Infuriating Report Shows How Govt and Big Pharma Intentionally Break Laws to Reap Massive Profit
With the “Affordable Care Act” now fully in place, the middle class is feeling the squeeze yet again through higher insurance costs, making quality health care unaffordable for many. On top of that, pharmaceutical drug prices continue to increase, especially cancer drugs which have skyrocketed.
Since 2000, the average monthly cost of oral cancer drugs went from $1,869 per month to $11,325 per month. Some of these drugs can extend a cancer patient’s life, although it may drain their life savings.
As we are well aware, pharmaceutical corporations are major power players in Washington, teaming up with government to squash competition and fleece the public through patent monopolies. The U.S. is one of only two countries where “direct-to-consumer” drug advertising is allowed, and the effects are plastered all over American TV.
But Big Pharma is not even happy with what it’s got. According to a report from Public Citizen, Pharma companies routinely break the law through deceit and fraud. The resulting financial penalties, rather than being a deterrent, are “just a cost of doing business.”
Most of the illegal activity is done through the unlawful promotion of drugs and overcharging government health insurance programs. These schemes, enabled by regulators who never put anyone in jail, actually become profitable activities.
The investigation is titled “Twenty-Five Years of Pharmaceutical Industry Criminal and Civil Penalties: 1991 Through 2015.”
From 1991 through 2015, a total of 373 settlements were reached between the federal and state governments and pharmaceutical manufacturers, for a total of $35.7 billion. Of these, 140 were federal settlements, for $31.9 billion, and 233 were state settlements, for $3.8 billion.
GlaxoSmithKline and Pfizer were the worst offenders, paying a combined total of almost $12 billion. These numbers may seem large, but they are dwarfed by profits.
Financial penalties continued to pale in comparison to company profits, with the $35.7 billion in penalties from 1991 through 2015 amounting to only 5% of the $711 billion in net profits made by the 11 largest global drug companies during just 10 of those 25 years (2003-2012).
Having to pay only five percent of profits to continue a profitable venture seems like a pretty sweet deal. Deceiving the public through unlawful advertising and defrauding government programs are sure bets for bringing in revenue to Pharma giants.
Valeant Pharmaceuticals has been in the news lately for its disreputable business strategy marked by shady accounting tactics, buying out competitors and sharply increasing drug prices. The company is facing a number of federal and state investigations, including the questionable marketing of several drugs. They should have nothing to fear, however, as the financial penalties will be a small cost of doing business.
Valeant exemplifies the racket that has been going on for years between Big Pharma and government. As Pharma companies rake in profits, including through the use of deceit and fraud, they make a payoff to government in the form of “penalties.” Government proudly says it is holding Pharma companies accountable, but no one goes to jail and the companies continue their involvement in the programs they have defrauded.
To our knowledge, a parent company has never been excluded from participation in Medicare and Medicaid for illegal activities, which endanger the public health and deplete taxpayer-funded programs. Nor has almost any senior executive been given a jail sentence for leading companies engaged in these illegal activities.
The report did find a data trend that appears to be promising. The number and size of settlements decreased in 2014 and 2015, but the authors note that it may not represent a long-term trend.
The report explores several possible reasons for this drop in settlement activity. The possibilities include a decline in federal enforcement; a shift in the focus of federal prosecutions away from off-label marketing and toward other forms of illegal activity, as alluded to (PDF) by U.S. Department of Justice officials in 2012; changes in state Medicaid pharmaceutical reimbursement strategies; and shifts in industry marketing strategies.
“We don’t yet know why there were fewer and smaller settlements in the 2014 to 2015 period,” said Dr. Sammy Almashat, researcher with Public Citizen’s Health Research Group and lead author of the report. “But we do know that, in addition to the rarity of executive accountability, previous penalties never have been large enough to deter the most common types of pharmaceutical fraud. So it would be surprising if the industry suddenly decided, of its own accord, to comply with laws it has routinely violated for decades.”
The U.S. has a long tradition of propping up robber barons to help run the corporatocracy. Pharmaceutical companies—along with the military-industrial complex, fossil fuel companies, biotech companies like Monsanto, and others—are now essentially part of government. The scheme exposed by Public Citizen report is but one example of how corporations and government engage in a racket to prey on the public.