As I reported a little while back, I had the pleasure recently of listening to a major presentation (at Davidson College, NC) by our colleague at Harvard and ACRE, Dr. Thomas P. Stossel: http://brodyhooked.blogspot.com/2010/04/encounters-with-dr-tom-stossel.html
Dr. Stossel did such a nice job of summarizing the world view of the ACRE folks that I will take this opportunity to comment on one point that's relevant to the recent AstraZeneca case.
Dr. S. was fully aware that when he tries to present his rosy view of the great advances in human well-being produced by recent Pharma and biotech breakthroughs, his critics will trot out "anecdotal" evidence of industry wrongdoing. One such anecdote is the settlement agreed to by a major drug firm when charged by the Feds with criminal conduct. As I recall, Dr. S. even provided his own list on a slide of some two dozen of these recent settlements.
He then gave the Pharma spin on that list. First of all, he said, if you think about all the wonderful new drugs and all the lives that they have saved, etc. this list looks pretty puny.
Second, we have to realize that in these cases, the drug companies are basically powerless and the Feds hold all the cards. The penalty the Feds can exact is capital punishment--a drug company found guilty of a crime automatically loses all ability to do business with Federal programs such as Medicare, Medicaid, VA, etc. for a certain number of years. That would be the death knell for any drug firm. So companies accused of crimes by the Feds cannot take the risk of defending themselves in court; they have no choice but to settle. Therefore (implies Dr. S.) most of these charges are completely false and baseless, and the companies settle solely because they are forced into it. (And of course, in most cases, the company denies wrongdoing as part of the settlement.)
OK, so that is the ACRE take on the matter. My replies:
- It is reassuring to know that the Feds do not find evidence of criminal wrongdoing in the marketing of every single drug that has recently come on the market. What I think the list proves, however long or short it is, is exactly the point that I have stressed ad nauseum in this blog--that we see here a recurring business strategy across the entire industry and not the actions of an occasional rogue firm.
- If you look at what it takes to put together one of these legal actions against a drug company--usually an inside whistle blower plus some 5-6 years of legal investigation--it is not surprising that a relatively small number have been brought. We can argue over whether these are all unjust accusations against firms of stellar virtue, or merely the tip of the criminal iceberg.
- The "capital punishment" works both ways. The Feds (specifically, the White House and DHHS, given that the executive branch and DOJ are the ones bringing the suit) know what would be the consequence of actually putting AstraZeneca, Pfizer, Merck et al out of business. First, all their thousands of employees are thrown out of work in the middle of a major recession. Second, millions of patients who rely on brand-name drugs that have no generic equivalent suddenly are deprived of those drugs without warning. If you imagine the political pressure generated by both of those aggrieved lobbies, you can see why the Feds simply would never lower the boom completely on a drug company guilty of even the most egregious behavior. (We have to add that the actual criminal behavior was no doubt engaged in by a tiny handful of company employees, with the vast majority of the workforce being blameless.)
- The end result is that the Feds go well out of their way to never shut down a big drug firm--and resort to subterfuges such as in the Pfizer case, where they "shut down" two drug firms that had actually shut down years previously and no longer existed except as paper targets (http://brodyhooked.blogspot.com/2010/04/cnn-pfizer-too-big-to-prosecute-shadow.html).
- So the real power remains in the hand of the drug firm that's "too big to shut down," analogous to the Wall St. bank that's "too big to fail."