Earlier this month, GlaxoSmithKline, a leading British pharmaceutical company, agreed to pay $3 billion to the United States government to settle criminal and civil investigations into its sales practices and marketing representations for a number of drugs. Last week, Merck agreed to pay $950 million to the U.S. government and to plead guilty to a criminal charge relating to its marketing and sales claims for Vioxx, a painkiller which was pulled off the market in 2004 after it was connected to heart problems.
These settlements are the latest in a wave of similar cases brought by U.S. officials into the marketing and sales practices of big pharmaceutical companies. Glaxo’s settlement, in fact, is the largest such settlement, topping the previous high of $2.3 billion paid by Pfizer in 2009.
Each of these cases confirm that even the best known pharmaceutical companies cannot be trusted to fairly represent and market their products without stringent government regulations and diligent enforcement of those regulations regarding the medical efficacy and testing of new drugs. That’s a chilling commentary on the state of big business and its compliance with standards for the safety and fair use of pharmaceutical drugs.
Merck’s offense was that it marketed Vioxx as a treatment for rheumatoid arthritis before it had been approved for such use by the Food and Drug Administration.
Glaxo’s settlement came in the wake of investigations into illegal marketing of Avandia, a diabetes drug whose use had been restricted after it was also linked to risks to the heart. Federal agents and whistle-blowers claimed had Glaxo unfairly promoted the drug by distorting its research and paying doctors to promote it. The settlement seems to confirm those charges.
Glaxo also had been charged with illegally manipulating prices it charged Medicaid for nine drugs from 1997 until 2004. Though $3 billion is a huge amount of money, critics fairly argued that the company is getting off lightly for the offenses. With $50 billion in annual revenue, its the fourth largest drug maker in the world. None of its principle executives will be charged or jailed or stopped from doing future business in the United States.
In effect, both companies paid off the government to avoid criminal prosecution. Given the history of such claims against drug-makers, it’s fair to ask if criminal prosecution isn’t a more appropriate remedy.