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The Bigger They Are, Less Prison Time They Serve

by Attorney Jonathan Emord

What lesson can we learn from the $3 billion settlement paid by GlaxoSmithKline to the U.S. treasury? The lesson drug makers acquire from the settlement may surprise you. If you are like GSK and earn about $28 billion annually, you must realize that you can get away with promoting drugs for unapproved uses, including promoting unapproved uses for the antidepressants Paxil and Wellbutrin, and with concealing for seven years from the FDA evidence that the Type 2 diabetes drug Avandia substantially increases the risk of heart toxicity without ever suffering a serious loss of any kind. In both instances, the public was at an unacceptably high risk created by the willful action of GSK executives. In neither instance will a single GSK executive go to jail.

Indeed, the federal government maintains a wicked double standard. Were GSK a dietary supplement company or even a small drug company it would have endured a far more treacherous course, likely resulting in criminal indictments, vigorous prosecutions, prison terms, and the destruction of product lines and markets. For GSK, however, the government politely negotiated over several years a payment to the U.S. Treasury–a payment that would cover all manner of sins, criminal and civil, and a payment that is literally a drop in the proverbial bucket for this market leviathan.

Department of Justice prosecutors represented that GSK promoted its antidepressant drug Paxil to those under the age of 18 despite the fact that the drug is approved only for adults. FDA’s medical reviewer Dr. Andrew Mosholder many years ago found persuasive evidence that use of the drug in children increased the risk of suicide. The government also alleged that GSK promoted its antidepressant drug Wellbutrin for unapproved uses, such as for weight loss and sexual dysfunction. Prosecutors explained that GSK’s inducements for physician prescription of these drugs were misleading and lavish, involving distribution of a deceptive medical journal article and supplying doctors with illegal kickbacks for prescribing the drugs, including free meals and spa treatments. The misconduct allegedly commenced in the 1990s and continued through 2007.

GSK was not charged with any felonies but, instead, pled guilty to three misdemeanors, one for each drug. GSK’s $3 billion ($1 billion in criminal fines and $2 billion in civil fines) is the largest settlement payment made to the federal government by a drug maker to date (the next highest was paid by Pfizer at $2.3 billion). The pattern has been set for large pay-outs in lieu of jail time for the giant pharmaceutical concerns.

Lest you think this the first time GSK was alleged to have engaged in unlawful conduct, think again. The $3 billion settlement also resolves another matter for which individuals have been excluded from participation in the Medicaid program or sent to prison or both: defrauding the federal government of monies owed it under the Medicaid program. Prosecutors alleged that from 1994 to 2003, GSK significantly underpaid money it owed to Medicaid. Under program regulations, GSK was required to inform the government of its “best prices” for drugs but did not do so. $300 million of the $3 billion is therefore earmarked for states and other public health authorities for monies they were shorted. About one year ago, GSK paid $41 million to 37 states and the District of Columbia for alleged substandard manufacturing processes at its Puerto Rico facility.

Those who run GSK and who do the company’s bidding at the FDA operate by rules different from the rest of us. If an FDA Commissioner refuses to remove a drug, like Vioxx, from the market despite the agency’s receipt of thousands of adverse event reports linking the drug to heart attacks, he never has to account to the courts, the Congress or the American people for the lives lost. Indeed, FDA Commissioner Lester Crawford overruled the agency’s medical reviewers who demanded that he act to remove the drug from the market based on extraordinary evidence that the drug increased the risk of heart attack many times. Instead, Commissioner Crawford went in the other direction, approving the drug for use in pediatric rheumatoid arthritis patients just two weeks before Merck volitionally withdrew the drug from the market against an avalanche of products liability suits.

If an executive in a major drug company is aware of evidence of toxicity associated with a company’s drug pending for approval at FDA, that executive may hide the information unlawfully from FDA with the only real threat consisting of a fine down the road if ever the company is caught. If an executive in a major drug company exceeds the limits of the law and promotes a drug for uses not approved or even bribes physicians to make the drug available for unapproved uses, that executive may well expect no criminal prosecution and, again, a fine down the road. Moreover, the fine amounts can be expected to be miniscule compared to the profits generated from the sale of the drugs.

The existing drug approval process is a corrupt regime, one of crony capitalism or fascism reminiscent of Mussolini’s Italy. It imposes formidable barriers to entry (even the fee for filing a drug application, nearly $300,000, bars most inventors, leaving the approval game open only to the largest drug companies in the world). It establishes a cozy relationship between the FDA and the regulated industry wherein the agency has become the captive of the industry. That relationship is corrupt with an agency willing to approve drugs that are demonstrably unsafe over the objection of agency medical reviewers and with an industry willing to coerce, cajole, and even bribe physicians to make reliance on drugs, even ones with hideous side effects, the preferred course for all manner of conditions. Until the FDA is stripped of its drug review powers, until a new blinded system is created and centered at universities under a legal regime that prohibits the undue influence of drug companies, there will be no end to the triumph of politics over science, financial interest over patient interest, and unexpected loss of life over wellness.

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