As we all know, government regulations are strangling businesses to the tune of 1.75 billion, er, TRILLION!!!! USD per year. Nowhere is that more true than in the over-regulated Pharmaceutical Industry. [SOURCE: CATO INSTITUTE] We all know that the marketplace can better decide what drugs are safe and for what reasons. Just like we used to bring a chicken to pay the doctor back in the good ol’ days, wouldn’t it be wonderful to go back to the day where medical cures were sold by small businessmen? [7:15-9:11, where Democrat Andy Griffith makes the case for medicinal regulation]
Well, some modern-day hucksters got busted today by a bipartisan coalition of 36 states’ atty. Generals (Bloomberg):
Johnson & Johnson (JNJ) will pay $181 million to resolve claims by 36 states that it improperly marketed and advertised the antipsychotic drugs Risperdal and Invega.
J&J and its Janssen unit settled claims that it promoted the drugs from 1998 through 2004 for uses not approved by the U.S. Food and Drug Administration.
New York Attorney General Eric Schneiderman said today the accord is the largest multistate consumer protection-based pharmaceutical settlement.
[snip]
The U.S. has been probing Risperdal sales practices since 2004. J&J disclosed in August 2011 that it reached an agreement to a misdemeanor criminal charge over Risperdal marketing.
The FDA approved Risperdal in 1993 for psychotic disorders including schizophrenia. That market is limited, and Janssen unit sought to sell Risperdal for bipolar disorder, dementia, mood and anxiety disorders and other unapproved uses, according to court filings. It was later approved for other uses.
Although
this lawsuit originated from the states, it reminds us that throughout the first Obama term, aggressive enforcement of Big Pharma’s abuses has paid dividends for consumers and used a variety of innovative regulatory strategies working with state governments across the political spectrum. While maybe a tad abstract for political advertising, this is nonetheless a common-sense issue that demonstrates a sector where the Obama administration has shown the power of aggressively competent oversight.
[I am not a lawyer and might be misinterpreting some of this ]
While this latest settlement is relatively small potatoes, one of the most powerful (yet quiet) legislative achievements of the Obama administration was to strengthen the False Claims Act through the 2010 Obamacare law and the 2009 Fraud Enforcement and Recovery Act. Even Paul Ryan voted for it.
By statutorily broadening the scope of the government's interest and weakening the requirements for "intent to defraud" that address a unanimous 2008 SCOTUS decision, the law turned 2010 and 2011 into record-breaking years for health-care recoveries:
It seems that "record-breaking" years for recoveries under the False Claims Act, 31 U.S.C. §§ 3729-33 (the "FCA" or the "Act") are becoming [...] predictable [...]. And 2011 was no exception. In its fiscal year ended September 30, 2011, the federal government recovered approximately $3.03 billion, bringing the total FCA recoveries since January 2009 to more than $8.7 billion. This was the second year in a row that FCA recoveries broke the $3 billion mark and the third-largest yearly recovery amount ever. And if one includes FCA recoveries payable to the states under the Medicaid program, 2011 recoveries exceeded $4 billion.
There have been several blockbuster decisions that dwarf today's JNJ settlement by a long shot, including GSK, Eli Lilly, and Abbott, often on similar grounds for making unsupportable claims for wonder drugs. In context, however, more can be done, as
Robert Reich pointed out last month:
The charges are deadly serious. Among other things, Glaxo was charged with promoting to kids under 18 an antidepressant approved only for adults; pushing two other antidepressants for unapproved purposes, including remedying sexual dysfunction; and, to further boost sales of prescription drugs, showering doctors with gifts, consulting contracts, speaking fees, even tickets to sporting events.
$3 billion may sound like a lot of money, but during these years Glaxo made $27.5 billion on these three antidepressants alone, according to IMS Health, a data research firm — so the penalty could almost be considered a cost of doing business.
before adding that the executives avoided criminal liability in the settlement.
Still, it's important to laud HHS Secretary Sebelius for aggressive and innovative ways, working with multiple government entities and (highly, highly incentivized) whistleblowers to bust up modern-day scams and help the President exercise his role as a fiduciary of the American healthcare system.
Five thoughts:
1) How can we turn "regulation" into a better national campaign issue? I'm reminded of Rachel Maddow's great line to Stephen Colbert that choosing Republicans to administer government services is like going to a vegan butcher.
2) Even though the pharma "kickback" with Obamacare was controversial, is it possible that these aggressive enforcement poses helpedHarry and Louise change their tune?
3) This is a valuable, if wonky, rejoinder to Mitt Ryan's Concern-Trolling on Medicare Fraud, Waste, and Abuse. Medicare Fraud, Waste, and Abuse is most often a black-box, a slogan. But when coupled with common-sense enforcement measures, Romney's "argument" is that we should throw Six-Friedman-Units-of-Iraq-War funding down an invisible sinkhole because, well, seniors, mediscare, fundamental change, socialism.
4) Hopefully the age of teh wonder drug is coming to an end. What's the GOP plan for "robust oversight?"
5) That Gibson Dunn lawfirm report linked to above includes a wonderful chart tracking FCA recoveries by year, and the health care sector relative to defense recoveries. It seems like a brave DOD Secretary with political cover could make a whole lot happen with this statute.
EDIT: Thanks for the extra eyes, rescue rangers! I think I learned a valuable lesson about hooking readers, though: even if you're snarking, never use an obscure headline and open with a Cato Institute stat.