How We Pay for Big Pharma’s Malpractice


The main reason we can’t get a health reform bill enacted is because the pharmaceutical and insurance industries aren’t happy with their piece of the action. This despite the fact that when politicians talk about cutting costs, what they really mean is cutting services to us so these two big industries can enhance their profitability.

One reason drug companies need additional revenue is because employee whistleblowers have found the nerve to report the industry’s crooked business practices—leading to multi-million dollar payouts to injured patients plus fines for legal violations. “I was trained to do things and did things that were blatantly illegal,” David Franklin, a Parke-Davis whistle-blower, told the Boston Globe in 2003. “I knew my job was to falsely gain physicians’ trust and trade on my graduate degree. If he was a cardiologist, I was an expert in cardiology. If he was a neurologist, I was an expert in neurology.” Under the False Claims Act, whistleblowers themselves stand to make millions of dollars for turning in their bosses.

But in the end we’re the ones who pay for drug company malfeasance—in the form of higher prices. And when it comes to health care reform, we’ll pick up the tab for their underhanded dealings in the form of reduced medical care—especially in the Medicare program—negotiated by our representatives in the name of fiscal restraint.

In early November the Indianapolis Star ran down some of the big payouts by the drug companies:

In January, Eli Lilly and Co. agreed to pay $1.4 billion to settle charges it illegally promoted its antipsychotic drug, Zyprexa, for unapproved uses. Nine whistle-blowers, former Lilly employees, split about $100 million of the settlement as their reward.

In September, Pfizer said it would pay $2.3 billion to settle charges that it illegally promoted numerous drugs, including the painkiller Bextra. Six whistle-blowers split about $102 million.

In October, AstraZeneca reached a $520 million agreement to settle investigations into illegal marketing of its psychiatric drug, Seroquel. Several whistle-blowers will split an undisclosed amount of money.

And last week, in a courtroom in Trenton, N.J., the latest case began, as a former sales worker at Janssen (owned by Johnson & Johnson) testified she was fired in 2004 for complaining about what she considered pressure to illegally promote the antipsychotic drug Risperdal for unapproved uses.

Meanwhile, more than 1,000 active whistle-blower cases are backlogged at the Department of Justice, and about 200 of them deal with drug companies.

Of the top 20 False Claims Act cases, measured by the amount of money recovered, 12 involved judgments or settlements against pharmaceutical companies, accounting for billions of dollars in recoveries.

None of the fines or settlements resulting from these cases will hurt the profitability of Big Pharma, which consistently ranks as one of the top two or three most profitable industries in the United States in Fortune 500 rankings. In 2008, according to Fortune, profits of the top 10 drugmakers alone came to $50 billion—and that, of course, is after the huge payouts to corporate executives.

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