Announcing that the Indiana Medicaid program would recover $9.52 million from a record $2.3 billion federal lawsuit won against Pfizer, Zoeller said that fraud on Medicare and Medicaid each year is estimated to be a multi-billion-dollar problem.
He isn't wrong: According to the Bureau of Investigative Journalists, the vast corruption that pharmaceutical companies are guilty of is fraught with fraud, cover-ups of fatal side effects, and huge kickbacks paid to doctors.
But that's just the tip of the iceberg. The real truth is that it is much, much worse.
Fraud. Kickbacks. Price-setting, bribery and illegal sales activities, including a felony count of assisting the Arab League in acquiring documents on Israeli business activities. Add in all the doctored and back-dated documents, federal and civil lawsuits, and billions of dollars in government sanctions, fines, and penalties – not to mention the deaths – and you'd think it was the script for a thriller global action movie.
But no, it's just Big Pharma at its deceitful best, dancing all the way to the bank while continuing to defraud the world of billions of dollars, and endangering the lives of regular people like you and me.
When I set out to investigate some of the criminal activities that the 12 largest pharmaceutical companies had been convicted of lately, I had a general idea of the hornet's nest I would be stepping into.
But the amount of gross misconduct, fraud and deceit I found was so insidious, so massive, and so overwhelming that I decided to narrow my original 12 picks down to just five for the purposes of this article.
Because of the uniqueness of one particular company's offense – a felony guilty plea to conspiring with the Arab League – I added a sixth.
'Get Out of Jail Free'
I'm sure that each and every one of the drug companies who have had to pay fines for their criminal activities would argue that they've hardly been given a "get out of jail free" pass. But when you look at what they took, compared to what they've had to pay back, I think you'll agree their punishment amounted to little more than a slap on the wrist.
The six companies I'm highlighting, in descending order of their annual revenues, are:
- Johnson & Johnson
- Baxter International
Size-wise, Baxter is actually way down the list at No. 17. But I felt this company's offenses were so egregious that I just couldn't ignore them. You may remember that last year at the height of the so-called flu pandemic, Baxter "mistakenly" mixed the lethal, live, biological weapon/virus, H5N1, with seasonal flu, then sent it to labs around Europe.
The potential disaster could have meant worldwide devastation, had it not been for the fact that the Czech Republic tested the vaccine before distributing it – and found it was a deadly cocktail.
Would it surprise you then, that Baxter is the company that, in 1993, pled guilty to the felony count of violating U.S. laws prohibiting cooperation with the Arab boycott against Israel?
At the time, the Veterans Administration was so angered by this offense that they cited it as one reason why they wanted to suspend Baxter from all VA contracts for three years. The kicker was that the catalyst to the suspension was the VA's contention that Baxter had "knowingly misled and provided false information to VA purchasing agents, in an attempt to get them to purchase Baxter products."
In the end, Baxter agreed to pay more than $6.5 million in civil and criminal penalties to settle the Arab "mistake."
Mistakes, Mistakes, Mistakes
You'll find that "mistakes" happen often with Baxter.
From dozens of recalls of products that caused deaths and injuries, to at least 11 different guilty pleas to fraud and illegal sales activity, to more than 200 lawsuits – many of them stemming from selling AIDS-tainted blood to hemophiliacs – to more than $1.3 billion in criminal fines and civil penalties, Baxter over the years has racked up a record that makes Bonnie and Clyde look like angels.
While I don't have space to name all the Baxter products that allegedly have caused deaths and/or injuries, a more recent product is its blood thinner Heparin, the subject of a lawsuit filed by actor Dennis Quaid and his wife, who say their twins were injured by it.
Another Baxter product that caused deaths through the years was its tainted dialysis filters, which led to the company settling lawsuits of patients who died as a result of the tainted filters.
It's no wonder why, in 1999, Baxter was named by AllBusiness.com as one of the "Top 100 Corporate Criminals of the 1990s!"
Baxter earned its No. 87 spot on AllBusiness' Top 100 Corporate Criminals list thanks to its guilty plea to dealing with the Arab League. But that place pales in comparison to (Hoffman La) Roche, which was crowned Corporate Criminal No. 1 for its $500 million criminal fine for leading a worldwide conspiracy to raise and fix prices and allocate market shares for certain vitamins sold in the United States and elsewhere.
The conspiracy lasted nine years, federal officials said – but it was the kind of "mistake" that was oft-repeated by a slew of drug companies during that decade.
Bribery, Fraud, Illegal Activities – They Just Keep Repeating
In all, 19 drug companies made AllBusiness.com's Top 100 Corporate Criminals List for the 1990s.
Their fines totaled nearly $850 million – and that was just the settlements, not the actual losses the government alleged, for crimes such as defrauding Medicare, Medicaid, and even the FDA, as well as international price-setting, false claims, hiding serious problems with their drugs and, in one case (Ortho, a subsidiary of Johnson & Johnson), obstruction of justice and eight counts of persuading employees to destroy documents in a federal investigation!
What is sad and shocking is that this was just the tip of the iceberg, AllBusiness.com said in its report.
"For every company convicted of health care fraud, there are numerous others who get away with ripping off Medicare and Medicaid, or face only mild slap-on-the-wrist fines and civil penalties when caught,"
I have to admit this literally makes me sick. If this is true – and I don't doubt it one iota – can you imagine what the tally might be for the latest decade, which has seen record fines like the one that Pfizer was hit with last year?
Too Big to Fail?
You may recall that I wrote about this -- in the largest health care fraud settlement in history, Pfizer was ordered to pay $2.3 billion to resolve criminal and civil allegations that the company illegally promoted uses of four of its drugs, including the painkiller Bextra. The other drugs were the antipsychotic Geodon, the antibiotic Zyvox, and the anti-epileptic Lyrica.
Only a few years earlier, Pfizer had paid $430 million for illegally promoting uses of its seizure drug, Neurontin.
Yet, these are just a few examples of all the "mistakes" Pfizer has made through the years, making it very clear why AllBusiness.com named this company No. 17 in the Top Corporate Criminals for the 1990s.
Technically speaking, companies found guilty of fraud like this are banned from dealing with Medicare and Medicaid again. But, as I've already reported, do you think that happened with Pfizer?
Instead, in a slap-on-the-wrist move that resembled the too-big-to-fail bank bailouts, federal prosecutors allowed Pfizer to avoid being sentenced for massive fraud and deception by letting them form a sham company to take the fall.
So, in the end, Pfizer's "imaginary friend" Pharmacia & Upjohn shouldered the conviction, even though it had never sold any drugs. As CNN found, "the subsidiary is nothing more than a shell company whose only function is to plead guilty."
And Pfizer got off scot-free, except for that little $2.3 billion fine that amounted to just three months' profits.
And Then There's Merck
Merck is another branch of Big Pharma with a long list of deaths to its credit. It was five years before Merck made its $30 billion recall of Vioxx that I warned my readers that this pain killer might be a real killer for some people.
As people began to die from heart attacks, strokes, and blood clotting disorders, I didn't like being right. But I hated that after it was over, and the drug had been pulled, that Merck appeared to pick up the pieces painlessly – pun intended – by getting a new drug fast-tracked and on the market, lickety-split.
That drug is Gardasil, a vaccine that so far has been linked to thousands of adverse events and at least 49 unexplained deaths. It's a situation that the FDA and CDC have been denying repeatedly, keeping their heads buried in the sand even as the adverse reports mount.
Merck has had other problems through the years, with more than $5.5 billion in judgments and fines levied against it. But like Pfizer, apparently somebody thinks this company is also "too big to fail."
Johnson & Johnson: Just Another Drug Gang Member
As I mentioned earlier, this company made the 1990s Corporate Criminal list for deliberately destroying documents related to a criminal investigation case on one its products.
You probably don't need to be reminded of all the recalls Johnson & Johnson has had over the years with its pain products, specifically Motrin, Tylenol and Fentanyl (pain killer patches). The fact that Johnson & Johnson has paid out over $1 billion in the last few years in fines and judgments probably comes as no surprise either.
But did you know that just recently (in May) the company pleaded guilty to illegally promoting its epilepsy drug Topamax for psychiatric purposes, and in so doing, settled a civil lawsuit in the case for $75 million?
You probably didn't realize, either, that in January the US Dept. of Justice accused Johnson & Johnson of paying tens of millions of dollars in kickbacks to Omnicare Inc to buy and recommend Johnson & Johnson drugs.
This latest scheme is the subject of a federal lawsuit that has 18 states suing not just Omnicare, but 14 other major drug companies, alleging that they ran this scheme together.
The lawsuit's been filed under the federal False Claims Act and, yes, Merck, Pfizer, Roche, Johnson & Johnson, and GlaxoSmithKline are all in there with Omnicare. Watch for news of this lawsuit in the upcoming months – but in the meantime, think about this: in the wake of all this hassle, Omnicare's CEO Joel Gemunder has quit, but not without remuneration.
But again, this is just the tip of an iceberg.
GlaxoSmithKline: 1,500 Deaths Alleged
At more than $5 billion in fines and judgments, GlaxoSmithKline is treading the same muddy waters as Merck, especially since its HPV vaccine counterpart, Cervarix, has its own share of adverse reactions and alleged deaths being reported around the world.
GSK's most recent "mistakes" stem from its diabetes drug, Avandia, which the FDA on September 23 decided to "regulate" – a little – but not withdraw, leaving Avandia as a "mistake" that is still ongoing.
What we do know so far is that GSK spent 11 years trying to cover up trial data that showed that Avandia was a risky drug for the heart.
In my research for this article, I also discovered that Avandia topped the list of drugs linked to fatal adverse events in 2009, according to an analysis of U.S. Food and Drug Administration records. With a staggering 1,354 deaths reported to the FDA in 2009 alone, it's hard to believe that this drug is still even in discussion!
But, like the others I investigated, GSK also has made hundreds of millions of dollars in settlements for fraud cases and pricing disputes, as well as judgments won by the federal government in Medicare and Medicaid fraud suits.
Roche: No. 1 in AllBusiness.com's Corporate Criminal Book
Roche's offenses have been ongoing over the years in its companies and affiliates around the world. Most recently, in March, Roche suspended a clinical trial for a rheumatoid arthritis and lupus drug after serious infections, some of them fatal, were reported with it.
Officials reported that the trial was stopped because "opportunistic" infections like those found in the trials are not normal in healthy individuals. Sadly, that information was too late for 15 Japanese patients, who died after taking one of Roche's approved arthritis medicines, Actemra.
But that's not the end of deaths related to Roche products: Another Roche drug, Posicor, was withdrawn in 1998 after reports of at least 140 deaths linked to harmful interactions of Posicor with other drugs.
It's no wonder that Roche has had to pay out nearly $2 billion in judgments and fines over the years, with thousands of individuals suing them. But before I move on, let me remind you that Roche also manufactures the CDC's and FDA's favorite flu stand-by, Tamiflu.
And in case you've forgotten, Tamiflu was blamed for the deaths of 18 Japanese children in 2007, and the subject of a warning by the Japanese Ministry of Health not to give this drug to children ages 10 to 19.
With a record like this, you would think that Roche and the rest of the drug king pins known as Big Pharma would have just a little shame over what they've done over the years. But, since the offenses just keep coming, and since states like Indiana have to keep on begging for whistleblowers to step forward, it's apparent that Pharma's sense of shame is nonexistent.
It seems fitting then, to end with this New York Times headline from 1999, when Roche was the subject of the price-fixing scandal that earned its No. 1 Corporate Criminal spot on AllBusiness.com's list:
"Roche Officers Say Scandal Is a Surprise." Yes, they proclaimed innocence, even while the federal government was busy yanking their hands right out of the cookie jar.
Scam-Buster Efforts by States and the Feds Continue
Fortunately, states' attorneys general like Zoeller are gaining ground in gathering support for routing out the criminal acts that Big Pharma continues to perpetuate.
More and more, organizations like the Bureau of Investigative Journalism, the False Claims Act Legal Center, and Politicol News are starting to investigate and publicize the illegal – and criminal – actions that these companies have been getting away with for years.
Thanks to the federal False Claims Act, state and federal investigators have a gun that they can use to hunt down and prosecute these heinous crimes with. If you visit the False Claims Act Legal Center website, you'll get a hint of just how much this type of corporate has been going on.
But again, it's just a hint, just the tip of an iceberg. What it does prove is that Big Pharma can't be trusted – and they have the criminal history to prove it.
What's most shocking, though, is that even when they get caught with deaths on their hands, along with the money in the cookie jar of price-fixing, fraud and deceit, is that like Pfizer, their punishments appear to be just little slaps on the wrist.
Apparently, they are too big to nail; too big to fail. So, like Baxter, instead of shutting down, they cough up a pittance in comparison to what they took, and continue onward with their government contracts for vaccines and other drugs.
It's encouraging that Health and Human Services Secretary Kathleen Sebelius in July announced the formation of the Healthcare Fraud Prevention and Enforcement Action Team, which together with the Department of Justice, US Attorneys' Offices and other federal agencies will target healthcare and drug fraud.
But, as Indiana Attorney General Greg Zoeller said, it's going to take more than that. So, whistleblowers, come out and help in this crusade. It's time to hold Big Pharma's career criminals accountable.
Chart Showing 6 Drug Companies' "Mistakes"
The chart below shows the type of criminal activity, lawsuits and fines or judgments I was able to find for each of the drug companies featured in this article. Keep in mind that these are conservative numbers – many records are not available without a Freedom of Information Act (FOIA) request.
Also, many are not readily available online unless you know exactly what you're looking for, and what year.
Type of criminal activity
Merck & Co.
Johnson & Johnson
Guilty of fraud and/or Illegal sales activity
Federal and/or Civil lawsuits
10,000+ Individuals or together in class action suits
226+ Unnamed number of persons w/AIDS
100,000 Individuals or together in class action suits
5,000+ Individual and/or class action
500+ Individual and/or class action
Dollar Amount of fines, judgments as a result of criminal or civil litigation