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Mar182011

Study Details Scope of Big Pharma's Crimes

Public Citizen recently released the most authoritative study yet conducted on the stunning scope of illegal activity by pharmaceutical companies. The study -- done by Sammy Almashat, Charles Preston, Timothy Waterman, and Sidney Wolfe -- looked at federal and state government settlements with these companies going back to 1991. It found that a total of "165 civil and/or criminal settlements of $1 million or more were made between the government and pharmaceutical companies from 1991 to 2010, with settlement amounts totaling $19.81 billion."

The data presented in the report is fascinating, and must reading for anyone interested in the chronic abuses of Big Pharma. But maybe the most important points of the study come in its conclusion:

Clearly, the continuing increase in violations by pharmaceutical companies despite such large financial settlements is an indication that the current system oenforcement is not working. The lack of criminal prosecution that would result injailing of company executives has been cited as a major reason for the continuing large-scale fraud, in addition to the fact that current settlement payouts may not be a sufficient deterrent. For example, GlaxoSmithKline and Pfizer have paid out a combined total of $7.44 billion in financial penalties overthe past 20 years. These two companies made a combined $16.5 billion in global net profits in one year alone. Thus, these financial penalties, although increasing, remain a very small fraction of company net profits and therefore do not provide a sufficient deterrent against further violations. Increased punishments may be needed, such as significantly larger financial penalties and, if appropriate, felony prosecution—including jail—for company executives engaging in criminal behavior. . . .

This more aggressive level of enforcement would be based on applying thedoctrine,” a legal precedent that holds top corporate executives liable for illegal conduct within their company, even if they didn’t know about or participate in it. The main purpose of employing this standard is to force companies to “…implement measures that will prevent [these] violations in the first instanceparticularly in cases where public safety is at risk. In addition to the prospect of jail time for individual executives, a felony conviction could result in their companies becoming ineligible for reimbursement from federal and state healthprograms, a critical source of pharmaceutical company revenues.

Holding actual individuals responsible is the usual response to crime sprees, except when those sprees are orchestrated by corporate executives. Until that changes, America's white collar crime epidemic will continue.

Rapidly Increasing Criminal and Civil Penalties

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    Study Details Scope of Big Pharma's Crimes - Drug Company Abuses - CheatingCulture

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