Friday, October 01, 2010

Novartis Settles..., But Wait, There's More

Back in January, 2010, we posted about Novartis' settlement of charges that it promoted its anti-seizure drug, Trileptal, (Oxcarbazepine) for off-label uses, agreeing to plead guilty to one charge of violating the US Food, Drug and Cosmetic Act.  This week, the full story of the settlement just came out, and yes, but wait, there's more.  Per the New York Times article by Duff Wilson, the story is not only about Trileptal:
The Swiss drug giant Novartis is paying $422.5 million to settle criminal and civil investigations into the marketing of the antiseizure medicine Trileptal and five other drugs, federal officials said on Thursday.
The other drugs were:
Diovan, a hypertension drug that is the company’s top-selling product, at $6 billion last year; Sandostatin, a drug to treat a growth hormone disorder that had worldwide sales of $1.2 billion last year; Exforge, a hypertension drug that sold $671 million; Tekturna, a blood pressure medicine that sold $290 million; and Zelnorm, a medicine for irritable bowel syndrome and constipation that was later withdrawn from the United States market.

And the issue was not solely off-label marketing:
Federal prosecutors accused Novartis of paying illegal kickbacks to health care professionals through speaker programs, advisory boards, entertainment, travel and meals. But aside from pleading guilty to one misdemeanor charge of mislabeling in an agreement that Novartis announced in February, the company denied wrongdoing.

While the allegations were much more broad than those originally announced, the penalties were the usual suspects:
The settlement includes a $170 million criminal fine and $15 million in criminal forfeiture by Novartis Pharmaceuticals, its United States subsidiary.

Novartis settled the investigation into the other drugs for $237.5 million.

Prosecutors said top management at Novartis had approved illegal marketing from July 2000 to June 2004. No individual, however, was named or charged.

Back in June, we posted about how US law enforcement was supposedly going to start getting tougher with the people who authorized, directed or implemented wrong doing by health care organizations. Back then, federal officials said that executives would be held accountable, and forced to leave their jobs or even be disbarred from working in the industry.

However, here we are, four months later, and even a case that mushroomed from involving allegations of off-label promotion of one drug to off-label promotion of six drugs, allegations of kickbacks to physicians, and allegations that top management knew about what was going on results in no negative consequences to any individuals.

So it still seems that if misdeeds, such as promotion of drugs for off-label uses, and giving kickbacks to doctors disguised as honoraria for talks, consulting fees, and meals and travel payments, are done under the auspices of a large health care organization, no one is ultimately responsible for them.  The organization may have to pay what appears to be a big fine, but one that pales against the profits to be made from the misdeeds.

So, if an ordinary person commits fraud, he or she is likely to have to pay a big fine and go to jail.  If a physician commits fraud, he or she is likely to have to pay a big fine and go to jail, and incidentally to lose his or her medical license.  But if a corporate executive authorizes a fraudulant practice, he or she is likely not to pay any penalty (but may well have already collected a big bonus).

We have repeated endlessly that by limiting penalties to only modest increases in the costs of doing business for organizational malfeasance in health care, we just encourage more bad behavior.  But with each new example like this, I agree more that the fundamental problem has become corporatism, (or Corpocracy, as Robert A G Monks put it).  Government and corporate leaders find that they have more in common with each other than with the little people.  Or as Barry Ritholtz just blogged:
The new dynamic, however, has moved past the old Left Right paradigm. We now live in an era defined by increasing Corporate influence and authority over the individual. These two 'interest groups' – I can barely suppress snorting derisively over that phrase – have been on a headlong collision course for decades, which came to a head with the financial collapse and bailouts. Where there is massive concentrations of wealth and influence, there will be abuse of power. The Individual has been supplanted in the political process nearly entirely by corporate money, legislative influence, campaign contributions, even free speech rights.

This may not be a brilliant insight, but it is surely an overlooked one. It is now an Individual vs. Corporate debate – and the Humans are losing.

There is some pushback already taking place against the concentration of corporate power: Mainstream corporate media has been increasingly replaced with user created content – YouTube and Blogs are increasingly important to news consumers (especially younger users). Independent voters are an increasingly larger share of the US electorate. And I suspect that much of the pushback against the Elizabeth Warren’s concept of a Financial Consumer Protection Agency plays directly into this Corporate vs. Individual fight.

But the battle lines between the two groups have barely been drawn. I expect this fight will define American politics over the next decade.

Keynes vs Hayek? Friedman vs Krugman? Those are the wrong intellectual debates. Its you vs. Tony Hayward, BP CEO, You vs. Lloyd Blankfein, Goldman Sachs CEO. And you are losing . . .


Anonymous said...

I think a review of the formal definition of fascism is in order.

Rule of Law, not Rule by Lawyers said...

I believe in creative destruction when it comes to governmental programs. Clearly it is time to end the ineffective system we have now to address the problems of corporate abuses of citizens and have a new effort.

Anonymous said...

The FDA has made it clear they will not destroy a company with a fine or limits on sales. The stated reason is they will not punish shareholders, employees, or those who rely on the company’s medications.

The result is a perverted system where everyone, except those who commit the crime, are punished. The large fines do impact those who work and hold stock in the company. Bad medications, or improperly prescribed medications or devices, impact patients.

Stop the farce. Find those responsible, fine and sentence them to jail time. I imagine we will see an immediate change in corporate ethics.

Steve Lucas

Anonymous said...

And I am not allowed to speak--being a victim of massive heart attack in my 30's due to one of the medications in question. And while I support whistleblowers being paid, there is something very wrong with them receiving millions, while victims of the drug fight and get a fraction. Something is very, very wrong here.

Unknown said...

I wrote about corporatism recently on my website.

It all started to go down hill when Corporations became protected under the Bill of Rights and the 14th amendment as “Natural Born Citizens” this gives them the right the petition the government and all other rights of an individual citizen.

It was not always like this, i go into much more detail in my article here:

I take an early look at the history of corporations in America and give a few different examples from the modern era. I thought you might want to take a look at this. Thanks for the good read.

blindmanken said...

Anonymous: You are quite correct. You should indeed speak out against these drug makers
who market these dangerous poisons with little or no regard for the safety of the people who
take them. Have you tried filing a civil suit against the company in question? My mother-in-law is currently going through the same situation you described until she dicided to sue
Novartis AG over the drug Tekturna HCT. We live in Central Florida, and I can tell you first-
hand that it was very hard to find an attorney. In fact, all the major TV attorneys cowered in
in the corner like a pack of frightened schoolgirls when we told them we wanted to sue big
bad Novartis for ruining Mother's life.

If you choose this option, I do have the name of the law firm Mother retained on a no win
no fee agreement. They seem to be very agressive in this area, and if you can provide most
or all of the documents pertaining to your case, your cost may be less, as there will be little
or no need to hire a private detective.

You may contact these attorneys at:

The Eiccholz Law Group
530 Stephenson Ave. Suite 300
Savannah, Georgia, 31405
Phone: 912-232-2791

Good luck, and I hope this helps you.