Many American consumers believe, not unreasonably, that Big Pharma—shorthand for the leading U.S. and global pharmaceutical companies—pursues profit as its top priority, over the health and wellbeing of the people it serves. Big Pharma is continually embroiled in lawsuit after lawsuit, many of them mass torts with record high settlements. In 2012, Glaxo paid $3 billion ($1 billion criminal, $2B civil) in the largest drug company settlement in U.S. history, for crimes that included paying kickbacks to physicians, making false and misleading statements concerning the safety of certain products, and, underpaying rebates owed, among other offenses.
Research by Public Citizen
, a nonprofit organization that represents consumer interests, found that from 1991 through 2015, a total of 373 settlements were reached between the federal and state governments and pharmaceutical manufacturers, for a total of $35.7 billion. Of these, 140 were federal settlements, for $31.9 billion, and 233 were state settlements, for $3.8 billion.
No matter how high the cost to pharmaceutical companies of these settlements, however, Big Pharma has seemed to consider them as simply the cost of doing business in a hugely profitable industry that achieves revenues of $1.05 trillion each year. “Financial penalties continued to pale in comparison to company profits, with the $35.7 billion in penalties from 1991 through 2015 amounting to only 5% of the $711 billion in net profits made by the 11 largest global drug companies during just 10 of those 25 years (2003-2012),” noted Public Citizen.
“To put that number [$1.05 trillion] in perspective, it’s roughly one-quarter of what the U.S. federal government will spend in 2016,” according to Motley Fool
. That’s why engaging in some “illegal but profitable activities will continue to be part of companies’ business model,” said Public Citizen’s report. Almost no senior executive “has been given a jail sentence for leading companies engaged in these illegal activities. Much larger penalties and successful prosecutions of company executives that oversee systemic fraud, including jail sentences if appropriate, are necessary to deter future unlawful behavior.”
The study also found a significant decrease in the number and size of federal and state settlements against the pharmaceutical industry in 2014 and 2015.It remains to be seen if the decrease signals a lasting decline.
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