In a report from USA Today on July 2,
2012, we learned that prescription drug giant GlaxoSmithKline pled
guilty and will pay $3 billion to resolve federal criminal and civil
inquiries arising from the company's illegal promotion of some of the
drugs it produces. About $1 billion will go towards the federal fine,
the remaining $2 billion to resolve civil claims that were made under
the US federal government's "Falls Claims Act".
Image courtesy of Wikipedia
This is a staggering announcement, not
to mention one of the largest if not the largest penalty ever levied
against a drug company by the US federal government. The article
quoted the federal government as saying “GSK's salesforce bribed
physicians to prescribe GSK products using every imaginable form of
high-priced entertainment, from Hawaiian vacations to pay doctors
millions of dollars to go on speaking tours to a European pheasant
hunt to tickets to Madonna concerts, and this is just to name a few”,
which was a statement reportedly made by Carmin M. Ortiz, a US
attorney in Massachusetts.
The civil claims also presented
evidence that GSK was inappropriately and illegally engaging in
"off-label marketing” in which a drug that has been approved
to treat one kind of illness might also have other beneficial uses.
However, the US FDA still requires that those alternative uses be
documented and proved prior to marketing. Two examples cited were:
The promotion of the drug Paxil for treating children suffering from
depression from April of 1998 to August 2, 2003; and the promotion of
the use of Wellbutrin for weight loss, sexual dysfunction, substance
addiction and ADHD from January of 1999 to December of 2003 even
though it was only approved by the FDA for major depressive
disorders.
Such a large penalty cannot have been
an easy thing for GSK's executive management to swallow. I can
imagine what the stockholders will say at the next annual meeting.
But the only reason I can think of that would prompt GSK's senior
management to accept such a staggering penalty is that the government
had them dead to rights. And this is the issue that bothers me the
most. I usually argue that most companies will do the right thing
for their customers because loyal customers result in repeat business
and repeat business results in long-term business growth and
stability. Something is very wrong when the leadership of a company
in the business of providing medicines would consider, much less
execute any strategy that intentionally results in a doctor
prescribing, or a patient taking a medication that has no proven
benefit to fight their illness. Shame on GSK's sales force and incidentally, shame on any doctor that in so doing has contradicted the oath of "Do no harm." How can I, as a strong fiscal
conservative who constantly argues for smaller government, in part by
reducing the hundreds of thousands of pages of regulations and
thereby reduce the size of the federal bureaucracy, when companies
like GSK clearly show quality of products and services to their
customers takes a back seat to profit? Where's the morality?
GlaxoSmithKline has created many
products which have been of enormous benefit to our society. For that
I applaud them. But when it is proven that they show no hesitation to
incorrectly market their products in pursuit of greater and greater
profits, then they have lost my trust and I would like to think that
they have lost the trust of the general buying public. I would also
like to think that what I was taught about basic economics is true,
which is that the free market will reward companies that provide a
good service or product and will force companies that provide
inferior products and services or which have questionable business
practices to fail. But with GSK being so big and being serviced by
exceptionally bright and skillful lawyers, I am being forced to
reevaluate my position.
Any person that calls themselves a true
conservative should not be doing business with a company that
knowingly puts you in jeopardy by misleading you
to think that the medicine that you are taking, sometimes at great
expense to either yourself or your insurance company, is effectively
treating your illness when in fact it may be doing nothing or worse.
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