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More About Drug Industry Lawlessness

February 2013

Sidney M. Wolfe, M.D.

During a December panel discussion at the Washington, D.C.-based Food and Drug Law Institute, a nonprofit organization providing an ongoing forum for discussing legal issues involving the Food and Drug Administration (FDA) and the drug industry, the growing epidemic of criminal and civil legal violations by the pharmaceutical industry was a hot topic. (For more information on the topic, see our reports on the past two decades of such violations, “Rapidly Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry: 1991 to 2010,” at www.citizen.org/hrg1924, and “Pharmaceutical Industry Criminal and Civil Penalties: An Update,” at www.citizen.org/hrg2073.)

Eric Blumberg, deputy chief counsel for litigation at the FDA, pulled no punches. Commenting on the growing, billions-per-year monetary fraud settlements by the drug industry, he stated: “Money is clearly not doing the job; qui tam (whistleblower) complaints are still falling across my desk like snowflakes! We need to employ a ‘bigger hammer,’ to send people to jail.” He advocated, as he has previously, greater use of the so-called Park Doctrine, which allows prosecutors to hold corporate executives personally responsible for regulatory infractions without need to prove prior knowledge or intent to defraud. Blumberg pointed out that under the Park Doctrine, corporate executives and managers not only have a positive duty to seek out and take steps to eliminate fraud, but also a duty to put into place policies and procedures to prevent violations. This duty, he stated, cannot be delegated to lower-level executives or employees.

A frequent complaint of industry officials and lawyers is that the Park Doctrine is too harsh: in part, they say, because executives in large multinational operations cannot know everything that goes on everywhere in their organization, thus requiring them to delegate and rely on others for compliance. Blumberg rejected this notion: “I’d say to them, ‘You took the job, with its seven- or eight-figure compensation package, with full knowledge of the consequences. You can’t have your cake and eat it too!’”

A lawyer for a large Washington, D.C., law firm that frequently represents the drug industry acknowledged that some (other) people believe that expensive sanctions for health fraud are just “the cost of doing business.” He countered that corporations are increasingly sensitive about the need to obey the law.

The seemingly never-ending, record-breaking succession of billion-dollar fines against this industry argues instead, in my view, that industry does see these penalties as merely “the cost of doing business.” This is yet another reason for the quite out-of-control prices of prescription drugs.

Information for this article was derived, with permission, from a summary of the conference by FDAWebView, www.fdaweb.com.

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