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Big Fines - Even Bigger Money Monday July 30, 2012


Governments were originally set up to protect us from invaders and marauders who stole our crops and our women. Governments still exist to protect us - not only from invasions and terrorists but from corporate interests that would otherwise pollute our drinking water, clear-cut our forests and sell us tainted and dangerous foods, products, and medicines.

But I don't believe our government does a good job of protecting us as we intended, and the pharmaceutical industry is a perfect example.

In 2004 Pfizer Inc. - the world's largest drug maker - pleaded guilty to promoting and selling drugs for unauthorized uses, also known as "off-label marketing". Pfizer paid over $400 million in criminal and civil penalties and promised never to do it again. But even AS they were signing this agreement with the US Justice Department, they were doing it again with some of their other drugs. For this new violation, Pfizer paid the largest criminal fine in U.S. history: $1.19 billion. No officers or directors went to jail. Just a fine paid by the company. A fine that was just a fraction of the money brought in through their illegal marketing.

Then, we've got the case of drug maker KlaxoSmithKline. That company recently agreed to plead guilty to off-label marketing, failing to report safety data about its diabetes drug, and improperly marketing several other drugs. As part of the guilty plea the company agreed to pay a fine of $3 Billion Dollars. Again, a fraction of the money they'd made off the drugs. And when the fines are barely a dent in the profits, it's not surprising companies just consider them the cost of doing business.

And that is where our governments did not protect us - again. No people - no pharmaceutical executives - were charged.

Drug companies deal with dangerous products. Knowingly making misstatements and misrepresentations about these drugs can literally kill patients. And that's criminal.

But clearly companies can not have criminal intent. Only people can. And companies can not go to jail. Only people can - and they should. Fundamentally, the individuals that authorized these illegal and DANGEROUS things, got away absolutely penalty-free. And since that is the case, where is the deterrent for other corporate executives to discourage similar action? There is none. No deterrent. In fact, these cases take so long, that the people that made these criminal decisions have likely cashed in their stock options, and may well be retired in the south of France by now.

Eliot Spitzer, who, as New York's attorney general, brought charges against GlaxoSmithKline in 2004 over similar accusations involving yet another one of its drugs, said "What we're learning is that money doesn't deter corporate malfeasance. The only thing that will work in my view is C.E.O.'s and officials being forced to resign and individual culpability being enforced." Well, years later, no individual culpability has been enforced. And sure enough, drug makers are at it again.

Bernie Madoff's COMPANY didn't go to jail for the decisions he made. HE went to jail. Yet the people who made the decisions in this GlaxoSmithKline case, and other similar cases, have escaped prosecution, just like the Wall Street guys who knew that the Asset Backed Securities they were pushing were bad.

And that, my friends, is just plain WRONG. It is unjust.

The purpose of Big Business is to make money. I accept that. I EMBRACE that. The purpose of government and the judicial system is to protect our society. To make certain not only that those that endanger our health or wellbeing are not only punished, but also that the punishment deters others from acting similarly.

We've all been let down in the GlaxoSmithKline matter, and in the many, many other occasions, when the rich get away with what you and I would be imprisoned for.