Big Pharma Absorbs $5 billion in fines! "The cost of doing business!"

10/02/2010

Big Pharma Absorbs $5 billion in fines! "The cost of doing business!"

Here's one from the excellent PharmaGossip blog that I must admit that I find to be sad and disturbing. This is a report of a study performed by The British Medical Journal and the Bureau of Investigative Journalism, City University, London

PharmaGossip: $5 billion in fines! "The cost of doing business!".

Effectively, we seem to have fostered a system whereby big pharma engages in fraud - usually off label marketing - as a standard business practice in order to hit market return expectations. This would also include kickbacks and "entertainment" for physicians (KOLs) - a sum said to exceed $200 M in recent years.

In the last 2 years alone, 6 of the top 10 pharmaceutical companies have been fined for fraud in the US with a further 3 undergoing investigations. The total paid out has been $5 B in fines. (Of the top 10, only Roche remains untouched by US government).

Pharmaceutical fraud is one of the US’s top 3 “threats” says Sharon Ormsby from the FBI Financial Crimes Unit, because everyone is touched by these frauds (of the billions going into US healthcare, 3 - 10% is believed to be siphoned off into fraud — a large amount that could go to needy patients. Healthcare Reform anybody?

I would encourage you to follow the link and read the rest of the article for more in depth examples and discussion. But it appears that we've institutionalized this behavior to an alarming degree and that it is in fact more cost effective for companies to just pay the fines and continue business as usual - as the proftis reaped far outweigh the financial penalties.

At the risk of moralizing further, I will refer readers back to a few other blog posts (see here and here) on related topics. I do think we need to refresher course in focusing on patient welfare and getting back to the roots on which the industry was founded - which I firmly believe was NOT more profits at any cost.

Let's try to remember that maximizing the "good" a company does is related to greater profitability, equity and return on assets, and creates more shareholder value. And it is the right thing to do!