COMMENTARY | According to CBS News, the GlaxoSmithKline pharmaceutical company has set a new record, not in sales or profits but in the size of the fine it has agreed to pay for health care fraud. Monday, the U.S. Department of Justice announced that the company has agreed to pay a penalty of $3 billion. $1 billion of the penalty will settle criminal charges. The $2 billion portion will settle the civil portion of the suit. GSK is the largest drug maker in the U.K.
The company allegedly misbranded Paxil and Wellbutrin, two popular anti-depressant drugs. They were allegedly negligent in reporting to the FDA data about the safety of the popular diabetic drug Avandia.
CBS quotes CEO Sir Andrew Wittey as saying, “Today brings to resolution difficult, long-standing matters for GSK. Whilst these originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made.”
Avandia was an immensely popular and profitable diabetic drug, with sales reaching $3 billion annually. Allegedly, the safety data on Avandia was withheld between 2001 and 2007. The drug now carries a label warning that it carries an increased risk of heart attacks.
According to Bloomberg News, the company earlier agreed to settle 20,000 cases with patients relating to alleged heart attacks. Fifteen thousand cases were settled for a sum of $700 million.
The company has a history of paying fines. In 2011, it paid $41 million that would be divided between 37 states and the District of Columbia because of faulty production standards at a facility in Puerto Rico.
Reuters states that part of the civil penalty in the present case will be used to reward several whistleblowers who provided information to the government. This is provided by a law called the False Claims Act.
It is noteworthy that quite often, a corporation pleads guilty to criminal charges but no individuals are charged. It is quite obvious that the decisions to perform the acts which were defined as criminal were approved by individuals. It is unreasonable that they could avoid prosecution because they work for a corporation. If it can be proven that the CEO knew of the violations, he should be as culpable as others.
Hopefully, the individuals who had callous disregard for human life will be prosecuted. Reuters states that the agreement specifically allows for additional prosecution of the individuals responsible.
The agreement includes a Corporate Integrity Agreement which is essentially oversight by the inspector general of the U.S. Department of Health and Human Services for a period of five years. One function of the agreement will be to prevent kickbacks to doctors for prescribing GSK products.
This case is a reminder that an essential role of government is to assure the safety of its citizens. This entails regulations and oversight, which are the checks and balances to unfettered capitalism.