Drug giants fined $11bn for criminal wrongdoing
Fines are not enough to reform drug industry, warn lawyers
The global pharmaceutical industry has racked up fines of more than
$11bn in the past three years for criminal wrongdoing,
including withholding safety data and promoting drugs for use beyond
their licensed conditions.
In all, 26 companies, including eight of the 10 top players in the
global industry, have been found to be acting dishonestly.
The scale of the wrongdoing, revealed for the first time,
has undermined public and professional trust in the industry
and is holding back clinical progress, according to two papers
published in today’s New England Journal of Medicine.
Leading lawyers have warned that the multibillion-dollar
fines are not enough to change the industry’s behaviour.
The 26 firms are under “corporate integrity agreements”,
which are imposed in the US when healthcare wrongdoing is
detected, and place the companies on notice for good behaviour
for up to five years.
The largest fine of $3bn, imposed on the UK-based company
GlaxoSmith-Kline in July after it admitted three counts of crimina
l behaviour in the US courts, was the largest ever. But GSK is not alone –
nine other companies have had fines imposed,
ranging from $420m on Novartis to $2.3bn on Pfizer since 2009,
totaling over $11bn.
Kevin Outterson, a lawyer at Boston University,
says that despite the eye watering size of the fines they
amount to a small proportion of the companies’ total revenues
and may be regarded as a “cost of doing business”.
The $3bn fine on GSK represents 10.8 per cent of its revenue
while the $1.5bn fine imposed on Abbott Laboratories,
for promoting a drug (Depakote) with inadequate evidence of its
effectiveness, amounted to 12 per cent.
Mr Outterson said: “Companies might well view such fines
as a quite small percentage of their global revenue.
If so, little has been done to change the system.
The government merely recoups a portion of the financial
fruit of firms’ past misdeeds.”
He argues that penalties should be imposed on executives
rather than the company as whole. He cites a Boston
whistleblower attorney, Robert Thomas who observed
that GSK had committed a $1bn crime
and “no individual has been held responsible”.
Following GSK’s admission that it had withheld safety data
about its best-selling diabetes drug Avandia, the company pledged
to make more clinical trial information available.
But the pledge has “disturbing exceptions”,
according to Mr Outterson, and in any case is made under
the corporate integrity agreement, which expires in five years.
Trust in the industry among doctors has fallen so low that they
dismiss clinical trials funded by it, even when the trials have been conducted
with scientific rigour, according to a second paper in the journal
by researchers at Brigham and Women’s Hospital, Boston.
This could have serious implications because most
medical research is funded by the drug industry and
“if physicians are reluctant to trust all such research,
it could hinder the translation of … research into practice,
” said Aaron Kesselheim, who led the study.
Andrew Witty, the chief executive of GSK, said at the time of the $3bn
settlement last July that it had resolved “difficult, long-standing matters”
for the company and that there had since been a
“fundamental change in procedures” including the removal
of staff engaged in misconduct and changes to incentive payments.
The Association of the British Pharmaceutical Industry
said practices in the industry had improved and more changes to
“build greater levels of trust” would be made.
The UK Medicines and Healthcare Products Regulatory Agency
said it monitored the conduct of companies and took
“appropriate action” when it uncovered malpractice.