Here’s a fascinating study that looks at the long-term pattern of ethical/legal violations by big pharmaceutical companies. The study, by Denis Arnold and colleagues (at the Belk College of Business at UNC Charlotte), covers the period 2003 to 2016. The study’s findings are powerful. Findings included that the “combined dollar value of financial penalties totaled $33 billion for 2003 to 2016.” Also interesting: “Four firms were not found to have penalties for illegal activities during the sample period.” What does the latter mean? The authors admit that there’s more than one possible explanation: “This may indicate an ability for illegal activity to be undetected,” or that “these firms may instead have effective ethics and compliance programs.”
Methods | We collected data on financial penalties for pharmaceutical firms listed on the Global 500 or Fortune 1000 lists….
Results | Among 26 firms in our sample, 22 (85%) had financial penalties for illegal activities. The combined dollar value of financial penalties totaled $33 billion for 2003 to 2016. Eleven firms with financial penalties exceeding $1 billion in inflation-adjusted dollars accounted for $28.8 billion (88%) of the total penalties (Table 1). The firms with the highest penalties as a percentage of revenues (ie, >1%) were Schering-Plough, GlaxoSmithKline, Allergan, and Wyeth; the number of penalties for these firms varied between 1 (Allergan) and 27 (GlaxoSmithKline). Four firms had financial penalties that totaled less than $80 million and no more than 2 penalty settlements (Actavis [Watson], Roche Group, Genzyme, and Perrigo). All but 1 firm (Perrigo) engaged in illegal activities associated with penalties for 4 or more years. An additional 4 firms received no financial penalties for illegal activities during this period….
What do you think?
(You can see additional commentary by Denis Arnold, here: Research Shows Price Pharmaceutical Firms Pay For Illegal Practices