by Robert Weissman
Published at HuffingtonPost.Com
It’s a grim day for the pharmaceutical industry.
A federal monitor has forced out the CEO of Bristol-Myers-Squibb (BMS), for violating the terms of an agreement with prosecutors. The old agreement involved a major accounting manipulation, by which BMS pushed product to wholesalers to misleadingly boost earnings. Under the terms of the deal, BMS was supposed to avoid wrongdoing for two years. That turned out to be too tough of a standard. The federal monitor found that BMS’s effort to cut a deal with a generic firm, to keep generic versions of its blockbuster anto-clotting drug Plavix, violated its obligation to maintain clean hands.
Meanwhile, British giant GlaxoSmithKline has agreed to pay more than $3 billion to the Internal Revenue Service to settle tax avoidance charges. The Glaxo dispute with the IRS concerned the issue of transfer pricing — the allocation of profits and expenses between the U.S. subsidiary and other parts of the multinational conglomerate. The IRS claimed that the U.S. subsidiary under-reported its profits to avoid paying its fair share of U.S. taxes. Glaxo is getting off with paying less than the IRS said it owed, but at the least the settlement evidences serious wrongdoing (which Glaxo, predictably, continues to deny, saying it settled to avoid the costs of protracted litigation).
On this point, it’s worth reflecting for a moment on the stunning record of pharmaceutical industry wrongdoing — not just bad behavior, like charging too much for drugs or investing millions in the U.S. electoral process to keep Republican allies in control of the House, but activities that transgress the law.
Haven’t we reached a point where the industry should no longer be considered to have a legitimate voice on policy matters — whether reimportation of drugs from Canada, FDA regulation, trade policy related to pharmaceuticals, or otherwise?
Dr. Peter Rost, the former Pfizer executive who gained prominence in the United States by speaking out in favor of reimportation, has just published a new book, The Whistleblower: Confessions of a Healthcare Hitman (Softskull Press). (The title is misleading, but it’s quite a good read nonetheless.) In one chapter, Rost lists some of the recent legal trouble of the industry. The Alliance for Human Research Protection prepared this abridged version of Rost’s list:
2001: “TAP-Astra Zeneca Pay Over a Billion Dollar in Fines” — re: criminal marketing of Lupron.
2002: Pfizer paid $49 million to settle state and federal Medicaid fraud charges involving Lipitor.
2002: Schering-Plough signed a FDA consent decree and paid a $500 million fine — the biggest in FDA history — for violating manufacturing standards.
2004: Schering-Plough paid $345 million to resolve criminal and civil liabilities for illegal marketing of Calritin.
2004: Pfizer admitted criminal marketing of Neurontin, agreeing to pay $420 million.
2003: Bayer pled guilty to violating the federal Prescription Drug Marketing Act, paying $257 million including a criminal fine for its marketing of Cipro.
2004: Merck withdrew its lethal painkiller, Vioxx. Estimates are that it would cost the company $50 billion.
2004: The IRS served Merck with a “preliminary notice of deficiency” that could lead to $2.04 billion payment for back taxes.
2003: GlaxoSmithKline shareholders questioned GSK CEO, Jean-Pierre Garnier, about his pay package to which he responded: “I am not Mother Teresa.” GlaxoSmithKline also ran afoul of the IRS — it is facing a demand for $7.8 billion in backdated taxes and interest.
2003: GSK signed a corporate integrity agreement and paid $88 million in a civil fine for overcharging Medicaid for the antidepressant, Paxil and nasal-allergy spray, Flonase.
2004: New York State Attorney General slapped GSK with fraudulent marketing of Paxil — the company settled and posted its previously concealed pediatric clinical trial data.
2005: the Justice Department announced that GSK had paid “over $150 million to resolve allegations of violations to the False Claims Act through fraudulent drug pricing and marketing.”
2004: Bristol-Myers Squibb was ordered by the Securities and Exchange Commission to pay $150 million to settle charges of inflating its revenue by $1.5 billion in 2000 and 2001. A separate criminal investigation by the U.S. Attorney General’s Office in NJ resulted in the indictment of two executives for securities fraud — the company agreed to pay $300 million to shareholders.
2000: Wyeth signed an FDA Consent Decree and paid $30 million for failing to comply with Good Manufacturing Practice.
1997: after pulling Pondimin and Redux off the market because of heart valve damage, Wyeth was forced to set aside $21.1 billion to settle “fen-phen” liability cases.
2005: Serono Laboratories (Switzerland) agreed to pay $704 million to resolve criminal and civil charges in connection with the marketing of Serostim, an AIDS drug. The company also pled guilty to marketing conspiracy.
2005: Eli Lilly pled guilty and paid $36 million for its illegal marketing of Evista for off-label uses.