Don’t worry it’s only $9Bn
Last week I noticed that Takeda, and Lilly had just been fined $9bn.
A US jury has fined Takeda and Eli Lilly $9 billion (£5.4 billion) for causing a man’s bladder cancer with their diabetes drug Actos (pioglitazone). The verdict came down hard on the companies after the case unearthed evidence that Japanese company Takeda had deleted emails, at least one of which raised concerns over Actos’ safety. ‘This serves as a wake-up call to those pharmaceutical companies that cut corners and hide or distort the facts rather than openly testing and educating about their drugs,’ Mark Lanier, who represented the plaintiffs, tells Chemistry World.
Takeda was unable to produce files for 46 clinical and sales employees, 38 of which were deleted after it ordered documents be preserved in 2002 ahead of legal action over Actos. ‘The breadth of Takeda leadership whose files have been lost, deleted or destroyed is, in and of itself, disturbing,’ wrote Judge Rebecca Doherty in a January ruling. http://www.rsc.org/chemistryworld/2014/04/missing-emails-safety-risk-actos-takeda-eli-lilly-fine
I think that most industries would be somewhat shocked at a fine this big, and this truly was a whopper. However, it follows a pattern of massive fines. GSK was fined $3Bn in 2011 for suppressing clinical trial data on increased suicide risk in children, among many other activities, such as paying kickbacks to doctors. Pfizer was ordered to pay $2.3Bn in 2009 for a series of illegal activities, from mis-branding drugs, to bribery and corruption. AstraZeneca had to shell out $523 million in 2010 for illegally marketing Seroquel for use in children. Roche is accused of hiding data on Tamiflu, GSK is embroiled in corruption cases in China and elsewhere. Merck was hit with a $670 million fine over Medicare fraud in 2007. Eli Lilly shelled out $1.4Bn for illegal marketing in 2009…….etc.
These are vast fines, and the activities exposed are very disturbing indeed. Suppressing data on drugs causing cancer, or suicide, is very serious indeed. You would think these fines would be punitive, but clearly they are not. Or they wouldn’t keep happening. Perhaps the companies just see this as the price of doing business?
Say you have a drug that is making $5Bn a year in profit, and half of that profit comes from illegal marketing, or hiding data. It is not difficult to work out that after only five years, you have made an extra $12.5Bn in profit. I assume it takes at least five years for any case to come to court – probably far, far, longer. (Takeda, it seems, started suppressing data as far back as 1993)
I suppose the equation here is very simple, if dreadful. If you get fined a paltry £1Bn for hiding data, then you have made an extra $11.5Bn in profit from acting illegally. Even if you get fined $9Bn, you are still in the money. (Sales of pioglitzazone were very nearly £5Bn in 2010, so this is not an abstract discussion).
In short, if you do not possess a moral compass, and you are only interested in maximizing profit, it makes perfect sense to market your drugs illegally, pay bribes to doctors, suppress data on increased cancer risk – and all the rest of the corrupt and illegal activities that have been exposed in the courts. Why would you not? Any fine you have to pay is going to be smaller than the increased profit.
In my opinion the only real ‘why you would not‘ is if you, the CEO of Takeda, or Merck, or Pfizer can actually be sent to jail if it turns out that the company was acting illegally on thier watch. At present, the greater the profit, the greater the CEO bonus. Fines will usually arrive long after you have left the company, with a massive pay off, and a pat on the back for your great work in boosting shareholder value.
I think it would concentrate the mind if the CEO or Takeda, or Merck, or Pfizer knew that they would go to prison for a long time, if the company they run, or ran, is found guilty suppressing data. At present we are, effectively, rewarding corrupt behavior by pharmaceutical companies. Which is why there have been so many huge fines; and why I predict that there will be many more.
Currently, the situation is one of extreme moral hazard. A pharmaceutical company makes far more money acting illegally, than acting legally. If the activity is exposed, no-one goes to prison and no-one is personally bankrupted. All that is required is to set aside enough money to pay the fine, if it ever arrives. ‘Don’t worry, dear shareholders, it’s only $9Bn.’ Phew, and I thought profits would be damaged.’