Monday, April 2, 2012

Wall Street Justice III: Fraud Pays in Healthcare Industries

One of my students forwarded me a link to an article describing numerous pharmaceuticals that have committed fraud only to have the CEO receive a hand slapping and a multi-million dollar bonus on the way out the door. Here are a few of the cases mentioned in the Forbes article:
Amgen Chairman and CEO Kevin Sharer is expected to get $49 million after he retires at the end of the year. Meanwhile, Amgen has reserved $780 million to settle litigation associated with illegal drug marketing allegations.
GlaxoSmithKline CEO Andrew Witty recently got a new pay package totaling about £10.5 million (roughly $16.5 million) – just four months after Glaxo announced that it will pay an historic $3 billion to settle federal allegations of illegal marketing of many of its prescription drugs. Glaxo felt its chief executive is “underpaid.”
Johnson & Johnson Chairman and CEO William Weldon received a 55 percent increase in his annual performance bonus for 2011 and a pay raise despite continued product recalls and a settlement J&J is negotiating with the Justice Department over the marketing of the prescription drug Risperdal for unapproved uses.  Reports say that settlement could be as much as $1.8 billion.
A few more examples were given later in the article including:
Look at Pfizer, which has had a string of fraud settlements with the government over the past several years. It paid $152 million in 2008; $49 million a few months later; a record-setting $2.3 billion in 2009 (which included a whistleblower case brought by my law firm); and $14.5 million last year. In addition, Pfizer paid $430 million in 2004 to settle a fraud case against its subsidiary, Warner-Lambert. Pfizer has entered into multiple corporate integrity agreements with the government that promise the company will adhere to federal regulations and the law. But the company seems to keep breaking those promises; all that changes is the size of the fraud settlements.
The article goes on to recommend that when fraud charges come to a company the CEOs and other executives should have to forfeit their bonuses, salaries and even go to jail. I tend to agree that some serious jail time might get some of these executives to wake up and behave more ethically. Unfortunately, I don't see the Department of Justice moving in that direction though...

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