Posted 23 January 2012

Big Pharma Faces Prospect of Big Fines in 2012

Some of the world's largest pharmaceutical companies are facing "costly settlements" during 2012 thanks to aggressive investigations and enforcement by US agencies and a wide-ranging list of improper activities allegedly perpetrated by the pharmaceutical companies, according to an analysis by The Financial Times.

US agencies are currently separately investigating Pfizer, GlaxoSmithKline, Merck, Baxter, Bristol Myers Squibb, Eli Lilly, AstraZeneca and Smith & Nephew, among others. The alleged charges include improper payments, bribery, marketing violations, kickbacks and corruption.

The Financial Times analysis notes that US-based companies are the target of the most prosecutions worldwide and that healthcare companies accounted for 12% of all enforcement actions since 1977. However, this may be because heavily regulated industries have "sophisticated compliance teams" that are more comfortable with disclosing their lack of adherence to regulations or laws, said Alexandra Wrage of the corruption-tracking non-profit Trace International.

An unnamed pharmaceutical executive expressed frustration that companies are often pressured to settle with the government due to threats against their government contracts or the costs associated with negative publicity.

The enforcement is largely coming from the US and other established western markets, says Wrage, adding that other countries are loathe to prosecute their own national pharmaceutical companies for fear of losing their "competitive advantage."

The wave of prosecutions and possible settlements could make it more difficult for the industry to claim the benefits of self-regulation, notes The Financial Times. Without real penalties, there is little pressure to adhere to ethical behavior aside from a disdain of negative publicity.

• Financial Times - Pharma groups brace for costly settlements