In the United States, the world’s largest pharmaceutical market, GlaxoSmithKline is a household name. Whether its Advair, Zofran or Wellbutrin, 5% of the drugs purchased in America are manufactured by the British-based company. Things are similar abroad, where Glaxo captured an equal proportion of the pharmaceutical market in 2014, according to PMLiVe.
East & West, GlaxoSmithKline Taken To Task For Alleged Wrongdoing
But as with every Big Pharma player, GlaxoSmithKline’s search for profit can get the company into trouble. Take this 2012 Justice Department case, for example. US officials charged GlaxoSmithKline with marketing numerous drugs, including the three we already mentioned, illegally.
Unfortunately, things are similar abroad in this respect, too. In 2014, a court in China (the world’s second largest pharmaceutical market) fined Glaxo $492 million for bribing Chinese physicians and medical facilities to use more of its products. Shockingly, the court actually sentenced Glaxo employees, including a British-born executive, to prison. That’s a rare occurrence; most federal cases against pharmaceutical companies, including the Justice Department’s 2012 lawsuit, are settled out of court.
In both cases, Glaxo’s alleged wrongdoing broke records. It’s $3 billion settlement with the US government remains America’s largest for alleged health care fraud. $492 million makes the company’s Chinese fine the biggest in that nation’s history, too.
Glaxo Devoted Itself To Promoting Patient Interests – But For How Long?
There are plenty of other parallels between GSK’s American and Chinese legal entanglements. Glaxo’s sales representatives in China can no longer be paid based on the amount of drugs they sell. That was also one of the stipulations in the company’s Corporate Integrity Agreement, a document hashed out with federal regulators to inject more rigorous ethical standards into Glaxo’s business model.
Rather than American sales reps being paid for selling more drugs, they’re now paid based on how well they know the company’s products and how accurately they can determine the needs of physicians and patients.
This “Patient First” program was heralded as a revolution in the pharmaceutical industry, but has met serious resistance – from inside GlaxoSmithKline. According to the Wall Street Journal, Glaxo’s new head of American operations, Jack Bailey, is considering alterations in the compensation program after exasperated sales reps complained.
Can Civil Justice Rein In Corporate Excess?
That’s one problem with the Corporate Integrity Agreement. It was only binding for five years. After December 31, 2013, Glaxo was free to run its business by its own dictates again – even go back to the old way of doing things.
Another problem? It’s easy for huge drug companies to settle these cases. GlaxoSmithKline made $12.3 billion in profit in 2012. $3 billion is a huge sum, but it’s a drop in the bucket when you’re raking in tens of billions every year. If the government had taken Glaxo to court and aired the company’s dirty laundry, that would have made a bigger statement.
Now the company faces more than 200 civil lawsuits claiming its anti-nausea drug Zofran was illegally promoted for use during pregnancy – and causes birth defects. Parents hope that taking the company to court, truly taking it to court, will help save future families from hardship. For them, that sounds a lot more like real justice than a fine, however hefty.