5 Questions for Eliot Spitzer on the Biggest Healthcare Fraud Settlement in History


It's the largest settlement involving a pharmaceutical company in history. British drugmaker GlaxoSmithKline has agreed to plead guilty to criminal charges and cough up $3 billion in fines for a long list of nasty and dangerous behavior, including misbranding drugs, failing to report safety data, and using undue influence to sway physicians to prescribe drugs by using everything from free spa treatments to outright bribes. The improper marketing of drugs -- especially to children -- is perhaps the most disturbing crime of all.

The fine against Glaxo over Paxil, Wellbutrin, and Avandia is big money. But will it change anything? I caught up with Eliot Spitzer, former Attorney General and governor of New York, to shed some light on this historic case. In 2004, Spitzer went after Glaxo for the same kind of fraud related to Paxil. In a settlement, the company was forced to publish details of clinical drug trials it had been concealing and pay a sum of $2.5 million. Spitzer's pursuit of Glaxo paved the way for this week's record-breaking settlement.

Lynn Parramore. Why is the current case significant?

Eliot Spitzer: This is yet one more example of Big Pharma doing 2 things. First, marketing drugs for off-label use, and second, preventing critically important testing data from becoming public, thereby denying medical researchers and others vital information needed to make assessments.

LP: The crimes involve threats to our physical well-being, particularly our children. How does this betrayal of public trust compare to those we’ve seen in the financial industry?

ES: Physical harm does have a  more immediate visceral and emotional impact. But financial cases such as the recent Libor price-fixing scandal show that Wall Street continues to engage in widespread fraud and corruption.

LP: Was inadequate regulation or business culture more to blame in the Glaxo case?

The Glaxo situation is one in which even if proper regulation had been in place, the evasion and criminal behavior would have probably happened anyway.

The only remedy is for people to lose their jobs.

In 2004, I dealt with an identical case. We charged Glaxo with just this type of behavior – committing fraud by suppressing studies and marketing Paxil to children and adolescents despite the risk of suicide.

LP: Do the fines even impact the company’s bottom line?

ES: The fines Glaxo will pay are less than the revenue the company got from the illegality. So there is little incentive for the company to change its behavior. Money is not a deterrent.

LP: Do we need to rethink the way drugs are developed, sold and used?

ES: I do think we’re at a tough point in terms of the development of new drugs. There’s an expansive and well-developed biotech sector which operates outside of Big Pharma. We may be at a transition away from Big Pharma to smaller companies doing R&D with Big Phama doing marketing.

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