GlaxoSmithKline Handed a Whopping $3 Billion Fine... But Is It Enough?

Talk about making a statement: Pharmaceutical giant GlaxoSmithKline was recently slapped with an unprecedented $3 billion fine for a series of questionable business practices dating back to 1998. The fine is the largest for healthcare fraud in US history — and a clear message from the US Department of Justice that putting the lives of Americans at risk is absolutely not cool.

But as extreme as this fine might appear, some say it was just a slap on the wrist.

The charges follow a criminal investigation that uncovered several instances of fraud committed by the British company, including the promotion of off-label use of two antidepressant drugs — Paxil and Wellbutrin. GSK admitted that, between 1998 and 2003, it promoted Paxil to people under 18, despite no approval from the US Food and Drug Administration. During the same period it sold Wellbutrin for the treatment of unrelated conditions like sexual dysfunction and addiction to drugs. And between 2001 and 2007, GSK failed to disclose information that the diabetes drug Avandia could cause congestive heart failure and heart attacks.

In other words, it blatantly and knowingly put lives in danger.

The company was also fined for misconduct related to questionable marketing practices, such as distributing a misleading medical journal article and providing doctors with meals and spa treatments — what are considered illegal kickbacks.

But as dramatic as the $3 billion fine appears, there are some who believe it was not enough.

"Until business in general and industries in particular make the consequences of misconduct harsh, others will continue to find quick ways to make a buck, regardless of how many fiscal and literal lives are put in jeopardy," wrote Vince Crew in a recent Street OpEd. He, like many others, feel that the GSK brass should have been summarily dismissed and even face jail time.

Looking at it more closely, the $3 billion dollar fine could be considered consequential, despite the fact that GSK is valued at $113 billion. The company posted a profit last year of $12.4 billion, and a turnover of $43 billion. While it is certainly poised to survive this experience, GSK's investors will certainly feel it at year-end — and this incident is sure to make them unhappy.

Furthermore, some commentators are arguing that the incident shows just how far Big Pharma will go when left unchecked, and how necessary these fines really are. Writing in Science-Based Medicine, Steven Novella had this to say:

The GSK settlement, in my opinion, is just the most recent evidence that industry cannot be left to their own devices without proper monitoring and regulation. There is a certain efficiency and motivation for innovation in the private sector approach to drug development. That seems worth preserving. But companies are chiefly motivated by profit, and when billions of dollars are at stake there is a huge motivation to bend the rules. We take for granted that companies are going to distort information when marketing their products to the public. Experienced and savvy consumers view all commercial and marketing activity with a skeptical eye and we do need to take some personal responsibility for protecting ourselves (let the buyer beware).

At the same time the public largely expects that with health care issues the government will play some role in protecting the public from fraud, misinformation, unsafe and ineffective products and services. The stakes are just too high to make every consumer fend for themselves in a completely unregulated wild west of health care. In addition the science behind health care products and services is complex, and it is not reasonable to expect the average citizen to be able to sift through complex technical medical research. That is essentially the reason for the existence of the FDA.

In its defense, GSK issued a statement expressing regret. CEO Andrew Witty noted that the offenses were part of a corporate culture that is no longer tolerated, and that "the company reached this settlement with the government to avoid the delay, expense, inconvenience and uncertainty of protracted litigation."

That said, US Deputy Attorney General James Cole noted that "this historic action is a clear warning to any company that chooses to break the law."

Regardless of whether the $3 billion fine is proportional to the degree of the misconduct committed, it's clear that, given their significant social responsibility, pharmaceutical companies have to be shown that being unethical is simply not worth the cost. Maybe this historic fine can be interpreted as a positive step towards ensuring that this doesn't happen again. Or maybe not.

Other sources: New Scientist, Reuters.

Image by B Brown via Shutterstock.com.