Introduction – Rapidly Increasing Criminal and Civil Penalties Against the Pharmaceutical Industry: 1991-2010

Rapidly Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry: 1991 to 2010

December 16, 2010

Sammy Almashat, M.D., M.P.H, Charles Preston, M.D., M.P.H,
Timothy Waterman, B.S., Sidney Wolfe, M.D.
Public Citizen’s Health Research Group

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Introduction

In the past few years, the pharmaceutical industry has come under increasing scrutiny for myriad criminal and civil violations.[1] It seems as if almost every week, a new settlement is announced. Why this is happening is a question for debate. But what is clear is that pharmaceutical companies are being more aggressive than ever before in the marketing and sales of their products and in maximizing their profit margins.[2], [3]

Governments have struggled to keep pace with the increase in these companies’ aggressive tactics. The federal government has imposed some of the largest criminal fines ever for activities such as off-label promotion.[4] And as state Medicaid programs have struggled with high enrollments[5] and dire budgetary conditions, an increased focus has been placed on rooting out Medicaid fraud.[6]

This study examines trends in, and details of, major federal and state government settlements with pharmaceutical companies over the past two decades. A database of civil and criminal settlements involving these companies was compiled, including the type of violation and the amount of money paid as a result of each settlement. From this database we explore various aspects of this serious problem, such as time trends in company payouts, individual company totals, the nature of actions taken (civil vs. criminal, federal vs. state), and major laws that were allegedly violated. To our knowledge, this is the first study that attempts to document and analyze all major pharmaceutical company settlements with both federal and state governments.

[1] Evans, D. When Drug Makers’ Profits Outweigh Penalties. 21 Mar 2010. Washington Post. Web. Accessed on November 13, 2010. http://www.washingtonpost.com/wp-dyn/content/article/2010/03/19/AR2010031905578.html

[2] Evans, D. When Drug Makers’ Profits Outweigh Penalties. 21 Mar 2010. Washington Post. Web. Accessed on November 13, 2010. http://www.washingtonpost.com/wp-dyn/content/article/2010/03/19/AR2010031905578.html

[3] Wilson, D. Side Effects May Include Lawsuits. 2 Oct 2010. New York Times. Web. Accessed on December 10, 2010. http://www.nytimes.com/2010/10/03/business/03psych.html?_r=1&adxnnl=1&pagewanted=2&adxnnlx=1292032938-wg19MNbfe7oOtMSnhITtqA

[4] Evans, D. When Drug Makers’ Profits Outweigh Penalties. 21 Mar 2010. Washington Post. Web. Accessed on November 13, 2010. http://www.washingtonpost.com/wp-dyn/content/article/2010/03/19/AR2010031905578.html

[5] Yarrow, A. State Budget Crises Mount as Medicaid Rolls Soar. 8 Sep 2010. The Fiscal Times. Web. Accessed (from Kaiser Health News) on November 27, 2010.  http://www.kaiserhealthnews.org/Stories/2010/September/08/FT-states-budget-crisis-medicaid.aspx

[6] Politico.com. Obama announces effort to crack down on Medicare and Medicaid fraud. 9 Mar 2010. Web. Accessed on November 27, 2010. http://www.politico.com/livepulse/0310/Obama_announces_effort_to_crack_down_on_Medicare_and_Medicaid_fraud_.html

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