Pharmaceutical companies have paid over $30 billion in criminal and civil settlements in the United States alone since 2000. These fines are treated as a cost of doing business — a small fraction of the profits generated by the fraudulent practices.

The Scale of Pharmaceutical Crime

The pharmaceutical industry has the highest rate of criminal and civil fraud convictions of any industry in the United States. Between 2000 and 2012, pharmaceutical companies paid $30.2 billion in settlements and judgments for fraud, according to a Public Citizen analysis.

The crimes include:

  • Off-label marketing (promoting drugs for unapproved uses)
  • Hiding safety data from regulators
  • Paying kickbacks to physicians
  • Misrepresenting clinical trial results
  • Defrauding Medicare and Medicaid

Major Settlements

GlaxoSmithKline (2012): $3 billion settlement — the largest healthcare fraud settlement in US history at the time. Charges included promoting Paxil for patients under 18 (not approved), promoting Wellbutrin for weight loss and sexual dysfunction (not approved), and paying kickbacks to physicians.

Pfizer (2009): $2.3 billion settlement for off-label marketing of Bextra and other drugs, and paying kickbacks to physicians.

Abbott Laboratories (2012): $1.5 billion settlement for off-label marketing of Depakote for dementia and schizophrenia.

Johnson & Johnson (2013): $2.2 billion settlement for off-label marketing of Risperdal and paying kickbacks to physicians.

Between 2000 and 2012, pharmaceutical companies paid $30.2 billion in fraud settlements. These fines are a small fraction of the profits generated by the fraudulent practices.

Why the Fines Don't Work

The fines are a cost of doing business. GlaxoSmithKline's $3 billion fine represented approximately 10% of one year's revenue from the drugs involved. The expected profit from the fraudulent marketing far exceeded the fine.

Moreover, no individual executives have been criminally prosecuted for pharmaceutical fraud. The companies pay fines; the executives keep their bonuses.

The Recidivism Problem

Companies that have paid fraud settlements continue to commit fraud. GlaxoSmithKline, Pfizer, and Abbott have all paid multiple fraud settlements. The pattern of behavior does not change because the financial incentives do not change.

What This Means

The pharmaceutical industry is not a collection of rogue actors. Fraud is a systematic, industry-wide pattern of behavior. The regulatory and legal systems have failed to deter it. Patients and physicians must assume that pharmaceutical companies will misrepresent their products' benefits and hide their risks.