PHARMA & HEALTHCARE 7/12/2012 @ 10:55AM 11,740 views
GlaxoSmithKline’s $3 Billion Hit: Deterrent or Business Expense?
Eight years ago, I wrote a cover story for the Sunday magazine of the San Francisco Chronicle. It began with the story of a teenage girl I called Angela Reich who became depressed after enduring months of grueling chemotherapy for leukemia. She resisted suggestions that she try antidepressants and saw a therapist for a while but her sadness and despair didn’t lift. So she relented and saw a psychiatrist, who started her on Paxil, an antidepressant made by the British pharmaceutical company GlaxoSmithKline.
The doctor increased the dose a little at a time, even after Reich told him she was feeling strange in her body and worse than she had before. She became increasingly anxious and jittery, with a relentless discomfort inside her body that caused her to constantly shake her leg. Finally, one morning, she attempted suicide by trying to swallow multiple doses of Ativan, Paxil and other medications she found around her house. Her father broke down the door of the bathroom, interrupting her pill-binge and rushed her to the hospital. His action may have saved her life.
Other teenage Paxil users were not so lucky. Jake Garrison, a 15-year-old who suffered from acne, was prescribed Paxil by his dermatologist for “body dysmorphic disorder,” a condition that leaves people feeling preoccupied with their own perceived physical defects. He took the medicine for a while, then stopped, and then, in September 2002, began taking it again. Three days later, he shot himself to death.
As I looked into the story at the time, several things became clear: GlaxoSmithKline was promoting the drug for use by teenagers even though it had never been cleared by the FDA for anyone under 18. The company also knew—but hadn’t revealed to doctors and patients—that, in some children, Paxil seemed to magnify their distress and increase their risk of thinking about or attempting suicide. GSK also seemed to be manipulating data from its clinical trials to minimize the number of suicides or attempts that might be blamed on its pills—“cooking the books,” in the words of a former Navy lawyer who took on the British pharma giant.
Last week, the U.S. Department of Justice announced that GlaxoSmithKline had agreed to pay $3 billion in criminal and civil fines for its misdeeds in inappropriately marketing Paxil and another antidepressant, Wellbutrin; for withholding information on the cardiovascular risks of Avandia, a diabetes drug that has been shown to cause heart attacks; and for promoting Advair, an inhaled lung drug, to patients with mild asthma even though it wasn’t approved or appropriate for them. The fine was the largest ever imposed by the U.S. on a pharmaceutical company and settled both civil and criminal charges.
The settlement agreement and the attached documents were full of juicy details that have now been widely reported: How GSK orchestrated the publication of a “misleading,” ghost-written study purporting to show that Paxil helped children when evidence suggested the opposite. How the company paid doctors, including “Dr. Drew” Pinsky, to promote Wellbutrin and how sales reps pitched Wellbutrin to doctors as the “happy, horny, skinny drug,” claiming it was also good for obesity and sexual dysfunction although it was approved only for depression.
As I read through company documents released by government lawyers, I began thinking about some of the victims I’ve interviewed during two decades of reporting on the pharmaceutical industry and its marketing of flawed, sometimes dangerous drugs—people like Angela Reich and the anguished parents of other children who died. I also thought about the statements made by Sir Andrew Witty, Glaxo’s chief executive officer, who expressed “regret,” said the company had learned from “the mistakes that were made” and asserted that under his leadership the company was now “putting patients first, acting transparently…and displaying integrity in everything we do.”
I wanted to talk to some of the people who had been harmed by taking GlaxoSmithKline’s drugs and the lawyers who represented them to see how they felt about the company’s admission of guilt and its $3 billion fine. First, I connected with Angela Reich, who was back in the Bay Area from an eastern school where she is now pursuing a PhD in literature. (She again asked that her name be changed, as it was when I first wrote about her in 2004.)
She recalled her Paxil experience and her subsequent effort to wean herself from the drug as a nightmare, and was outraged that the company failed to warn patients about the dangers.
“I think it’s despicable what they did and I think a $3 billion fine is pathetic,” when the company’s earnings are considered, she told me. “No specific individual executive has been prosecuted or punished or fined; there’s nothing to take away the incentives for huge drug companies to commit fraud. I’m infuriated.”
In fact, Glaxo’s legal and financial liability goes beyond the DOJ settlement. The company has been hit with jury verdicts and settled thousands of cases alleging that Paxil caused suicides, addiction and birth defects in babies whose mothers using the drug during pregnancy. A couple of years ago, my former colleagues at Bloomberg News estimated that Glaxo had paid out about $1 billion to settle Paxil-related cases. That was before a raft of birth-defect cases had been settled or tried.
Michael Baum, a partner at Baum-Hedlund, a Los Angeles firm that handled some of those cases, told me about 1500 had settled and a few remained. Both he and Sean Tracey, the Houston attorney whose firm handled most of the birth-defect cases, declined to estimate the value of the settled cases because they were made secret under the terms of the settlements.
Then there’s Avandia. Baum thinks that GSK’s apology and partial admission of guilt may make it harder and more expensive for the company to settle a number of still-unsettled Avandia cases. He estimated the number at about 1800 and says his office is involved in 180 of them. About 50,000 Avandia cases have been settled.
“Their admissions in the plea agreement and the information (the criminal complaint) puts GSK’s experts and corporate representatives in a corner,” Baum said. “It makes it difficult for them to say they did not hide information from physicians.”
As part of the plea agreement, the company made a commitment: it had to pledge that its executives won’t lie in the future. That requirement, Baum said, “is going to make it difficult for them.”
So will the penalties imposed on GSK really deter nefarious behavior in the future? Baum agreed with his former client, Angela Reich, that while the fine itself is serious money, it doesn’t compare to the revenue the company made from fraudulent marketing. “The public exposure of the conduct may be more of a deterrent than the fines,” Baum said.
Last year, GSK had a net profit of 5.3 billion pounds ($8.2 billion) on revenue of 27.4 billion pounds ($42.6 billion). Paxil, which entered the U.S. market in 1993, had sales of $11.7 billion in the nine years starting in 1997. Avandia came on the market in 1999, reached peak annual sales of $3 billion in 2006, then fell to $1.2 billion in 2009, two years after a study in the New England Journal of Medicine linked Avandia to a 43 percent increased risk of heart attack.
“If pharma companies can flout the law and then simply write a check when they get caught, they’re never going to stop,” said Sean Tracey. “The money is too large. Until and unless someone’s liberty comes to jeopardy, they simply consider this the cost of doing business.”
The full set of documents relating to GSK’s suppression of information on the cardiovascular risks of Avandia has still not come to light and GSK is still working to keep those documents under wraps, Baum said. “They’re fighting us on releasing these documents that show what really happened,” he said. “They should allow the press and the public to see them.”
Tracey, meanwhile, is gearing up for another battle. Two years ago, he won a $2.5 million judgment against GSK for the family of a three-year-old boy, Lyam Kilker, whose mother took Paxil while she was pregnant. He subsequently settled 35 other cases. Now, on behalf of 150 clients, he is preparing to take on Pfizer, the maker of Zoloft, an antidepressant that came on the market around the same time as Paxil, and has also been alleged to cause birth defects. Stay tuned.