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[4 brief articles on Drug company crime / deviance – count as 1 reading for RDP’s]
Glaxo Agrees to Pay $3 Billion in Fraud Settlement
By KATIE THOMAS and MICHAEL S. SCHMIDT
New York Times
Published: July 2, 2012
In the largest settlement involving a pharmaceutical company, the British drugmakerGlaxoSmithKline agreed to plead guilty to criminal charges and pay $3 billion in fines for promoting its best-selling antidepressants for unapproved uses and failing to report safety data about a top diabetes drug, federal prosecutors announced Monday. The agreement also includes civil penalties for improper marketing of a half-dozen other drugs.
The fine against GlaxoSmithKline over Paxil, Wellbutrin, Avandia and the other drugs makes this year a record for money recovered by the federal government under its so-called whistle-blower law, according to a group that tracks such numbers.
In May, Abbott Laboratories settled for $1.6 billion over its marketing of the antiseizure drug Depakote. And an agreement with Johnson & Johnson that could result in a fine of as much as $2 billion is said to be imminent over its off-label promotion of an antipsychotic drug, Risperdal.
No individuals have been charged in any of the cases. Even so, the Justice Department contends the prosecutions are well worth the effort — reaping more than $15 in recoveries for every $1 it spends, by one estimate.
But critics argue that even large fines are not enough to deter drug companies from unlawful behavior. Only when prosecutors single out individual executives for punishment, they say, will practices begin to change.
“What we’re learning is that money doesn’t deter corporate malfeasance,” said Eliot Spitzer, who, as New York’s attorney general, sued GlaxoSmithKline in 2004 over similar accusations involving Paxil. “The only thing that will work in my view is C.E.O.’s and officials being forced to resign and individual culpability being enforced.”
The federal whistle-blower law, officially the False Claims Act, dates to 1863 and was originally envisioned as a check on war profiteering after the Civil War.
Whistle-blowers get a share of any money recovered by the federal government. So far, according to Patrick Burns, spokesman for the whistle-blower advocacy group Taxpayers Against Fraud, at least $10 billion has been agreed to in settlements this fiscal year, which ends in September.
The settlement, which requires court approval, stems from claims made by four employees of GlaxoSmithKline, including a former senior marketing development manager for the company and a regional vice president, who tipped off the government about a range of improper practices from the late 1990s to the mid-2000s.
Prosecutors said the company had tried to win over doctors by paying for trips to Jamaica and Bermuda, as well as spa treatments and hunting excursions. In the case of Paxil, prosecutors claim GlaxoSmithKline employed several tactics aimed at promoting the use of the drug in children, including helping to publish a medical journal article that misreported data from a clinical trial.
A warning was later added to the drug that Paxil, like other antidepressants, might increase the risk of suicidal thoughts in teenagers. Prosecutors said the company had marketed Wellbutrin for conditions like weight loss and sexual dysfunction when it was approved only to treat major depressive disorder.
They said that in the case of Avandia, whose use was severely restricted in 2010 after it was linked to heart risks, the company had failed to report data from studies detailing the safety risks to the F.D.A.
“Today’s multibillion-dollar settlement is unprecedented in both size and scope,” said James M. Cole, the deputy attorney general. “It underscores the administration’s firm commitment to protecting the American people and holding accountable those who commit health care fraud.”
The initial terms of the settlement were announced in November, and Glaxo had already set aside cash for the settlement. In a statement Monday, the company said it has since changed many of its policies, including no longer rewarding sales representatives for the number of drug prescriptions sold.
Andrew Witty, the chief executive, sought to portray the illegal actions as part of the company’s past.
“Whilst these originate in a different era for the company, they cannot and will not be ignored,” he said in the statement. “On behalf of GSK, I want to express our regret and reiterate that we have learned from the mistakes that were made.”
The three criminal charges involved Paxil, Wellbutrin and Avandia and included a criminal fine of $1 billion. The remaining $2 billion involves fines in connection with a civil settlement over the sales and marketing practices of the blockbuster asthma drug Advair and several other drugs.
Part of the civil settlement also includes claims that the company overcharged the government for drugs. Glaxo did not admit any wrongdoing in the civil settlement.
Despite the large amount, $3 billion represents only a portion of what Glaxo made on the drugs. Avandia, for example, racked up $10.4 billion in sales, Paxil brought in $11.6 billion, and Wellbutrin sales were $5.9 billion during the years covered by the settlement, according to IMS Health, a data group that consults for drugmakers.
“So a $3 billion settlement for half a dozen drugs over 10 years can be rationalized as the cost of doing business,” Mr. Burns said.
Mr. Burns and others have said that to institute real change, executives must be prosecuted criminally or barred from participating in the Medicare and Medicaid programs, an action known as “exclusion.”
This has occurred in only a handful of cases, and rarely in a case involving a major pharmaceutical company... [Dunn cut rest for space reasons.]
Pfizer Pays $2.3 Billion to Settle Marketing Case
By GARDINER HARRIS
New York Times
September 3, 2009
WASHINGTON — Top aides in the Obama administration announced a $2.3 billion settlement on Wednesday with the pharmaceutical giantPfizer Inc. over the company’s illegal promotion of its now-withdrawn painkiller, Bextra.
It is the largest fine ever levied for fraud in the Medicare and Medicaid programs, and Obama administration officials — criticized by Republicans on Capitol Hill for failing to crack down on fraud in the government’s health programs — sought to highlight the case by having Kathleen Sebelius, secretary of health and human services, make the announcement. The agreement also includes some promotional practices involving other Pfizer drugs — Zyvox, Geodon and Lyrica.
The settlement had been expected. Pfizer, which is acquiring a rival, Wyeth, had reported in January that it had taken a $2.3 billion charge to resolve claims involving Bextra and other drugs. Pfizer shares were down about one percent at mid-day.
Marketing fraud cases against pharmaceutical companies have become almost routine, with almost every major drug maker having been accused of giving kickbacks to doctors or shortchanging the Medicaid program on prices. Prosecutors said that they had become so alarmed by the growing criminality in the industry that they had begun increasing fines into the billions of dollars and would soon start charging doctors individually as well.
Under the agreement with the Justice Department, Pfizer will pay a $1.3 billion criminal penalty related to Bextra and $1 billion in civil fines related to a number of medicines. In addition, a Pfizer subsidiary, Pharmacia and Upjohn Company, will plead guilty to violating the Food, Drug and Cosmetic Act for its promotion of Bextra.
In January, prosecutors announced that they would fine Eli Lilly $1.4 billion for illegal marketing efforts on behalf of Zyprexa, an antipsychotic.
Although the fine amounts began to soar during the Bush administration, top administration officials rarely publicized the cases or appeared during news conferences about them. The Zyprexa case was announced by federal prosecutors in Philadelphia.
Ms. Sebelius’s decision to make the Pfizer announcement in a news conference in Washington suggests that the political environment for the pharmaceutical industry has become more treacherous, despite the industry’s commitment to save the government $80 billion as part of efforts to change the health care system.
Merck to Pay $650 Million In Medicaid Settlement
Carrie Johnson
The Washington Post
February 8, 2008
Pg. A01
Merck agreed yesterday to pay more than $650 million to settle charges that it routinely overbilled the government for its most popular medicines, the arthritis drug Vioxx and the cholesterol drug Zocor, cheating Medicaid out of millions of dollars in discounts over eight years.
Prosecutors say the drugmaker gave pills to hospitals at virtually no cost to hook poor patients on expensive medicine. When the patients left the hospital, they often continued taking the drugs, but with the government footing the higher bill.
The Merck settlement culminates an investigation that began in 2000 and is one of the first in a series of cases centering on whether drugmakers used unfair pricing practices to bilk the government. The Justice Department is looking into 630 health-care whistleblower claims.
H. Dean Steinke, a district sales manager for Merck, set off the investigation after he noticed his company was using questionable sales tactics. Steinke complained to his supervisors, who brushed him off, so he turned to federal authorities.
Steinke, a 51-year-old Michigan native, will receive about $68 million from the settlement as a whistleblower reward. He said he was prompted to go to authorities after his direct supervisor told him: "I don't care how you do it, but get the damn business," when he questioned the sales practices. "There comes a time when you just dig in your heels and say, 'You know what? They're not going to get away with it,' " Steinke said… [Dunn cut rest of article for space reasons]
OxyContin Makers Admit Deception
Addiction Danger From Painkiller Was Understated
By Carrie Johnson
Washington Post Staff Writer
Friday, May 11, 2007; A01
The manufacturer of the potent painkiller OxyContin and three current and former executives at the company yesterday pleaded guilty to falsely marketing the drug in a way that played down its addictive properties and led to scores of people becoming addicted, prosecutors said.
The Purdue Frederick Co. and its chief executive, top lawyer, and former medical chief agreed to pay a total of $635 million to resolve charges filed by the U.S. attorney in the Western District of Virginia, who called OxyContin "one of our nation's greatest prescription-drug failures."
"Even in the face of warnings from health-care professionals, the media and members of its own sales force . . . Purdue continued to push a fraudulent marketing campaign," U.S. Attorney John L. Brownlee said.
The drugmaker knew as early as 1995 that health professionals feared the addictive potential of OxyContin, an opium derivative, but looked the other way, according to court papers. From 1996 to 2001, Purdue claimed that the "miracle drug" was safer than rival medications despite repeated studies that suggested patients had developed a risk of abuse and had serious trouble withdrawing from OxyContin. Purdue collected $2.8 billion through sales of OxyContin during that time, court papers said.
In one instance, supervisors decided against sharing information about difficult OxyContin withdrawal out of fear that it would "add to the current negative press," according to documents presented in an Abingdon, Va., courtroom yesterday.
"Purdue put its desire to sell OxyContin above the interests of the public," Assistant U.S. Attorney General Peter D. Keisler said.
OxyContin, the trade name for oxycodone, is a time-released pill that when crushed and ingested gives users a powerful high. The medication was designed as a less dangerous alternative to morphine for people with cancer and chronic pain. But it has proved deadly for consumers and vexing for law enforcement officials, who bemoan the rise in home burglaries and pharmacy break-ins connected to the spread of a drug sometimes called "hillbilly heroin."
In a 2002 report, the Drug Enforcement Administration traced 142 deaths to OxyContin overdose and said the drug contributed to another 318 fatalities. The DEA said the number of deaths related to the substance rose 400 percent from 1996 to 2001.
Under the terms of the plea deal, Purdue pleaded guilty to a single felony count and agreed to pay $470 million to the government and $130 million more to settle civil claims over injuries and deaths. Virginia will receive nearly $5.3 million to fund health-care fraud investigations and $20 million to fund a prescription drug monitoring program.
Purdue chief executive Michael Friedman, chief legal officer Howard R. Udell and former head of research Paul D. Goldenheim each pleaded guilty to one misdemeanor charge. The men, who will not serve prison time, together will pay about $35 million under the terms of the agreement. …[Dunn cut some for space reasons]
Legal experts said proving that drug company officials intended to deceive consumers is a difficult burden for the government. But one health-care advocate criticized the settlement as toothless, given the estimated $9.6 billion in OxyContin sales between 2000 and last year.
Sidney M. Wolfe, director of Public Citizen's Health Research Group, said in a written statement that the government should have pressed Purdue to forfeit more money it made off the drug.
"Why have the three wealthy Purdue executives, who have pleaded guilty to orchestrating this dangerous promotional campaign, escaped jail time and why are they paying merely $34.5 million in penalties?" Wolfe said.