Health Care in America - Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry

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The Broken American Health Care System

Rapidly Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry: 1991 to 2010

Sammy Almashat, M.D., M.P.H, Charles Preston, M.D., M.P.H, Timothy Waterman, B.S., Sidney Wolfe, M.D.

Public Citizen’s Health Research

Group EXECUTIVE SUMMARY

Background

U.S. spending on prescription drugs has increased from $40 billion in 1990 to$234 billion in 2008. In this era of rapidly rising drug costs, the illegal pharmaceutical company activities that have contributed to such inflated spending have garnered a significant amount of media attention. Recent billion-dollar settlements with two of the largest pharmaceutical companies in the world, Eli Lilly and Pfizer, provide evidence of the enormous scale of this wrong doing.  However, the total size, varied nature, and potential impact of these illegal and potentially dangerous activities have not been previously analyzed. This study examined trends from 1991 to the present in federal and state criminal and civil actions against pharmaceutical companies in order to address these questions.

Analysis

The purpose of this study was to compile a comprehensive database of all major criminal and civil settlements between federal and state governments and pharmaceutical companies. Press releases from both federal and state governments, in addition to existing online databases, were used to identify all settlements of at least $1 million during the past 20 years.

Main Findings

• Of the 165 settlements comprising $19.8 billion in penalties during this 20-year interval, 73 percent of the settlements (121) and 75 percent of the penalties ($14.8 billion) have occurred in just the past five years (2006-2010).
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• Four companies (GlaxoSmithKline, Pfizer, Eli Lilly, and Schering-Plough) accounted for more than half (53 percent or $10.5 billion) of all financial penalties imposed over the past two decades. These leading violators were among the world’s largest pharmaceutical companies.
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• While the defense industry used to be the biggest defrauder of the federal  government under the False Claims Act (FCA), a law enacted in 1863 to prevent defense contractor fraud, the pharmaceutical industry has greatly overtaken the defense industry in recent years. The pharmaceutical industry now tops not only the defense industry, but all other industries in the total amount of fraud payments for actions against the federal government under the False Claims Act.
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• The practice of illegal off-label promotion of pharmaceuticals has been responsible for the largest amount of financial penalties levied by the federal government over the past 20 years. This practice can be prosecuted as a criminal offense because of the potential for serious adverse health effects in patients from such activities.
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• Deliberately overcharging state health programs, mainly Medicaid fraud, has been the most common violation against state governments and is responsible for the largest amount of financial penalties levied by these governments. This type of violation is also the main factor in the considerable increase in state settlements with pharmaceutical companies over time.
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• Former pharmaceutical company employees and other “whistleblowers " have been instrumental in bringing to light the most egregious violations and have been responsible for initiating the largest number of federal settlements over the past 10 years. From 1991 through 2000, qui tam (whistleblower) cases made up only 9 percent of payouts to the government, but from 2001 through 2010, they comprised 67 percent of total payouts.

Conclusion

Over the past two decades, especially during the past 10 years, there has been a marked increase in both the number of government settlements with pharmaceutical companies and the size of the accompanying financial penalties.  The reasons for these increases are likely related to a combination of increased violations by companies and increased enforcement on the part of federal and state governments.  The danger to public safety and the loss of state and federal dollars that comes with these violations require a more robust response than the government’s current practices. Given the relatively small size of current financial penalties when compared to the perpetrating companies’ profits, both increased financial penalties and appropriate criminal prosecution of company leadership may provide a more effective deterrent to unlawful behavior by the pharmaceutical industry.

Worst Offenders and Largest Settlements

Individual Companies: Total Penalties, 1991-2010

There are 20 pharmaceutical companies that paid a total of at least $100 million each in financial penalties over the past 20 years. The four worst offenders, with at least $1 billion in penalties each, were GlaxoSmithKline, Pfizer, Eli Lilly, and Schering-Plough. Together they accounted for more than half (53percent) of all financial penalties paid out by pharmaceutical companies.

Twenty Largest Settlements, 1991-2010

The 20 largest settlements over the past two decades follow. In the largest settlement of the past 20 years, GlaxoSmithKline agreed to pay the federal government $3.4 billion in 2006 for failing to pay required taxes over a 17-year period.

The second and third largest settlements included the two largest criminal fines ever levied by the federal government against any company. In January 2009, Eli Lilly was forced to pay $515 million (the largest criminal fine ever received by a corporation at that time) and Pfizer, later that year, was fined$1.2 billion (the largest criminal fine ever imposed in the U.S.). Both companies were fined for illegal off-label promotion.

The majority (14) of the 20 largest settlements have occurred within the past five years (2006-2010), consistent with the dramatic increase in pharmaceutical industry financial penalties in recent years.  Of note, almost all cases (16 of 20) involved violations of the federal FCA, at least in part. Multiple blockbuster drugs (i.e., those with sales exceeding $1 billion per year), such as Neurontin (gabapentin), were involved in these settlements. For example, in the Pfizer case of 2004, the company was charged with illegal off-label promotion of Neurontin, a drug which in 2002 generated 94 percent of its $2.27-billion revenue from off-label use.

Table 2. Pharmaceutical Company Penalties: Worst Offenders

Company - Fine in millions of dollars - Percent of Total

GlaxoSmithKline                                     4501              22.7

Pfizer                                                            2935             14.8

Eli Lilly                                                        1712               8.6

Schering-Plough                                      1339               6.8

Bristol-Myers Squibb                             890                4.5

AstraZeneca                                               883                4.5

TAP Pharmaceutical Products            875                4.4

Merck                                                           806                4.1

Serono                                                          704                3.6

Purdue                                                         620                3.1

Allergan                                                      600                3.0

Novartis                                                       524                2.6

Cephalon                                                     425                 2.1

Johnson & Johnson                                353                 1.8

Forest Laboratories                                313                 1.6

Sanofi-aventis                                           310                 1.6

Bayer                                                            301                 1.5

Mylan                                                           267                 1.3

Teva                                                              181                 0.9

King Pharmaceuticals                          167                 0.8

Other                                                          595                 3.0

*Parent company names are current names without corporate (e.g. inc. or plc) designations. If company is non-existent now, name at time of most recent settlement was used.**Data for 2010 include only the first 10 months of the calendar year (through Nov. 1, 2010)***Percent of $19.813 billion in overall penalties. Percents do not add up to 100% as some cases were excluded due to inability to determine individual company share in settlement.

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Health Care in America - "Corruption at the Core of the Collapse

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The Broken American Health Care System

What is the driving force behind the failure of the most expensive heath care system in the world to provide a better quality of life?  A lot of us have opinions.  So do the media, politicians and academia, but none seem to be addressing the reason behind every failure of an institution like medical care in society.

There comes a point when the institutions no longer serve the purpose they were created to address.  They evolve to a position where they believe the survival of the institution is more important than the mission of the institution.

When that happens, and inevitably it will when all good causes become their own bureaucracy, we have the seeds of corruption planted.

In America we spend about 9.9% of our disposable income on food.  Thirty years ago we spent 15% of our disposable income, meaning we spend over 5% less today on food than thirty years ago.

Now compare that to our experience with health care costs.

An article  was written June 28, 2009 by George Will titled: "Americans Will Regret Health Care Fix".  It described the cost of health care in America as follows.

The Hudson Institute's Betsy McCaughey, writing in The American Spectator, says that in 1960 the average American household spent 53 percent of its disposable income on food, housing, energy and health care. Today the portion of income consumed by those four has barely changed -- 55 percent. But the health care component has increased while the other three combined have decreased. This is partly because as societies become richer, they spend more on health care -- and symphonies, universities, museums, etc.

It is also because health care is increasingly competent. When the first baby boomers, whose aging is driving health care spending, were born in 1946, many American hospitals' principal expense was clean linen. This was long before MRIs, CAT scans and the rest of the diagnostic and therapeutic arsenal that modern medicine deploys.

In a survey released in April by NPR, the Kaiser Family Foundation and Harvard, only 6 percent of Americans said they were willing to spend more than $200 a month on health care, and the price must fall to $100 a month before a majority are willing to pay it. But according to Grace-Marie Turner of the Galen Institute, Americans already are paying an average of $400 a month.

Most Americans do not know this because the cost of their care is hidden. Only 9 percent buy health coverage individually, and $84 of every $100 spent on health care is spent by someone (an employer, insurance company or government) other than recipients of the care. Those who get insurance as untaxed compensation from employers have no occasion to compute or confront the size of that benefit. But it is part of the price their employers pay for their work.

During the past thirty years health care as a percentage of our gross domestic product has grown by more than ten times.  That does not include your taxes paid for the government expenditures on health care.  The cost now is over $2.6 trillion a year and rising, both in terms of treatment and insurance.

Make no mistake, health care, long a public service through churches, non-profit organizations, government owned facilities and other resources, has now become BIG BUSINESS.

Pharmaceutical corporations led the way into making health care a profit center, not a public service, and now virtually every aspect of our health care system is privately owned, profit centered, and financed by Wall Street.

Wall Street may be reasonably good at financing new businesses like the Internet companies and health care industry but once Wall Street takes control of the industry through controlling the financing, that company serves a new master, Wall Street profitability.

Before you get out your protest banners and decide to occupy hospitals, I mean it is fashionable to protest against anyone we think is ripping off the public, look in the mirror because you are the one embracing a system now under the control of the financial institutions.

My point is this.  Health care is more about serving Wall Street interests than the people's interest.  Of course this is America and we encourage capitalism and these health care capitalists are operating within the framework of the law.  I guess if you owned stock in enough health care companies you would be profiting from the gouging of the American public with excessive health care costs, but most of us don't own health care stocks.

Our health care industry has evolved to the point where moral and financial corruption permeate the entire system, even corrupting those in the industry who really want to help people.

The medical industry is dependent on funneling millions in campaign funds to politicians who have to vote on their funding, in bribing doctors to prescribe drugs, in bribing universities to compete on a cut throat basis for grants from private corporations for survival, and for encouraging doctors to own testing equipment which in turn has to be justified to keep.

Conflicts of interest and ethics issues dominate the health care landscape.  It has become so financially competitive that excessive and unnecessary treatment is the order of the day as a simple and nearly undetectable way to pad the revenue stream.

Why X ray a single tooth if you can X ray the whole mouth?  Why take one or two spinal X rays when you can take multiple X rays of the spine?  Why not set up follow up doctor appointments for reasons of billing for the office visits rather than transmitting test results?

If a drug company pays a doctor to prescribe their drugs, and the more drugs prescribed the more the doctor makes, don't you think more prescriptions will be written?

How can FDA employees fairly evaluate a New Drug Application (NDA) worth potentially billions of dollars in new revenue if the same employees can quit their jobs and go to work for the same drug companies for far more money?

The top five drugs in terms of sales revenue in America all make between $3 and $5 billion a year for the owners, the pharmaceutical company.  If new health research or treatment does not generate profits first and foremost, it is of little value to a profit driven health care system.

If congress or the president eliminated conflicts of interest in the industry, both in terms of the relationship between government workers and the industry and between the industry and practitioners, it would be a great start to cost reduction.

The same conflict of interest exists when doctors are convinced to own expensive equipment like CAT scan and MRI machines, blood laboratories, pharmaceutical offices and others.  If Medicare or a health insurance company allows excessive CAT scans and MRI analysis for the purpose of making sure people are diagnosed and the doctors own the machines, don't you think more screens will be prescribed?

There are a thousand and one ways to get caught in a conflict in an industry that is barely regulated.  Usually there are industry watchdogs like the Securities and Exchange Commission assigned to keep an eye on the system.  However, even they are subject to the same conflicts because the SEC failed to see the housing and banking crisis coming.  More than likely they just turned their back to it.

A comprehensive and fair conflict of interest law could be proposed by the president and approved by congress and a thorough ethics law could be adopted by the medical and health care industries and that would start to unscramble the layers of conflicts and ethics violations we face today.

Unfortunately, such leadership by our politicians and health industries is nonexistent and will be as long as the industry finances the political campaigns in Washington and through the nation.  So we also need campaign financial reform, meaningful reform, to fix that inherent problem.

Fix the conflict of interest, draw up enforceable ethics laws, and clean up the campaign finance mess and it will lead directly to reduced health care costs.  Once again, nothing has been proposed by politicians to correct this mess.

Isn't it about time to REALLY start fixing things?

Our Broken Health Care System - Whom can you trust and whom can you believe?

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What a sad commentary to hear the news media talk about how our presidential candidates from Clinton to Christy, Bush to Fiorina, have suddenly begun talking about the dangers of prescription drugs and how addiction to prescriptions is causing a heroin epidemic in America.

Hillary should think about such things when her presidential campaign accepts all that money from Big Pharma and the Clinton Foundation accepts millions of more dollars from the same scoundrels.  One day the FBI will recover the missing emails and we will finally know the truth.

Until then, I have been writing articles for over a decade about the abuses in medicine and health care including the prescription drug explosion.  Demand our candidates tell us what they are going to do about it!  You will hear nothing.

This is the same road Barack Obama got away with when he took millions of dollars for his campaign from Big Pharma, then attacked them over health care.  Then he took $50 million from them to promote Obamacare when it was being debated and lo and behold, after it was approved the drug companies got everything they wanted and more.

I am reprinting the key articles I wrote exposing the dangerous condition of our health care system, all because it is grounded on profitability and not healing.  Obamacare is Eutopia for anyone desiring to keep people sick to maximize insurance payments and make no mistake my friends, they will do anything and everything necessary to make money by keeping you sick.

So your favorite family doctor gets a bonus when he prescribes certain prescriptions.  Where I come from they call that bribery, and millions and millions of dollars are involved.  Congress and the president make sure the doctors are exempt from liability if they prescribe these drugs, even if they lead to suicide or accidental overdoses.

Big Pharma pays off doctors to prescribe their drug and their drug leads to the death of the 

 user whether through adverse side effects or suicide from addiction to the prescribed drug.  So far you have committed bribery, used unfair business practices, had excessive prescriptions written, and killed your client, and you cannot even be held responsible.

Those lovable drug companies we see on television bring you relief from pain and drugs to help you sleep.  Sounds like a Columbian drug cartel to me.  As for the trusted doctors, they are the drug distributors, the ones condemning you to death, and there is no recourse for what either has done.

Well, we have a government allowing this insanity to take place, we have a health care system called Obamacare thriving on the carnage resulting from over-prescription, and we have health insurance companies paying the tab as long as the people paid their highly inflated premiums.

All of the assorted characters are responsible for the tens of thousands of suicides taking place and the hundreds of thousands of drug over-doses resulting in accidental or suicidal death.

"The Blood of American Victims is on the Hands of the People we Trusted most."

The following series of "broken health care system" articles explains how we, the people, are victimized, by a system with no morals, no ethics, and no justice, just profit and greed.

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CPT Master Subject Index - Health Care Issues

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The Broken American Health Care System Article Index

October 14, 2013

Health Care in America - "Corruption at the Core of the Collapse"

http://www.blogger.com/blogger.g?blogID=36650605#editor/target=post;postID=8214232287731538451;onPublishedMenu=posts;onClosedMenu=posts;postNum=0;src=postname

 

 

 

June 14, 2013

Obamaville - June 14, 2013 - The Midterm Check Up

http://www.blogger.com/blogger.g?blogID=36650605#editor/target=post;postID=3652150078613629811;onPublishedMenu=posts;onClosedMenu=posts;postNum=1;src=postname

 

 

 

March 07, 2012

Health Care in America - Illegal "Off-Label" Conspirators

http://coltonspointtimes.blogspot.com/2012/03/health-care-in-america-illegal-off.html

 

 

March 06, 2012

Health Care in America - Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry

http://coltonspointtimes.blogspot.com/2012/03/health-care-in-america-increasing.html

 

 

 

March 06, 2012

Health Care in America - Big Pharma Convictions in Civil and Criminal Courts

http://coltonspointtimes.blogspot.com/2012/03/health-care-in-america-big-pharma.html

 

March 06, 2012

Health Care in America - Big Pharma Fraud, Cover Ups & Corruption

http://coltonspointtimes.blogspot.com/2012/03/health-care-in-america-big-pharma-fraud.html

 

 

February 29, 2012

Health Care in America - The Sword of Damocles - Antibiotics

http://coltonspointtimes.blogspot.com/2012/02/health-care-in-america-sword-of.html

 

 

February 21, 2012

Health News You Can Use - Stay Informed & Stay Alive

http://www.blogger.com/blogger.g?blogID=36650605#editor/target=post;postID=8082353701027388736;onPublishedMenu=posts;onClosedMenu=posts;postNum=146;src=postname

 

 

February 15, 2012

Did You Hear About This in the News?

America's Legal Drug Addiction

http://coltonspointtimes.blogspot.com/2012/02/did-you-hear-about-this-in-news.html

 

 

February 06, 2012

Health Care in America - "Corruption at the Core of the Collapse

http://coltonspointtimes.blogspot.com/2012/02/health-care-in-america-corruption-at.html

 

 

February 03, 2012

Health Care in America - "Possible Side Effects" Warnings

http://coltonspointtimes.blogspot.com/2012/02/health-care-in-america-possible-side.html

 

 

January 31, 2012

Health Care in America - Where Politicians Fear to Tread

http://coltonspointtimes.blogspot.com/2012/01/health-care-in-america-where.html

 

 

May 14, 2010

Now that we have a health care bailout - how about an American Health Care Reform?

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May 13, 2009

The Health Industry Capitulation - This Sure Ain't No Pythagorean Theorem

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