Billions in fines for drug makers

T HE global pharmaceutical industry has racked up fines of more than $11 billion (R92bn) in the past three years for criminal wrongdoing, including withholding safety data and promoting drugs for use beyond their licensed conditions.

Twenty-six companies, including eight of the 10 biggest, have been found to be acting dishonestly.

According to two papers published in yesterday’s New England Journal of Medicine, the scale of the wrongdoing has undermined public and professional trust in the industry and is holding back clinical progress.

Lawyers have warned that the multibillion-dollar fines are not enough to change the industry’s behaviour.

The 26 firms are under “corporate integrity agreements”, which are imposed in the US when wrongdoing in health care is detected and place the companies on notice for good behaviour for up to five years.

The largest fine was $3bn, imposed on GlaxoSmith-Kline in July after it admitted three counts of criminal behaviour in US courts.

But GSK is not alone – nine other companies been fined since 2009, ranging from $420 million fine for Novartis to $2.3bn for Pfizer.

Kevin Outterson, a lawyer at Boston University, said that despite their eye-watering size, the fines amounted to a small proportion of the companies’ total revenues and might be regarded as a “cost of doing business”.

The $3bn fine for GSK represented 10.8 percent of its revenue. A $1.5bn fine for Abbott Laboratories, for promoting a drug called Depakote without adequate evidence of its effectiveness, amounted to 12 percent of revenues.

Implications

“Companies might view such fines as quite a small percentage of their revenue. If so, little has been done to change the system. The government merely recoups a portion of the financial fruit of firms’ past misdeeds,” Outterson said.

He argued that penalties should be imposed on executives rather than the company as a whole. He cited a Boston whistle-blower attorney, Robert Thomas, who had observed that GSK had committed a $1bn crime and that “no individual has been held responsible”.

After GSK’s admission that it had withheld safety data about its best-selling diabetes drug, Avandia, the company pledged to make more clinical trial information available.

But, said Outterson, the pledge had “disturbing exceptions”, and in any case had been made under the corporate integrity agreement, which expired in five years.

Researchers at Brigham and Women’s Hospital, Boston, found that trust in the industry among doctors had fallen so low that they dismissed clinical trials funded by it, even when the trials had been conducted with scientific rigour.

Aaron Kesselheim, who led the study, said that this could have serious implications because most medical research was funded by the drug industry and “if physicians are reluctant to trust all such research, it could hinder the translation of… research into practice”.

Andrew Witty, the chief executive of GSK, said at the time of the $3bn settlement that it had resolved “difficult, longstanding matters” for the company and that there had since been a “fundamental change in procedures”, including changes to incentive payments and the removal of staff engaged in misconduct.

The Association of the British Pharmaceutical Industry said that practices in the industry had improved and more changes to “build greater levels of trust” would be made.

The UK Medicines and Healthcare Products Regulatory Agency said it monitored the conduct of companies and took “appropriate action” when it uncovered malpractice. – The Independent