The largest health care fraud settlement in history: Is it big enough?

A law is a rule of conduct or action formally recognized as binding and enforced by a controlling authority. Law enforcement broadly refers to any system by which some members of society act in an organized manner to promote adherence to the law by discovering and punishing persons who violate the rules governing that society.

The purposes of punishment for crimes include:

1. Punishment will stop them from committing further crimes.
2. Punishment tells the victim that society disapproves of the harm that he or she has suffered.
3. Punishment discourages others from doing the same thing.
4. Punishment protects society from dangerous or dishonest people.

But what if the alleged crimes are committed by corporations?

Do you believe that? Of course not. No corporations commit crimes. Human beings within corporations commit crimes.

Case at point: According to the U.S. Justice Department, GlaxoSmithKline LLC has agreed to plead guilty and to pay $3 billion to resolve liabilities arising from (a) the company’s unlawful promotion of certain prescription drugs for uses not approved by the FDA, (b) its failure to report certain safety data, and (c) its civil liability for alleged false price reporting practices.

This resolution is the largest healthcare fraud settlement in U.S. history and the largest payment ever by a drug company.

The Associated Press has reported that the improper marketing to doctors included expensive resort vacations, European hunting trips, high-paid speaking tours, and even tickets to a Madonna concert.

Did the punishment fit the crime and meet the purposes described above? I don’t think so.

The problems include:

1. The penalty sounds like a lot of money but that company made probably 10 times that much from its illegal actions.
2. This report sounds like a broken record, same bad behavior, different companies, same fines.
3. Companies like this with new leaders (the old guilty ones already took the money and ran free) just keep playing the same broken record, and the fines are nothing more than the “cost of doing business,” money regained by pricing practices.
4. The myriad docs who took the bribes also run free.

It is the recidivism of this whole industry behavior pattern that makes a cruel joke of Eric Holder’s (and his predecessors) Justice Department’s non-prosecutorial actions.

It seems to me that something like Racketeer Influenced and Corrupt Organizations (RICO) laws are going to have to be applied to the people who make these corporate decisions if the country really wants to change bad corporate behavior.

And not only for Big Pharmas.

One time Alabama Governor and third party Presidential candidate George Wallace, himself a lawyer and one time judge, when discussing appropriate punishment for certain particularly egregious crimes, used to say that the jail was too good a place for certain criminals; they should be placed “under the jail.”

How about trying that kind of punishment for some guilty CEOs, Board Chairs, COOs and CFOs?

I’ll bet that would improve behavior really fast.

George Lundberg is a MedPage Today Editor-at-Large and former editor of the Journal of the American Medical Association.

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  • William Nuesslein

    There is always the tension between profit being incentive for socially
    desirable behavior and an gouging of the consumer. One fellow asked “How
    can you make money off sickness and death?”, That is what doctors do
    for the most part.

    The question is whether respectable companies like Glasco are highway
    bandits or just fat targets for those with misguided views of medical
    economics. I think the latter. The most fearsome assault against
    civilization is by the Plaintiff bar not our drug company. I like our
    president very much and will vote for him next November, but he is very
    foolish at times as when he put a moratorium on Gulf drilling and in his
    acceptance of the absolutely evil Naderiest.

    I expect better from Dr. Lundberg. This post is terrible.

  • http://www.facebook.com/people/Steven-Reznick/100000549195050 Steven Reznick

    How different is this than the fraud committed by Columbia Health Care with the CEO being the now governor of Florida Rick Scott? I believe Mr. Scott took the fifth amendment numerous times while under oath being questioned about his possible involvement in the fraud. Columbia is now part of HCA and one should read last week’s NY Times front page expose on HCA and how it became profitable again. Corporations are the new world powers and they certainly treat paying a fine as the cost of business to accomplish their goals.

  • Robert Young

    Yeah Dr. Lundberg, don’t pick on Glasco whoever that may be, even though Glaxo has settled false claims cases before, but haven’t lost their Medicare or Medicaid privileges.

    If one looks at Holders record from when he was acting AG in 2000 to now, $20 billion of the $30 billion recovered was from drug manufacturers, so one might think pharmaceutical manufacturers are the biggest crooks around – and they’d be right.

    As to Mr. Nuesslein’s favorite President, before ACA passed his deal with PhRMA that causes our drugs to continue to cost twice as much as in any other country, spelled out by an energy and commerce memo. http://republicans.energycommerce.house.gov/Media/file/PDFs/20120531ObamacareDeals.pdf

    Meanwhile the drug companies can’t find any new chemicals they can patent, so they are left with trying to find other medical conditions and different names for existing drugs, that they will try to get physicians to write for. These as 85% of our drugs are made in facilities in China or India which the FDA can’t even locate let alone inspect! The FDA having nothing to keep English only inspectors “busy” as U.S. facilities close, they “double” inspections of U.S. facilities causing drug shortages.

    With 33% of physicians who are in short supply, not taking new Medicaid patients and 18% not taking Medicare or any new patients, how we can add 16 million new Medicaid and the 3.66 million new Medicare patients annually seems impossible without waits longer than in Canada and any other Nation. No problem, physicians will work more for less –It’s the American way, but can it last?

  • http://www.facebook.com/john.hoefen John Hoefen

    If people could connect with lost lives with these problems maybe something could be done to prosecute.The decision by Astrazenica not to warn doctors in the PDR of the propofol infusion syndrome was a deliberate act which cost our son and alot of other people their life.