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GlaxoSmithKline paid the largest criminal and civil fine ever, but they got off easy

Oh…size matters

Are you impressed? You’re certainly supposed to be.

You probably heard that GlaxoSmithKline executives agreed to pay $3 billion to resolve a cluster of criminal and civil charges.

The U.S. Dept. of Justice says it’s the largest single settlement ever. One official called it “unprecedented in both size and scope.”

Unprecedented? Really? Well I have more shocking number for you. Much more shocking: 48,000.

Two years ago, I told you about an FDA report with this stunning estimate. Researchers claim between 1999 and 2009, 48,000 people 65 and over experienced a stroke, heart failure, or death that could be attributed to their use of Avandia instead of Actos, another type 2 diabetes drug.

So… $3 billion? That’s nothing. Weigh that amount of cash against the estimated 48,000 lives lost or shattered.

$3 billion is a pittance.

And make no mistake. I imagine GSK executives are absolutely delighted about this settlement. They know they got off easy.

For just $3 billion…all this, and more

To appreciate the tragedy of the 48,000 events linked to the drug, there’s one more key detail you need to know.

GSK buried the risks for years while their drug made millions.

In 1999, the company launched a safety study comparing Avandia to Actos. The potential dangers of the drug soon became obvious. In 2001, a GSK executive sent an e-mail that read… “Per Sr. Mgmt request, these data should not see the light of day to anyone outside of GSK.”

“Anyone” included the FDA. And for more than a decade, GSK successfully covered up the dangers while patients succumbed to strokes, heart failure, and death.

I’m focusing on GSK’s Avandia here, because the whole episode is just so despicable. (Keep in mind, GSK already paid out $2.4 billion to settle numerous civil claims by Avandia patients and survivors.)

But $3 billion purchased much more than just a pass on the Avandia criminal charges.

The Dept. of Justice charged GSK with…

  • Illegal promotion of the antidepressant Paxil to children under 18
  • Illegal promotion of the antidepressant Wellbutrin for weight loss, sexual dysfunction, and ADHD
  • Promoting a variety of drugs for off-label uses, while also paying kickbacks to doctors who prescribed the drugs
  • Reporting false drug prices, resulting in Medicaid fraud

The DoJ now drops all these charges. Ka-ching! Stamp it “PAID,” and move on.

But who actually does the paying?

Patrick Burns of Taxpayers Against Fraud told Pharmalot that monetary penalties don’t stop rampant fraud. In settlements like this, he points out, executives at “big fraudster corporations” keep their jobs, along with bonuses and stock options. So the cost of fraud lands on stockholders.

Burns: “Either way, the fraud will continue because the people who design frauds personally profit and pay no personal cost.”

So don’t be impressed by the largest settlement ever. It’s $3 billion worth of smoke and mirrors.

Sources:
“Biggest Deal Ever: Glaxo Pays $3B For Bad Behavior” Ed Silverman, Pharmalot, 7/2/12, pharmalot.com

“GlaxoSmithKline settles healthcare fraud case for $3 billion” David Ingram, Reuters, 7/2/12, reuters.com

“Diabetes Drug Maker Hid Test Data, Files Indicate” Gardiner Harris, New York Times, 7/12/10, nytimes.com

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