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Drug Industry Pays out $10 Billion in Fraud Settlements in less than 2 Years

Published: October 2, 2012
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Source: ALL Gov.

Jean-Pierre Garnier, CEO of GSK during its worst abuses

The rate at which the pharmaceutical industry is settling lawsuits continues to soar, with the last two years witnessing a 50% increase in payouts compared to the previous two decades.

From 1991 to 2010, drug companies forked over $20 billion to resolve various civil and criminal allegations. But in less than two years (from November 2010 to July 2012), the industry shelled out another $10 billion in settlements, according to Public Citizen, a consumer watchdog organization.

This year alone has seen more than $6 billion in deals between Big Pharma and the government. State governments have been driving many of the recent cases against drug makers, generating nearly 60% of settlements.

Twenty-seven states have concluded at least one settlement with drug companies since 1991. The state with the most deals to date is Kentucky, with 17, followed by Idaho with 12.

The most common violations brought against drug manufacturers have been overcharging government health insurance programs and illegal marketing of medications.

The biggest settlements were:

  • GlaxoSmithKline (GSK) paying $3 billion to resolve criminal charges for promoting its best-selling antidepressants for unapproved uses and failing to report safety data about Avandia, a much-prescribed diabetes drug, and other products.
  • Johnson & Johnson paying a $2 billion fine for off-label promotion of the antipsychotic drug, Risperdal.
  • Abbott Laboratories paying $1.6 billion for its illegal marketing of the antipsychotic drug Depakote.

In none of these major cases were executives charged with a crime, which may explain why big pharmaceutical companies continue to break the law, chalking up the fines and penalties to the normal cost of doing business.

-Noel Brinkerhoff, David Wallechinsky 

To Learn More:

Pharmaceutical Industry Criminal and Civil Penalties: An Update (by Sammy Almashat and Sidney Wolfe, Public Citizen)
Report: Pharmaceutical Industry Criminal and Civil Penalties: An Update (by Sammy Almashat and Sidney Wolfe, Public Citizen) (pdf)
Glaxo Agrees to Pay Record $3 Billion Settlement for Fraud and Hiding Drug Safety Data (by David Wallechinsky and Noel Brinkerhoff, AllGov)
Top 10 Fraud Recoveries All Came from Health Care Companies (by David Wallechinsky, AllGov)
Health Care Giants Dominate List of Justice Department Fraud Settlements (by Noel Brinkerhoff, AllGov)

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