Fines hurt, but there may be stronger medicine for abuse

There’s no question that $3 bil- lion is a lot of money for a drug company to pay in fines and penalties for peddling some drugs for unapproved uses and overcharging for others. But is it enough to convince pharmaceutical companies to mend their ways? We don’t know, but we do know that in the history of federal prosecution of drug companies for misdeeds, very few have involved individuals being held to account for their misdeeds.

Last week British drugmaker GlaxoSmithKline agreed to pay $3 billion in fines for criminal and civil violations involving 10 drugs that it marketed in the United States. That’s the largest heath-care fraud settlement in U.S. history.

About $40 million of the settlement will cover costs to Ohio Medicaid, according to Attorney General Mike DeWine, with the federal share being $23.5 million and the state share $16.7 million.

DeWine’s office recited a litany of misdeeds by GlaxoSmithKline that included a pattern of unlawfully marketing certain drugs for uses for which the drugs were not approved by the Food and Drug Administration; making false representations regarding the safety and efficacy of certain drugs; offering kickbacks to medical professionals, and underpaying rebates owed to government programs for various drugs paid for by Medicaid and other federally-funded health-care programs.

The company was accused of marketing the depression drug Paxil for off-label uses, such as use by children and adolescents; marketing the depression drug Wellbutrin for weight loss and treatment of sexual dysfunction, and various off-label marketing of the asthma drug Advair, the seizure medication Lamictal, the nausea drug Zofran and the diabetes drug Avandia.

It’s all comparative

But as big as a $3 billion fine might appear, The New York Times reported that just three of those drugs, Avandia, Paxil and Wellbutrin had combined sales of about $28 billion for the years covered by the misconduct. Patrick Burns, a spokesman for Taxpayers Against Fraud, told the Times, “a $3 billion settlement for half a dozen drugs over 10 years can be rationalized as the cost of doing business,”

The federal government has been getting more serious about pursuing cases against pharmaceutical companies in recent years. In addition to this case, Abbott Laboratories pleaded guilty in May and agreed to pay fines and settlements of $1.5 billion for promoting Depakote, approved for bipolar disorder and epilepsy, for use in patients with dementia and autism. Pfizer Inc., the world’s biggest drugmaker, paid the government $2.3 billion in 2009 in criminal and civil fines for improperly marketing 13 different drugs, including erectile-dysfunction drug Viagra and cholesterol fighter Lipitor, the top-selling drug in the world for years.

Yet no official of a major pharmaceutical company has been individually held to account. The Times reports that in 2011, four executives of the medical device company Synthes were sentenced to less than a year in prison for conducting clinical trials that were not authorized by the Food and Drug Administration and the former chief executive of K.V. Pharmaceutical was sentenced to 30 days in jail and fined $1 million for selling misbranded morphine tablets.

Meanwhile executives who are shown to have approved and promoted fraudulent marketing plans and incentive programs for salesmen and physicians that border on bribery are off the hook. Some executives even pocketed millions in bonuses for the success of their efforts.

Prosecute a few top executives — or even some doctors who could be shown to have enthusiastically responded to company incentives to prescribe off-use drugs — and the effect would be much greater than even a few billion dollars in corporate fines.