaxo will follow through.
The Glaxo case is the latest and biggest in a series of Justice Department prosecutions of Big Pharma for illegal marketing prescription drugs. In May, Abbott Laboratories settled for $1.6 billion over its wrongful marketing of an antipsychotic. And an agreement with Johnson & Johnson is said to be imminent over its marketing of another antipsychotic, which could result in a fine of as much as $2 billion.
The Department says the prosecutions are well worth the effort. By one estimate it's recovered more than $15 for every $1 it's spent.
But what's the point if the fines are small relative to the profits, if the wrong people are feeling the financial pinch, and if no executive is held accountable?
The only way to get big companies like these to change their behavior is to make the individuals responsible feel the heat.
An even more basic issue is why the advertising and marketing of prescription drugs is allowed at all, when consumers can't buy them and shouldn't be influencing doctor's decisions anyway. Before 1997, the Food and Drug Administration banned such advertising on TV and radio. That ban should be resurrected.
Finally, there's no good reason why doctors should be allowed to accept any perks at all from companies whose drugs they write prescriptions for. It's an inherent conflict of interest. Codes of ethics that are supposed to limit such gifts obviously don't work. All perks should be banned, and doctors that accept them should be subject to potential loss of their license to practice.
ROBERT B. REICH, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
OBS
Kick-backs to doctors and research professors all equals corruption alright BUT, no matter how deadly the side-effects, if we believe they are our only hope then we are bound hands and feet. When we discover that diseases, such as heart disease, cancer, diabetes, strokes and mental disorders are simply pathological stress that has reached fever pitch levels and that this stress is not happening due to “the hectic lives that we live in the 21st century” but toxic relationships, then the tide has turned. When we understand how they come about then we can get well and stay well WITHOUT DRUGS. This is what I am sharing with others on my blog at http://kyrani99.wordpress.com/ to help others achieve what I have achieved -no need of a doctor in 20 years and I have dealt with diseases such as cancer in that time with 100% satisfactory results. You can too!
Also, Big Pharma and Big Agra pretty much own the FDA-look at how many people who used to work for the drug companies are appointed by the government to positions within the FDA or hired by the FDA. Also, some Congressman become lobbiysts for Big Pharma. Greed and corruption seems to have replaced "Do no harm." Very sad.
And this money has gone...where?
Another appalling development of the last couple decades: Law enforcement as a profit center. See drug law seizures and traffic cameras, for example.
America provides incentives for corporations to conduct criminal activities, kill or injure people through negligence or risk-taking, and retain ost of their ill-gotten gains. In principle, there is no difference between what GSK, Merck, Pfizer, and dozens of pharmaceutical companies do ... and what BP, Goldman Sachs, BOFA, Wells Fargo, Monsanto, etc. do. All of them imperil millions of people ... get exposed sometimes ... and write checks to settle claims.
So, here we are and have been as spectators in the sport of egregious behaviors, massive ill-gotten gains, exposure, investigations, and ... corporate checks written in settlement of claims. Executives take the hit with shareholders ... but $3 Billions in fines pales in comparision to ... Aandia which earned $10.4 billion, Paxil which earned $11.6 billion, and Wellbutrin which earned nearly $6 billion during the years covered by the settlement.
Congress: A Real Hoot!!!
Most Americans don’t understand the healthcare system; it’s complexity, and reimbursement system. They think doctors are getting rich which like in any business is true for some individuals but not for the majority. The real shift in wealth has been the healthcare dollars that go to Big Pharma and the Insurance industry. The claims management process, executive compensation, and unreasonably high profit margins alone account for most of our health care costs while increasingly placing less emphasis on wellness and prevention.
Big Pharma has also been placing increasing pressure on Congress and the FDA to prevent the use of natural supplements and labeling on natural foods that define their health benefits. It appears that over the last 30-40 years profits have become more important than protecting the health of the nation and its citizens.
What ever happened to integrity??
It would have been more befitting to take all of the profits made from these harmful drugs as ill-gotten gains in addition to the $3B. As it is now, they made a profit from doing harm.