GlaxoSmithKline Most Heavily Fined Drug Company
By Pat Anson, PNN Editor
The pharmaceutical industry has long been criticized for engaging in illegal or unethical activities, such as fraud, kickbacks and price gouging. A new study published in JAMA shines a light on the scale of the problem, finding that Big Pharma paid over $30 billion in financial penalties for illegal activities in the United States.
Researchers looked at state and federal settlements from 2003 to 2016 and found that almost every large pharmaceutical company had paid a fine for illegal activity. The biggest transgressor was GlaxoSmithKline (GSK), which paid nearly $9.8 billion to settle 27 cases brought against it for bribery, corruption, improper marketing, pricing violations and selling adulterated drugs. In one settlement alone, GSK was fined $3 billion for encouraging doctors to prescribe its antidepressants to children.
The fines paid by GSK were over three times higher than the amounts paid by Pfizer ($2.9 billion) and Johnson & Johnson ($2.6 billion) during the study period. Researchers say only four of the 26 drug companies they analyzed were not assessed a penalty.
TOP 10 MOST HEAVILY FINED DRUG COMPANIES
GlaxoSmithKline $9.8 billion
Pfizer $2.9 billion
Johnson & Johnson $2.6 billion
Abbott Laboratories $2.5 billion
Merck $2.1 billion
Eli Lilly $1.8 billion
Schering-Plough $1.6 billion
Wyeth $1.6 billion
Bristol Myers Squibb $1.4 billion
Novartis $1.2 billion
“Among the large pharmaceutical companies included in this study, 85% had evidence of financial penalties for illegal activities. Given the scope and nature of the illegal activities involving financial penalties, physicians and regulators should exhibit vigilance over the activities of large pharmaceutical firms,” wrote lead author Denis Arnold, PhD, a professor of business ethics at Belk College of Business, University of North Caroline at Charlotte.
“Four firms were not found to have penalties for illegal activities during the sample period. This may indicate an ability for illegal activity to be undetected, although these firms may instead have effective ethics and compliance programs.”
Because the study period ended in 2016, it did not include any recent settlements with drug companies involving opioid litigation. Nor did it cover fines paid outside the U.S., such as the $490 million fine that GSK paid for bribing Chinese doctors to prescribe its medications.
“This has been a deeply disappointing matter for GSK," chief executive Sir Andrew Witty said in a formal apology to the Chinese government in 2014.
Not much has changed at GSK over the years. This year the company agreed to pay $4.5 million in fines in Australia for marketing and price violations involving the pain relief gel Voltaren. The British pharmaceutical giant was also recently fined $2.8 million by Romania for failing to supply the country with asthma medication.
Drug company executives rarely serve prison time for illegal activities and the large fines do not appear to be much of a deterrent against unethical behavior. The nearly $9.8 billion paid by GSK amounts to less than 2 percent of its total revenues during the study period. On average, GSK’s illegal activities went on for over seven years before the company stopped them, according to the JAMA study.
GSK did not respond to a request for comment for this story.
Fraud Alert for Speaker Programs
In recent years, federal watchdogs have become increasingly concerned about the use of speaker fees, free meals, entertainment and other kickbacks paid by healthcare companies to promote their drugs and medical devices. In the last three years, companies paid nearly $2 billion to healthcare providers for speaker-related services.
In a special fraud alert released this week, the Office of Inspector General (OIG) for the Department of Health and Human Services warned against the practice, saying high-priced speaker programs “may be subject to increased scrutiny.” The OIG cited cases where speaker programs were held at wineries, stadiums and restaurants where expensive meals and alcohol were served at no charge to attendees.
“OIG is skeptical about the educational value of such programs. Our investigations have revealed that, often, HCPs (healthcare providers) receive generous compensation to speak at programs offered under circumstances that are not conducive to learning or to speak to audience members who have no legitimate reason to attend,” the report warns.
“Furthermore, studies have shown that HCPs who receive remuneration from a company are more likely to prescribe or order that company’s products. This remuneration to HCPs may skew their clinical decision making in favor of their own and the company’s financial interests, rather than the patient’s best interests.”