A Failure of Remedies: The Case of Big Pharma (An Essay)

3 Emory Corporate Governance and Accountability Review 41 (2016)

Emory Legal Studies Research Paper No. 16-399

66 Pages Posted: 23 Feb 2016 Last revised: 15 Aug 2017

See all articles by Paul J. Zwier

Paul J. Zwier

Emory University School of Law

Reuben Guttman

Emory University School of Law

Date Written: February 21, 2016

Abstract

This essay questions whether multi-billion dollar settlements with some of the world’s largest pharmaceutical companies have sufficiently deterred the types of unlawful marketing practices that have drained health care dollars and placed patients at risk. The piece also analyzes pharmaceutical pricing, making the claim that price gouging is pervasive where the government has no real ability to bargain for the lowest cost.

It analyzes 20 major settlements between the United States Government and the pharmaceutical industry in concluding that traditional remedies have failed to have necessary deterrence value. It questions why there are no formal and transparent Justice Department Guidelines for settlements and why cases are resolved without the public, and particularly the medical community, having a full report on how unlawful marketing practices may have impacted the market for honest medical information and ultimately the standard of care. It raises the question of whether the Centers for Medicare and Medicaid Services (CMS) has delegated oversight and payment implementation to private vendors in a manner that has led to inefficiencies and payments for products that are not medically necessary and may cause harm. It also suggests that purported research and development costs may be actually expenditures for studies to support unlawful off label marketing tactics. It concludes that the data available strongly supports the claim that large pharmaceutical companies have handled large fines as the price of doing business, but it also suggests that neither the fines, nor the corporate integrity agreements, have altered their behavior. Fourteen companies can be categorized as repeat offenders. With government expenditure for prescription drugs costing taxpayers billions of dollars annually, the article hopes its analysis in this election cycle will focus debate and cause journalists to ask questions.

Keywords: Big Pharma, Corporate Governance, High Prices

JEL Classification: H51

Suggested Citation

Zwier, Paul J. and Guttman, Reuben, A Failure of Remedies: The Case of Big Pharma (An Essay) (February 21, 2016). 3 Emory Corporate Governance and Accountability Review 41 (2016), Emory Legal Studies Research Paper No. 16-399, Available at SSRN: https://ssrn.com/abstract=2735742

Paul J. Zwier (Contact Author)

Emory University School of Law ( email )

Reuben Guttman

Emory University School of Law ( email )

1301 Clifton Road
Atlanta, GA 30322
United States

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