By NEIL GORDON
USA Today reports that the world's largest pharmaceutical companies have paid billions of dollars in fines over the past few years for misconduct such as ripping off Medicare and Medicaid, yet are still allowed to continue participating in these programs.
Pfizer has racked up almost $3 billion in fines, penalties, and settlements since 2002. The bulk of that occurred in September 2009 when Pfizer agreed to pay $2.3 billion to settle federal and state civil and criminal allegations that it had illegally marketed drugs by promoting them for non-approved uses and submitted false claims to Medicare and Medicaid.
Merck has paid out nearly $6.5 billion since 2007. Most of that came in November 2007 when Merck entered into a $4.85 billion settlement of thousands of lawsuits claiming harm caused by Merck’s Vioxx pain medication. Merck incurred $1.6 billion in fines and penalties in two instances of fraudulent marketing of Vioxx and other drugs, one in February 2008 and the other in November 2011.
GlaxoSmithKline paid a whopping $750 million in October 2010 to resolve civil and criminal charges relating to substandard manufacturing practices at its Puerto Rico facility. This pales in comparison, however, to the hundreds of millions of dollars it has paid in recent years to settle negligence and wrongful death lawsuits involving drugs such as Avandia and Paxil, and its landmark $3.4 billion settlement with the IRS.
USA Today lays out government investigators’ dilemma: They can punish Pfizer, Merck, Glaxo, and other pharmaceutical companies for their bad behavior by excluding them from Medicaid and Medicare, but they do so at the risk of leaving beneficiaries without the products on which their lives may depend. Instead, they are fining the companies amounts that barely put a dent in their annual earnings and forcing them into corporate integrity agreements that often turn out not to be worth the paper they’re printed on as these companies continue getting into trouble. Clearly, some sort of middle-ground remedy is needed.
Both Congress and the White House have been working towards a viable solution. In 2010, the Department of Health and Human Services (HHS) changed its enforcement strategy from excluding entire companies to targeting only certain individuals within those companies. Other ideas being considered by HHS include revoking a company’s patent rights as a condition of settling with the government. Bills recently introduced in the House and Senate would expand the government’s ability to exclude from federal health care programs companies and individuals that have committed fraud.
POGO frequently calls attention to the "too big to debar" phenomenon, or the federal government’s seeming unwillingness to withhold taxpayer funds to large contractors because it has grown so dependent on them for certain goods or services. It’s the same problem faced by the government when trying to hold pharmaceutical companies accountable for their misconduct.
Neil Gordon is a POGO investigator.