Once upon a time, the defense industry was the biggest defrauder of the government. Who remembers the $640 toilet seats and $7,600 coffee makers contactors charged the Pentagon in 1987?
But a new study by the Health Research Group of Washington, D.C.-based Public Citizen reveals that pharma is now the biggest defrauder of the federal government. Since 2000, 25 percent of all federal False Claims Act payouts are from pharma versus 11 percent from the defense industry.
Credibility Problem by Martha Rosenberg
In fact, since 2009, pharma has paid $6 billion in settlements to the government -- $19.8 billion since 1990. The fraud trend is getting worse, too, says Public Citizen's Health Research Group. 73 percent of the settlements occurred in the last five years.
Leading the Hall of Government Fraud Shame is the politically connected Eli Lilly, linked to the Bush family and former Enron officers. Lilly paid $1.4 billion in fines in relation to its antipsychotic Zyprexa in 2009. The charges included hiding Zyprexa side effects which include diabetes mellitus, hyperglycemia, pancreatitis and increased risk of suicide. Lilly also paid settlements related to Zyprexa to more than 13 states in 2009.
The next offender is Pfizer, the world's biggest pharmaceutical company, which paid $2.3 billion for illegally marketing pain drug Bextra, antipsychotic Geodon, epilepsy drug Lyrica and antibiotic Zyvox.
Honorable mentions go to Novartis which paid $422.5 million this year to settle charges it illegally promoted seizure drug Trileptal and charges related to its high blood pressure drugs Diovan and Tekturna among other drugs.
Also this year Forest Labs received a $313 million penalty for mismarketing the thyroid drug Levothroid and antidepressant Celexa, Allergan was fined for mismarketing Botox, AstraZeneca was fined $520 million for hiding the antipsychotic's Seroquel's dangers and Elan received a $203.5 million fine related to the epilepsy drug, Zonegran. And how was your year?
The Hall of Government Fraud Shame also includes repeat offenders like Abbott which is fielding a recall this week of its glucose test strips after recall of its Similac infant formula for insect matter earlier this year. Abbot has been ordered to pay $22.5 million, along with its partner Fournier Industrie et Sante, for blocking the states from obtaining a cheaper alternative for its cholesterol drug, TriCor.
And Recall King Johnson & Johnson's two subsidiaries received an $81 million penalty for off-label promotion of its seizure drug Topamax, widely used in the military.
Last year's Hall of Government Fraud Shame inductees also included:
Merck, who paid $5.4 million in relation to Vytorin marketing, GlaxoSmithKline who paid $400 million in relation to several drugs and Sanofi-Aventis who paid $95.5 for inflating the price of its subsidiary Aventis' nasal spray.
The orgy of mismarketing, misinformation, falsification of clinical studies and scientific papers and even bribery of practitioners means consumers can't trust pharma when they are most vulnerable, says the World Institute of Natural Health Sciences. The most common violation against state governments is pharma's deliberate overcharging of Medicaid programs which hurts the most defenseless.
The number of whistleblower assisted settlements against pharma is increasing notes WINHS, comprising 67 percent of total payouts since 2001. But no drug company executive has served a single day of prison time for the billions the government has been bilked so far.
Hopefully 2011 will change the music for pharma's Teflon dons.