US drug companies paid $15bn fines for criminal and civil violations over the past five yearsBMJ 2010; 341 doi: http://dx.doi.org/10.1136/bmj.c7360 (Published 21 December 2010) Cite this as: BMJ 2010;341:c7360
Illegal marketing activities by drug companies have risen over the past five years, leading to major penalties when companies forced to settle with the federal and state governments, says Public Citizen, an independent US watchdog organisation. It has called the drug industry “the biggest defrauder of the federal government.”
Although reports of drug companies’ misdeeds have been reported before, Public Citizen’s new report summarises the situation.
Industry spokespeople said that the problems were behind them and that the industry had put stricter guidelines in place.
Sidney Wolfe, director of Public Citizen’s health research group, told the BMJ that in the past five years the drug industry moved ahead of the defence industry and all other industry sectors in the amount of civil penalties for fraud under the False Claims Act against the federal government. The report said that of 165 drug company settlements comprising $19.8bn (£12.8bn; €15bn) in penalties over the past 20 years, 73% of settlements and 75% of penalties occurred in the past five years, including civil and criminal cases and those involving the federal and state governments.
Dr Wolfe said that the rise in the number of cases was largely because of drug companies’ greater use of illegal marketing practices, such as the promotion of off-label uses of drugs, and increased enforcement by authorities, which were getting more insider information from whistleblowers, who can receive substantial rewards.
He said, “The only way it will stop is . . . if someone goes to jail, because many of these are criminal violations and they endanger the public health.”
In November the US Department of Justice indicted Lauren Stevens, a retired lawyer for GlaxoSmithKline, charging that she obstructed a Food and Drug Administration proceeding relating to the off-label prescribing of bupropion. Her trial is scheduled to begin on 1 February in Boston. If convicted she faces five to 20 years in prison. Her lawyer told the BMJ that “she had done absolutely nothing wrong” (BMJ 2010;341:c6570, doi:10.1136./bmj.c6570).
On 20 December the US health and human services secretary, Kathleen Sebelius, and the attorney general, Eric Holder, announced that the Center for Medicare and Medicaid Services would be acquiring new tools to prevent fraudulent claims.
Many prosecutions reported in the Public Citizen study relate to an 1863 Civil War era law that rewards whistleblowers who reveal contractors who defraud the federal government. Other prosecutions relate to drug companies overcharging joint federal and state health programmes such as Medicaid, the health insurance scheme for poor people.
The Public Citizen report examined trends from 1991 to November 2010. It found that four companies—GSK, Pfizer, Eli Lilly, and Schering-Plough—accounted for more than half of all financial penalties imposed over the past 20 years.
The illegal off-label promotion of drugs resulted in the largest amount of financial penalties, the report said. Such promotion can sometimes be prosecuted as a criminal offence, because it may harm patients. Overcharging government programmes is more likely to lead to civil penalties (fines).
Dr Wolfe said that drug companies had few new drugs coming onto the market and were trying to expand the market for existing drugs. He emphasised the difference between doctors relying on scientific evidence to prescribe drugs for off-label uses and drug companies promoting off-label use.
A spokeswoman for the Pharmaceutical Research and Manufacturers of America (PhRMA) said that it had developed a code of conduct for company interactions with healthcare professionals in 2002 and strengthened it in 2008. PhRMA’s statement to the BMJ says, “In fact, the alleged conduct that formed the basis of the complaints at issue in Public Citizen’s report likely pre-date the 2008 Code revision.”
An industry representative who did not want to be identified told the BMJ that drug companies wanted to settle cases to put this problem behind them and also because if they had lost in court they would have forfeited the right to sell their drugs to the Medicare and Medicaid programmes, an important source of sales.
A spokesman for Pfizer, which paid $1.3bn in criminal penalties and $1bn in civil fines in 2009, said in a statement, “The Public Citizen report looks backwards and unfairly holds Pfizer responsible for some conduct that occurred in other companies prior to Pfizer’s acquisition of them. More importantly, the report ignores the significant steps Pfizer has taken not only to comply with state and federal laws but also to meet the high standards that patients, physicians, and the public expect from a leading worldwide company dedicated to healing and better health.”
Cite this as: BMJ 2010;341:c7360
Rapidly Increasing Criminal and Civil Monetary Penalties against the Pharmaceutical Industry: 1991 to 2010 is available at www.citizen.org/hrg1924.