The Bigger They Come, the Softer They Fall - the Size of Pharma Companies and How Vigorously they are Prosecuted

After we found lessons to be learned from even  relatively small legal cases involving medical device companies, we reviewed some relatively small cases involving pharmaceutical companies made public in 2014.  Again, we had an index case that linked to larger issues

Merck Settled Fraud Allegations for $31 Million

This case got very little coverage in October, 2014.  A very short story by Reuters included these essentials,

A subsidiary of Merck & Co has agreed to pay U.S. states $31 million to settle claims that it overcharged their Medicaid programs for an antidepressant it had sold at a discount to pharmacy companies, attorney generals from three states said on Wednesday.

The officials from Idaho, New York and Florida said Organon USA Inc offered the drug, Remeron, to nursing home pharmacies at a discount to encourage its use over competitors. At the same time, the company reported the full cost of the drug when seeking reimbursements from state Medicaid programs, the states claimed.

New Jersey-based Organon, which did not admit any wrongdoing, also was accused of improperly promoting use of the drug by children and teens.

The agreement, which includes Washington, D.C., and every state besides Arizona, settled whistleblower lawsuits filed in 2007 in federal courts in Massachusetts and Texas.

That was the main content of the article.

Kickbacks to Promote Use of a Dangerous Drug

However, on the PharmaLot blog, Ed Silverman added important nuance,

Organon also allegedly offered kickbacks to nursing home pharmacies to encourage use of the Remeron antidepressant. The drug maker also allegedly promoted the medicine for uses not approved by the FDA. The marketing included targeting children and teenagers, according to a statement from New York Attorney General Eric Schneiderman.

So this was not merely financial fraud, but involved kickbacks to encourage excess use of a medicine for patients for whom it may have an enhanced risk of severe adverse effects.  In particular, Remeron (mirtazapine) may lead to higher risks of suicide attempts, including successful ones, by adolescents (look here for its official label).  So this case was not only about a company allegedly over-charging the government, but promoting a medicine that might be dangerous for vulnerable patients taking it. 


Merck's Track Record

Merck in some ways is the poster child for health care companies once renowned, but now troubled.  Merck's own voluminous Values and Standards document starts with this famous quote by founder George W Merck,

We try never to forget that medicine is for the people. It is not for the profits. The profits follow ,and if we have remembered that, they have never failed to appear.

Yet Merck was one of the first big multinational pharmaceutical companies to be tripped up by a big scandal in the 21st century.  As we wrote here, 

In summary, Vioxx (rofecoxib, Merck) a Cox-2 inhibitor non-steroidal anti-inflammatory drug used for pain, and touted for its ostensibly low risk of gastrointestinal side-effects, was withdrawn from the market in 2004 because of its cardiac risks.  The Vioxx case is flush with examples of how the company used deception to market a very profitable drug without regard to its risks to patients. 

A longer summary of the Vioxx scandal is in the Appendix below.

Furthermore, Merck also seems to have a chronic problem with honest discussion of another of its products, Zetia (look here).   Merck was also fined by the French government for a "smear campaign" against generic competitors (look here) and this month got a very poor rating for its global corporate transparency from Transparency International (look here). 

So this relatively small case reminds us that when a very large health care company is accused of misbehavior, including deceptive behavior that could have led to patient harms, not only are no individuals who might have authorized, directed or implemented the bad behavior held accountable, but the case is likely resolved in a seeming vacuum, totally uninformed about the company's previous record of similar problems.

Sheffield Pharmaceuticals CEO Pleaded Guilty of Felony for Discharge of Wastewater Without Permit

An interesting contrast is the case of one Mr Thomas Faria, as described by the New London (CT) Day in July, 2014,

Thomas H. Faria, who resigned in March as president and chief executive officer of Sheffield Pharmaceuticals, pleaded guilty in U.S. District Court Tuesday to a felony violation of the Clean Water Act for knowingly discharging untreated industrial wastewater to the New London sewage treatment plant from 1986 to 2011.

His penalty does not yet seem to be public, but could go considerably beyond loss of his job,

Faria pleaded guilty to one count of knowingly violating, or causing to be violated, the Clean Water Act, an offense that carries a maximum penalty of three years of imprisonment and a fine of not less than $5,000 but not more than $50,000 per day of the violation.

Yet the harms produced by the company's actions are not so clear,

The environmental impact of the violation over a 25-year-period is unknown, though Special Assistant U.S. Attorney Peter Kenyon from the Environmental Protection Agency said the EPA is unaware of any fish kills or direct harm suffered by humans.

'The possibility of impact from this type of discharge certainly exists,' Kenyon said during a conference call Tuesday.

So in this case, the offense was environmental, and had nothing directly to do with the over the counter drugs manufactured by the company, or their effects on patients.  The impact of the offense on the environment was unclear.  Nonetheless, the CEO of this small, privately held company lost his job, had a felony on his record, and is liable for large fines or up to three years in jail, pending sentencing.

Jury Found Takeda and Eli Lilly Concealed Cancer Risks of Actos, Company Subject to Punitive Damages of $36.8 Million

The basics of the case were reported by Medscape in April, 2014, and were also covered by Reuters and Bloomberg,

Drugmakers Takeda Pharmaceutical Co. and Eli Lilly and Co. promised to appeal an award of $9 billion in punitive damages — one of the largest in US history — after a federal jury found they had concealed the cancer risks for their type 2 diabetes drug pioglitazone (Actos).

In addition, the jury ordered the payment of $1.475 million in compensatory damages.

Pioglitazone is associated with an increased risk for bladder cancer among persons with type 2 diabetes, according to a 2012 study in BMJ, as reported by Medscape Medical News.  The US Food and Drug Administration in 2011 updated the pioglitazone label to warn against starting the drug in patients with active bladder cancer and to use caution if starting it in patients with a prior history of bladder cancer,...

In addition, the judge ruled that the company destroyed relevant documents to prevent their use in court proceedings,

attorney Mark Lanier said Takeda officials intentionally destroyed documents about the drug.

US District Judge Rebecca Doherty agreed and penalized the company, telling jurors they could infer that the files may have supported Allen's claims that the company wrongfully concealed the medication's health risks. 'The breadth of Takeda leadership whose files have been lost, deleted or destroyed is, in and of itself, disturbing,' Doherty wrote in a January ruling.

In late October, 2014, the judge reduced the award for punitive damages, per Reuters,

In her ruling, Doherty said the original $9 billion damages award was 'excessive' and violated the companies' constitutional rights to due process.

She ordered Takeda to pay $27.6 million and Eli Lilly to pay $9.2 million for a total of $36.8 million. Doherty said that, while far smaller than the jury's original award, the reduced punitive damages were still 'large enough to accomplish the jury's clear aim: to send a message to the defendants that their wrongdoing must stop...'>

I should note that apparently the judge found the amount excessive given the size of the compensatory award to the single plaintiff.  However, the judge reiterated her concerns about the companies' deceptive conduct,

The companies also had sought a new trial, arguing that the court had made prejudicial rulings on evidence and jury instructions that tainted the trial's outcome.

Doherty rejected that request Monday, writing that the evidence during the trial showed that the companies 'disregarded, denied, obfuscated and concealed' for more than a decade that Actos could increase patients' risk for bladder cancer.  

Note that in this civil case, a jury found the companies' deceptive conduct reprehensible, and a judge agreed that they "disregarded, denied, obfuscated and concealed" the truth.  No government prosecutors seemed to care to get involved with this particular case.  Because it was a civil case in which the companies were defendants, I am not sure whether any penalties affecting individuals were a possible outcome.  The results seem to suggest, at least in my humble opinion, that both ordinary people, like those sitting on juries, and judges may take greater exception to deceptive conduct that could harm patients than may government law enforcers and regulators.

Teva Pharmaceutical Industries Made $27.6 Million Settlement of Charges that it Induced Physicians' Excessive Prescriptions


This was well summarized by ProPublica in March, 2014,

Teva Pharmaceutical Industries Ltd. has agreed to pay more than $27.6 million to settle state and federal allegations that it induced Chicago psychiatrist Michael Reinstein to overprescribe clozapine, a powerful antipsychotic drug.

Reinstein has twice figured into ProPublica investigations.


Four years ago, ProPublica and the Chicago Tribune spotlighted Reinstein's prescribing pattern, finding that in 2007 he had prescribed more clozapine to patients in Medicaid's Illinois program than all of the doctors in the Medicaid programs of Texas, Florida and North Carolina combined. At least three of Reinstein's patients died of clozapine intoxication. At that time, Reinstein defended his prescription record, arguing that clozapine is effective and underprescribed.

Then, last spring, ProPublica reported that Reinstein prescribed even more of the drug in Medicare's prescription drug program for seniors and the disabled. ProPublica cited Reinstein in an investigation about how Medicare fails to monitor problem prescribers,...

Illinois Attorney General Lisa Madigan and the U.S. Justice Department claimed that IVAX, a Teva Pharmaceuticals subsidiary, paid Reinstein to overprescribe clozapine to Medicare and Medicaid patients. Yesterday Teva agreed to pay almost $15.5 million to the federal government and more than $12.1 million to Illinois to settle those allegations out of court.

Note that the government case seemed to be about how the government had to pay too much, not about harms to patients, despite the patient deaths described above.  Furthermore, the prosecutors, as they usually now do, allowed the case to be settled without any findings of wrongdoing,

Teva spokeswoman Denise Bradley told Reuters that the settlement does not mean that the company has admitted any liability.

It is interesting that the government is apparently pursuing a case against the physician as an individual, but not any cases against corporate managers who might have authorized, directed, or implemented the "inducements" to that physician,

In November 2012, federal prosecutors also filed suit against Reinstein, alleging that IVAX hadpaid him $50,000 a year to work as a consultant, paid his nurse to promote the drug and funded a study at an affiliated research institute. After the payments, Reinstein began overprescribing clozapine. The company also allegedly paid for trips and entertainment for Reinstein and his friends.

Otherwise, this case is typical of many US government and state prosecutors have pursued against big health care corporations.  There was a monetary settlement that might appear big to the public, but was tiny given the size of the company.  (According to Yahoo Finance, Teva's annual revenue is about $20 billion.)  The settlement did not involve any admission of wrongful behavior.  No one in the company who may have been involved with the wrongdoing that was not admitted suffered any negative consequences.  But, as is not usual, the government is pursuing a case against one individual, the physician who allegedly was paid as a "consultant," by maybe actually just to prescribe the company's product.

Summary

These cases add to the march of legal settlements about which we have often written.  These settlements and other legal cases suggest how frequently big health care organizations are involved in practices that may be unethical, illegal, and/or harmful to the patients they proclaim to serve.  Yet almost never do cases that involve US state and particularly federal law enforcement ever impose monetary penalties that are more than costs of doing business for the companies involved.  Almost never do they impose any negative consequences on any individuals within the companies who might have authorized, directed or implemented unethical, illegal, or harmful behavior.  

However, as we saw before, when the government asserts its law enforcement power against small organizations, small companies, or individuals, people may lose their livelihoods or go to jail.

The leniency of the government towards big health care corporations is very similar to the leniency shown towards big financial corporations.  A recent review of the book "Too Big to Jail" in the Washington Monthly noted that Mr Eric Holder, the current US Attorney General has urged leniency for big, and hence economically powerful corporations,

a memo written by Holder in 1999, during his stint as deputy U.S. attorney general. The document, 'Bringing Criminal Charges Against Corporations,' urged prosecutors to take into account 'collateral consequences' when pursuing cases against companies, lest they topple and take the economy down with them. Holder also raised the possibility of deferring prosecution against corporations in an effort to spur greater cooperation and reforms—a policy, unsurprisingly, later supported by the Bush administration.

The attorney general angered many last year when he reiterated those concerns at a congressional hearing, admitting 'that the size of some of these institutions becomes so large that it does become difficult for us to prosecute' because of the potential nasty economic effects of a major company failure.

Furthermore, the book provided some essentially epidemiological evidence that the government in fact has been more lenient towards bigger corporations, at least in the finance sphere,

There’s some compelling evidence that the largest, most established companies are more likely to win leniency with a delayed or canceled prosecution: 58 percent of the companies awarded such deals are public firms listed on a U.S. stock exchange, while publicly traded firms make up just 6 percent of those against whom the Department of Justice obtained convictions.

Yet there seems to be no evidence that this policy produces social good.  In particular, there seems to be no evidence that corporations treated leniently behave any better.

Finally, there is a question of essential fairness, and equal treatment under the laws.  It appears that executives of large finance, and likely health care corporations have virtual impunity.  Yet little people in health care, or finance, who do something wrong may go to jail.

True health care reform would establish a level playing field.  True health care reform would deter unethical behavior, especially when it harms patients.  True health care reform would make leaders of health care organizations accountable for putting patients' and the peoples' health first.   


Appendix- Vioxx Case

There is evidence is that the company knew about the cardiac risks of Vioxx since 2000, but suppressed the clinical research evidence until 2003.(1)  In particular, in 2005, the editors of the New England Journal of Medicine raised concerns that an article published in that journal in 2000 about the results of the VIGOR study of rofecoxib sponsored by Merck failed to report data that would have suggested that the drug caused excess cardiovascular risks.(2) In 2007, the company paid more than $4.9 billion to settle patient lawsuits alleging harm due to Vioxx.(3)  Also in 2008, the company made a $58 million settlement of claims its advertising of Vioxx deceptively minimized its risks.(4) In 2008, it became clear that at least one apparently clinical trial of Vioxx, the ADVANTAGE trial, was merely a "seeding trial,' that is, a marketing exercise.(5)

On Health Care Renewal, we starting writing about Vioxx in 2005, including,
- here about ghost-writing of a Vioxx research publication;
- here, and here about allegations that Merck executives tried to intimidate Vioxx critics;
- here about how advocates of an extreme laissez faire approach to regulation of health care corporations used illogical arguments about the Vioxx case;
- here about the ADVANTAGE "seeding trial," that is, a study really meant to recruit supposed physician-researchers as prescribers; and
- here about how one once prominent Vioxx researcher pleaded guilty to fraud in connection with his research on other drugs.
-  here about how in settling a shareholder lawsuit Merck vowed to improve its scientific and academic integrity, and refrain from manipulating and suppressing clinical research.

In 2010, we summarized the Vioxx case thus, " the Vioxx case provides a good lesson about some of the tactics used to deceptively and unethically promote health care products (pharmaceuticals in this case)." 

In case there are any doubts about the harms patients suffered as a result of using Vioxx as a pain reliever, in 2004, a cumulative meta-analysis of published trials of Vioxx known by then estimated the risk of myocardial infarction (heart attack) due to Vioxx compared with placebo or other non-steroidal anti-inflammatory drugs was 2.3 times the baseline rate.(6)  That analysis suggested that there was data by 2000 that Vioxx increased the risk of bad cardiovascular events.  A cumulative meta-analysis from 2009 suggested that the risk of death due to Vioxx was 1.7 times the baseline rate.(7)   That analysis suggested there was data by 2001 that Vioxx increased the risk of bad cardiovascular events.  Graham and colleagues' nested case-control study of Vioxx use in a large managed care organization lead them to estimate that "88 000 - 140 000 excess cases of serious coronary heart disease probably occurred in the USA over the market-life of rofecoxib."(8).

References

1. Topol EJ. Failing the public health - rofecoxib, Merck and the FDA. N Engl J Med 2004; 351: 1707-1709.  Link here.
2. Curfman GD, Morrisey S, Drazen JM et al.  Expression of concern reaffirmed. N Engl J Med 2006; 354:1193. Link here.
3. Charatan F. Merck to pay $5bn in rofecoxib claims. Brit Med J 2007; 335: 1011. Link here.
4. Charatan F. Merck to pay $58m in settlements over rofecoxib advertising. Brit Med J 2008; 336: 1208-1209. Link here.
5. Hill KP, Ross JS, Egilman DS, Krumholz HM. The ADVANTAGE seeding trial: a review of internal documents. Ann Int Med 2008; 149: 251-258. Link here.
6.  Juni P, Nartey L, Reichenbach S et al. Risk of cardiovascular events and rofecoxib: cumulative meta-analysis.  Lancet 2004; 364: 2021-2029.  Link here.
7.  Ross JS, Madigan D, Hill KP et al.  Pooled analysis of rofecoxib placebo-controlled clinical trial data: lessons for postmarket pharmaceutical safety surveillance.  Arch Intern Med 2009; 169: 1976-1984.  Link here.
8.  Graham DM, Campen D, Hui R et al.  Risk of acute myocardial infarction and sudden cardiac death in patients treated with cyclo-oxygenase 2 selective and non-selective non-steroidal anti-inflammatory drugs: nested case-control study.  Lancet 2005; 365: 475-481.  Link here.

9:40 AM

Department of Justice Throws (at Least a Small Paperback) Book at Bio-Rad Laboratories - $55 Million Settlement, Admission of Wrongdoing, Employees Fired

Hard on the heels of our recent roundup of legal cases involving medical device companies comes a notable settlement by Bio-Rad Laboratories Inc, a company that makes equipment and supplies for clinical diagnostic testing. 

The Basics

As reported by Reuters,

Bio-Rad Laboratories Inc will pay $55 million to end U.S. investigations into whether it failed to prevent bribery of government officials in Russia and other countries, and falsified records to conceal payments, U.S. authorities said on Monday.


The company, which makes medical diagnostics products, entered a non-prosecution agreement with the U.S. Justice Department to resolve charges that it violated the Foreign Corrupt Practices Act by recording fake payments in connection with sales in Russia.

It also entered a civil settlement with the U.S. Securities and Exchange Commission, which said units of the Hercules, California-based company made $7.5 million in improper payments to officials in Russia, Vietnam and Thailand to win business.

Some Sordid Details
 
Some details of the unseemly conduct were reported by the San Jose, California, Mercury News,

The Department of Justice and the SEC said Bio-Rad subsidiaries in Europe and Asia bribed government officials from 2005-10 with payments to phony middleman companies. Bio-Rad executives ignored the payments, which were so obvious that they should have spotted them, the federal investigators said. One Russian middleman company even used a phony address that was actually the address of a Russian government building, according to the SEC.

Large commissions to companies that didn't have the resources to perform any of the contracted services should have raised an alarm, the complaints said. Also, the payments were made through banks in Latvia and Lithuania, another alleged red flag. Yet several 'high level' Bio-Rad managers approved the payments, the Justice Department said.


In Vietnam, a sales representative of Bio-Rad authorized payment of bribes to government officials, including the hiring of a middleman to pay the bribes, according to the SEC. Bio-Rad's sales manager agreed to the practice fearing that the company would lose 80 percent of its sales if it stopped paying bribes, the SEC's complaint said.

In Thailand, Bio-Rad invested in a local company in 2007 that had an ongoing bribery scheme. An agent of the company received inflated commissions which were split with Thai government officials, the complaint said.  

 Admissions of Wrongdoing, Firing of Employees

Note that the $55 million was not just a civil fine, according to Reuters,

 

Bio-Rad's payout includes a $14.35 million criminal fine to the Justice Department, and $40.7 million representing illegal profit and interest to the SEC....

Moreover, the penalties could have been worse,

The Justice Department said the criminal sanctions were not more severe because Bio-Rad disclosed the misconduct and fully cooperated in its probe, including by making employees available for interviews and producing documents from overseas.

Bio-Rad also bolstered its internal compliance processes, and said it fired employees responsible for the misconduct.

If the company disclosed the misconduct, that meant they acknowledged there was misconduct.  Furthermore, in this case, the company at least indirectly admitted the wrongdoing,

'The actions that we discovered were completely contrary to Bio-Rad's culture and values and ethical standards for conducting business,' Bio-Rad Chief Executive Norman Schwartz said in a statement.

Summary

In summary, employees of Bio-Rad Laboratories bribed officials in various countries to induce more sales.  Upper level managers seemed to disregard fairly obvious signs that this was happening, but eventually someone in upper level management discovered what was going on and reported it to authorities.  The activities were unethical, but the crimes were financial and did not appear to directly risk patients.  The company paid a moderate sized fine, but part of the fine was criminal.  Top management acknowledged wrongdoing, and apparently some employees involved suffered negative consequences: they were fired.

So this case appears a bit different from the majority of the settlements we have discussed.  Bad behavior was acknowledged by managers, and some individuals involved in the bad behavior suffered modest negative consequences.  However, after reviewing the last set of cases we discussed, it does confirm the pattern.  The bigger the company, the proportionately SMALLER the penalties to the company, and the LOWER the likelihood and severity of any negative consequences to an individual.  (This was a moderate sized company, so the penalties were moderate.)  Also, financial misadventures lead to harsher penalties than actions that primarily harm patients.

At least this case shows that the US Department of Justice is capable of making a settlement of a case involving unethical behavior by a health care organization that does not allow the organization to deny misbehavior, and leads to at least some negative consequences for individuals who authorized, directed or implemented the bad behavior.

The question remains, though: why are cases involving really big organizations, and hence often lots of money, and/or cases that involve clinical rather than financial risks treated so leniently?  

The usual pattern, at least for large companies, is: settlements that involve fines that appear large, but are not proportionate to the size and revenue of the company; fines that are imposed on the company as a whole, but no penalties for the people who authorized, directed, or implemented the bad behavior, and likely personally profited from it; and no findings of guilt or acknowledgement of wrong doing.  This lenient approach allows large health care organizations to treat such settlements as costs of doing business.  Hence, it is unlikely to deter future bad behavior, especially given that the people most likely to make the most money from it can expect impunity.  

Note that the pattern of law enforcement and regulation for health care in the US is similar to the pattern of law enforcement and regulation of the finance sector.  And that helped bring us the global financial collapse.  Meanwhile, our health care system has become the most expensive, but clearly not the best in the world.

To repeat, the Kabuki play that is regulation of and law enforcement for large health care organizations goes on.  As our society is being increasingly divided into a huge majority in increasingly difficult economic circumstances and a small and  increasingly rich minority, it also seems to be increasingly divided into little people who may be ruined by lawsuits, and imprisoned for even minor infractions, and big people who have impunity. 

True health care reform would hold leaders of health care organizations accountable for their organizations' behavior, and its effects on patients and health care professionals. 

8:53 AM

Shire Settles Claims of Deceptive Marketing of Multiple Drugs for $56.8 Million, No Individual Held Responsible

Here we go again.  A big drug company has settled claims of deceptive marketing, yet no individual was held accountable.  The most extensive coverage came from the Philadelphia Inquirer, presumably since the announcement came from the local US Attorney.

The basics were:

Shire Pharmaceuticals L.L.C. will pay $56.5 million to settle allegations that it inappropriately promoted the sale of ADHD medicine, among other drugs, the U.S. Attorney's Office in Philadelphia said Wednesday.

Shire is registered in the Channel Islands and headquartered in Dublin, but operates from the United States....

As is usual in such cases,

Shire admitted no wrongdoing, but also entered into a five-year Corporate Integrity Agreement with the Office of Inspector General for the Department of Health and Human Services.

The detailed allegations make for interesting reading.

The settlement resolves allegations that, between January 2004 and December 2007, Shire promoted Adderall XR for certain uses despite a lack of clinical data to support such claims and overstated the efficacy of Adderall XR, particularly relative to other ADHD drugs. Among the unsupported claims allegedly made by Shire was that Adderall XR was clinically superior to other ADHD drugs because it would 'normalize' its recipients, rendering them indistinguishable from their non-ADHD peers. Shire allegedly stated that its competitors’ products could not achieve similar results, which the Justice Department contended was not shown in the clinical data Shire collected. Shire also marketed Adderall XR based on claims that Adderall XR would prevent poor academic performance, loss of employment, criminal behavior, traffic accidents, and sexually transmitted disease. In addition, Shire promoted Adderall XR for the treatment of conduct disorder, an indication not approved by the Food and Drug Administration (FDA).

The settlement further resolves allegations that, between February 2007 and September 2010, Shire sales representatives and other agents also allegedly made false and misleading statements about the efficacy and abuse liability of Vyvanse to state Medicaid formulary committees and to individual physicians. For example, one Shire medical science liaison allegedly told a state formulary board that Vyvanse 'provides less abuse liability' than 'every other long-acting release mechanism' on the market. No study Shire conducted concluded that Vyvanse was not abusable, and, as an amphetamine product, the Vyvanse label included an FDA-mandated black box warning for its potential for misuse and abuse. Shire also made unsupported claims that treatment with Vyvanse would prevent car accidents, divorce, being arrested, and unemployment.

Additionally, the settlement resolves allegations that, from April 2006 to September 2010, Shire representatives improperly marketed Daytrana, administered through a patch, as less abusable than traditional, pill-based medications. The settlement also resolves allegations that, for part of the foregoing periods, Shire representatives improperly made phone calls and drafted letters to state Medicaid authorities to assist physicians with the prior authorization process for prescriptions to induce these physicians to prescribe Daytrana and Vyvanse.

Finally, the settlement resolves allegations that, between January 2006 and June 2010, Shire sales representatives promoted Lialda and Pentasa for off-label uses not approved by the FDA and not covered by federal healthcare programs. Specifically, the government alleged that Shire promoted Lialda off-label for the prevention of colorectal cancer.

Thus, the allegations were that Shire marketers and "agents" made false, sometimes apparently ridiculous claims about four different medicines.  Some of these claims, for example, that an amphetamine drug had no abuse potential, or that an anti-inflammatory drug would prevent cancer (in patients at risk for cancer), could conceivably have led to patients being harmed. 


According to the Wall Street Journal, the settlement was made to clean up loose ends before the big take-over of Shire,

 The pact resolves one outstanding issue ahead of Shire's planned $54 billion acquisition by AbbVie Inc.

So note that the dollar amount of the settlement is approximately one one-thousandth (0.1%) of the total value of Shire.

According to the Philadelphia Inquirer, no one admitted guilt, and no individual will pay any penalty:

'We are pleased to have reached a resolution and to put this matter behind us,' Flemming Ornskov, Shire’s chief executive officer said in a statement.

So this follows the usual formula for legal settlements in health care.  A big pharmaceutical company was alleged to have deceptively marketed multiple products.  Some of the deceptions could have lead to patient harm.  The government took the company to court, but the end result was a monetary penalty paid by the company that might appear large, but which was tiny compared to the assets of the company.  The company did not have to admit guilt.  No individual at the company paid any penalty or suffered any consequence.  While the organization had to sign a "corporate integrity agreement," it is not clear that such agreements prevent future bad behavior.

There have been many, many such settlements, as we have discussed on Health Care Renewal.  At least these settlements serve as evidence that many, many large health care organizations have behaved unethically, often in ways that not only increase health costs, but may directly harm patients.  Yet the settlements seem bent over backwards not to trouble the people who personally profited from unethical behavior. 

Individual company marketers, their supervisors, and top executive likely made more money because of the revenue brought in by the unethical practices.  However, the settlement somehow avoided identifying any of them, or even stating unequivocally that the company, or any of its employees did anything wrong.  That is absurd, since if nothing bad was done by anybody, why did the company have to pay anything?  Beyond that, if individuals who work for big drug companies, and other large health care organizations know that whatever they do in their official capacities, they will not be held personally responsible, what would deter them from taking unethical actions in the future?

Most citizens trust drug companies to provide safe effective medicines.  Marketing drugs as safer than they are, or for purposes for which they are not effective abuses the companies' entrusted power.  Doing so in order to enrich oneself thus is a manifestation of corruption.  The ongoing parade of legal settlements is thus a marker of how corrupt health care has become. 

Furthermore, the continued inability of regulators and law enforcement to do more in the face of corruption suggest moral failure, incompetence, and perhaps more corruption.

We will never achieve true health care reform, and will never really improve our vastly over-priced, ineffective health care system until we address this sort of health care corruption. 

A final note: Eric Holder, the current US Attorney General, will soon leave.  While he has been hailed for promoting human rights in some instance (that is, for LGBT individuals), he has been criticized for never making an effort to pursue the top corporate executives who were responsible for the global financial collapse of 2008 (look here) although the Department of Justice constantly goes after relatively small scale white collar criminals.  He also appears to have almost never pursued any top corporate executives involved in deceptive, unethical, illegal or corrupt health care practices, while the government constantly pursues perpetrators of relatively small scale Medicare and Medicaid fraud (look here).  One of his US Attorneys notably pursued the late Aaron Swartz for vaguely specified computer crimes which did not appear to harm anyone while she gave passes to executives at big health care corporations that settled cases of alleged actions that likely harmed patients (look here).   His failure to pursue such large scale health care corruption should be regarded as no less serious than his failure to pursue financial corruption.

11:03 AM