It was reported in the New York Times earlier this month that GlaxoSmithKline was fined three billion (yes billion!) dollars by the feds to settle civil and criminal penalties for illegally promoting ten of its drugs. In Maythe drug firm Abbott Laboratories was fined 1.6 billion (yes billion!) dollars for illegally promoting their drug Depakote. In April Johnson & Johnson was fined 1.2 billion (yes billion!) dollars in Arkansas for marketing practices of their drug Risperdal. We can keep this short by primarily reporting fines from this year and those in the billion-plus range. I do feel the need to recall Pfizer’s 2.3 (yes billion!) dollar fine in 2009 for illegal marketing of Bextra. Taxpayers Against Fraud reports over ten billion in such settlements and civil and criminal penalties during the current fiscal year.
How can pharmaceutical companies engage in such costly activities on an ongoing basis? It turns out that what seems like a lot of money to you and me is not so much to these huge corporations. Avandia, Paxil, and Wellbutrin, just three of the ten drugs that GlaxoSmithKline was marketing this way had sales of over 25 billion (again, yes billion!) during the ten year period covered by the settlement. According to Patrick Burns, spokesman for Taxpayers Against Fraud, this “can be rationalized as the cost of doing business.” The market apparently agrees that this is a reasonable cost to do business as these fines barely registered in terms of the valuation of stock in these companies. Implicit in this conclusion is that these companies are making a purposeful decision to act in this manner and thus could be considered criminal enterprises.
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