The Big Pharma Business Model: Deception And Bribery

It’s déjà vu all over again. Remember how, three years ago, Pfizer paid $2.3 billion to the Department of Justice to settle off-label claims relating to Bextra and other drugs, and Eli Lilly paid $1.4 billion for Zyprexa marketing?

If so, then last week was no surprise: GlaxoSmithKline agreed to pay a whopping $3 billion to settle criminal and civil charges brought against it by the Department of Justice. Quoting from the DOJ press release, GlaxoSmithKline was accused of:

  • distributing a misleading medical journal article that misreported that a clinical trial of Paxil demonstrated efficacy in the treatment of depression in patients under age 18,
  • GSK did not make available data from two other studies in which Paxil also failed to demonstrate efficacy in treating depression in patients under 18.
  • GSK sponsored dinner programs, lunch programs, spa programs and similar activities to promote the use of Paxil in children and adolescents.
  • GSK paid millions of dollars to doctors to speak at and attend meetings, sometimes at lavish resorts, at which the off-label uses of Wellbutrin were routinely promoted and also used sales representatives, sham advisory boards, and supposedly independent Continuing Medical Education (CME) programs to promote Wellbutrin for these unapproved uses.
  • GSK failed to include certain safety data about Avandia, a diabetes drug, in reports to the FDA that are meant to allow the FDA to determine if a drug continues to be safe for its approved indications and to spot drug safety trends.   The missing information included data regarding certain post-marketing studies, as well as data regarding two studies undertaken in response to European regulators’ concerns about the cardiovascular safety of Avandia.
  • GSK promoted Avandia to physicians and other health care providers with false and misleading representations about Avandia’s safety profile … GSK stated that Avandia had a positive cholesterol profile despite having no well-controlled studies to support that message. The United States also alleges that the company sponsored programs suggesting cardiovascular benefits from Avandia therapy despite warnings on the FDA-approved label regarding cardiovascular risks.
  • GSK paid kickbacks to health care professionals to induce them to promote and prescribe these drugs [Paxil, Wellbutrin, Avandia, Advair, Lamictal, and Zofran] as well as the drugs Imitrex, Lotronex, Flovent and Valtrex.

Let’s call GlaxoSmithKline what it is: a criminal enterprise. GSK didn’t miss the finer points of a couple red-tape regulations: the DOJ alleged they tampered with scientific studies, concealed safety data, then lied to doctors and patients and, if that didn’t work, outright bribed the doctors. Why?  For Wellbutrin, the purpose was to sell psychoactive drugs to kids that were known to be useless in treating depression, but which had a plethora of side effects, including, quoting the label:

headache, insomnia, dizziness, tremor, somnolence, thinking abnormality, abnormal dreams, sleep abnormalities, … depersonalization, emotional lability, hostility, suicidal ideation, aggression, delusions, euphoria, hallucinations, manic reaction, nightmares, paranoid ideation, delirium, psychosis, organic mental disorders, catatonia, restlessness, and completed suicide, … palpitation, cardiac arrhythmias, hypertension (in some cases severe), hypotension, syncope, tachycardia.

For Avandia, the point was to trick diabetics into taking a drug — a drug for which a number of safer alternatives were available, including lifestyle changes and no medicine at all — that “causes or exacerbate congestive heart failure in some patient” and creates a “statistically significant increased risk of myocardial infarction.” That’s on the warning label now, but it wasn’t when most of the marketing was going on, even though GSK knew about the problems.

These aren’t placebos. The side effects aren’t just an upset stomach or nausea. You know what happens when you sue a drug company over a prescription medication? They claim that all prescription drugs are “unavoidably dangerous,” so dangerous that plaintiffs shouldn’t even be allowed to file strict liability or defective design, or failure-to-test lawsuits, because the courts should presume these drugs necessarily kill people. Yet, while it was arguing in court that its drugs were “unavoidably dangerous,” GSK thought it was just fine to prey upon parents’ anxieties about their children’s mental health and diabetics’ fears of crashing or going into shock if they could make a couple billion dollars out of it.

So people are going to jail, right? This is, after all, America, the county with the highest per capita prison population in the world, where the Supreme Court has said you can get strip-searched for riding your bicycle without a bell, where the federal government can send you to jail for growing marijuana in your backyard for your own medicinal use even if your state permits it, where you can be tasered for back-talking to a cop in a traffic stop as long as they don’t taser you “excessively,” where a judge can send you to jail for six months for smiling in court. If we can find some reason to throw you in jail, we’ll take it.

Unless, of course, the defendant did the deed in service of a big corporation. No one at GlaxoSmithKline is under any threat of prosecution. The Department of Justice brought obstruction of justice charges against GlaxoSmithKline’s in-house lawyer for allegedly concealing information in the Wellbutrin investigation, but the prosecution was a failure, resulting in the judge dismissing it before even submitting it to a jury. If that specific information was so important that concealing it was a crime, then why weren’t the initial concealers prosecuted for hiding it from the FDA and the medical community?

So actual prison time, even just the threat of prosecution, for selling people deadly snake oil is out the window. Even the $3 billion is less than it seems, too; calling it a “slap on the wrist” isn’t quite right, but it is by no means real punishment, perhaps more a whisternefet. The money is all being paid by GlaxoSmithKline, not by the employers, officers or directors involved, so it does nothing to deter future drug company employees from doing exactly the same thing — which we know they will, given that this settlement is just the latest in a long string of massive settlements involving all of the big names in pharmaceuticals, including Pfizer, Eli Lilly, Merck, you name it. This headline from the Guardian says it all: “Pharma overtakes arms industry to top the league of misbehaviour.”

We could complain that the wrongdoers at GSK are walking free as a result of paying other people’s money (i.e., the shareholders’ money), but, as the Guardian article points out:

Despite the large fine, $3bn is far less than the profits made from the drugs. Avandia has made $10.4bn in sales, Paxil took $11.6bn, and Wellbutrin sales were $5.9bn during the years covered by the settlement …

The shareholders thus aren’t going to complain at all; GSK is doing exactly what they asked them to do: it’s making money. As Robert Reich points out, “the penalty could almost be considered a cost of doing business.” There’s a reason you can walk down any urban street in the middle of the day and see UPS and FedEx trucks illegally stopped in the middle of the road doing deliveries: delivery companies just consider the tickets a cost of doing business.

That’s the new pharmaceutical company business model: lie, cheat, and bribe your way into billions of dollars. Play upon the fact that doctors are clueless about “off-label prescriptions,” so that, every year, more than 100 million off-label prescriptions with “little or no scientific support” are written. All a pharmaceutical company has to do is set up some baloney expenses-paid conference in Vail or St. Croix or dispatch some sales representative to the doctor’s office — or, if all that fails, just write a check — and, voilà, millions of patients will be prescribed an expensive, useless and dangerous drug for an “off label” purpose unapproved by the FDA.

What’s the worst that could happen to the company? They pay a toll, sign on for a meaningless “Corporate Integrity Agreement” that will do more to shield future perpetrators than to deter them, and then get back to the business of loading people up with dangerous drugs they don’t need.

[Update: Coincidentally, today USA Today has an editorial saying the same thing, while Avvo VP & General Counsel Josh King has a rebuttal. King's article is at best naive: saying we shouldn't have criminal prosecutions of corporate executives because "the vast majority of executives want to do the right thing" is like saying we shouldn't prosecute homicide because "the vast majority of people aren't murderers." Update II: Scott Greenfield chimes in as well. Regular readers will be shocked to learn he disagrees with me.]

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  • Michael Carin

    I must have missed this portion of the health care debate – eliminating Big Pharm fraud on US taxpayers. I certainly heard discussion of trial lawyers, though. I looked for any discussion on Overlawyered, but no article addressed this legal news. On the other hand, Mr. Olson wrote an article about a T-shirt message: “I picked out my beverage all by myself” – regarding soda health care in New York City. Evidently soda trumps Big Pharm fraud.

    • http://www.litigationandtrial.com/ Max Kennerly

      A lot of attention has been paid to trivial healthcare reform efforts, like soda bans. I suppose politicians just feel better doing something easy than doing something hard, like reforming the pharmaceutical industry.