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"Breaking the law shouldn't be profitable, especially not when patients' health and lives are on the line." (Photo: Chris Potter/flickr/cc)

Report Shows Breaking the Law 'Just a Cost of Doing Business for Big Pharma'

"It's time to stop letting the U.S. government play PhRMA's fool."

Deirdre Fulton

As a new report shines light on 25 years of puny penalties for pharmaceutical industry lawbreaking, health activists worldwide are gearing up for a "Global Day of Action Against Pharma Greed," scheduled to take place Friday.

The report, released Thursday afternoon by Public Citizen, shows that "stronger enforcement is needed to deter pharmaceutical manufacturers from continuing to break the law and defraud federal and state health programs," according to a press statement. An update to a previous study released in 2012, the report catalogues all major financial settlements and court judgments between pharmaceutical companies and federal and state governments from 1991 through 2015, which totaled $35.7 billion.

"Breaking the law shouldn't be profitable, especially not when patients' health and lives are on the line."
—Dr. Sidney Wolfe, Public Citizen's Health Research Group

Within that 25-year span, overcharging of government health insurance programs—mainly drug pricing fraud against state Medicaid programs—was the most common violation, while the unlawful promotion of drugs was the single transgression that resulted in the largest financial penalties. Big Pharma giants GlaxoSmithKline and Pfizer reached the most settlements (31 each) and paid the most in financial penalties—$7.9 billion and $3.9 billion, respectively—to the federal and state governments.

Another of the report's key findings is that both the number and size of settlements decreased significantly in 2014 and 2015.

While Public Citizen admits it can't yet explain this drop in settlements, "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," said Dr. Sammy Almashat, researcher with Public Citizen's Health Research Group and lead author of the report.

Indeed, Public Citizen notes, the pharmaceutical industry's $711 billion in global net profits from just one decade (2003-2012) dwarf the $35.7 billion in penalties recovered over the last quarter century.

"So it would be surprising," Almashat said, "if the industry suddenly decided, of its own accord, to comply with laws it has routinely violated for decades."

Bottom line, said Dr. Sidney Wolfe, founder and senior adviser to Public Citizen's Health Research Group, "Breaking the law shouldn't be profitable, especially not when patients' health and lives are on the line."

He added: "Larger financial penalties, especially for repeat offenders, and jail time for executives implicated in criminal activity might actually change the calculus, so that the consequences of lawbreaking are no longer just a cost of doing business for Big Pharma."

Expanding its indictment of the industry, Public Citizen will join other health advocacy organizations on Friday outside the Pharmaceutical Research and Manufacturers of America (PhRMA) office to demand Big Pharma stop charging unethical prices for medications—and for the U.S. government to stop doing the industry's bidding. 

The groups say the lobbying association "has worked to obscure recent scandals in drug pricing, arguing simply that pricing is complex." Furthermore, they add, "The biomedical research and development system that PhRMA defends has failed the sick, bankrupted public programs, and left millions of poor people to die worldwide."

And on top of all that, PhRMA is pushing for longer-term monopolies in corporate-friendly trade agreements like the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), despite evidence that such deals would delay the production and availability of lifesaving, affordable generic medicines.

As Jacob Levi of the direct action advocacy group ACT UP put it on Thursday: "It's time to stop letting the U.S. government play PhRMA's fool."

According to the press advisory from Universities Allied for Essential Medicines, other day of action events will take place in Sydney, Rio de Janeiro, Tokyo, Delhi, Ahmedabad, New York City, Boston, San Francisco, "and three other international cities that cannot yet be named due to the nature of the events."

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