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Why We Still Need to Keep Drug Companies on a Short Leash

Blog | 
Policy | 
System Dynamics | 

Drug companies may end up saving us from the pandemic, but that doesn’t mean we can take our eyes of them for a second. 

A new research letter in the Journal of the American Medical Association found that most of the world’s largest drug companies routinely violate the law and pay billions of dollars out in financial penalties for a wide range of offenses. You can download the research letter here

Researchers from the University of North Carolina, San Francisco State University and the University of Nebraska searched for any settlements between 26 of the biggest drug companies and state attorneys general offices and federal agencies. The federal agencies include the U.S, Justice Department, the U.S. Securities and Exchange Commission and the U.S. Environmental Protection Agency. The study period was January 2003 through December 2016. 

They found that 22 of the 26 companies paid a total of $33 billion in financial penalties to the agencies for illegal activities over that 14-year period. Only four of the companies did not. 

The 22 companies paid 196 separate penalties involving a total of 276 separate violations. Seven out of 10 violations were what I would consider sales related. The four biggest violation categories were:

  • Pricing like overcharging or underpaying (78 violations)
  • Off-label marketing of drugs approved for other purposes (50 violations)
  • Kickbacks to providers to prescribe drugs (33 violations)
  • Misleading or deceptive marketing practices (32 violations)

“Given the scope and nature of the illegal activities involving financial penalties, physicians and regulators should exhibit vigilance over the activities of large pharmaceutical firms,” the study said.

What about the four companies with no penalties over those 14 years? The researchers speculated that they either have really good ethics and compliance programs or a knack for engaging in illegal activities that go undetected by state and federal regulators. 

I’m not going to name names, but many of the companies now being heralded for developing effective COVID-19 vaccines are listed in Table 1 in the research letter. Nor do I want to rain on anyone’s parade or be a party pooper. But this research letter reminds us that drug companies are businesses like those in any other industry. They do what they do to generate revenue and profits for their owners. Further, drug companies have a long and documented history of going outside the lines to do that. 

So, no matter how giddy we get over the prospect of effective COVID-19 vaccines to turn the tide in the pandemic, we can never let our regulatory guard down. No matter how appreciative we are.

Thanks for reading.

Stay home. Stay safe. Stay alive. 

About the 4sight Health Author
David Burda News Editor & Columnist

Dave is 4sight Health’s biggest news junkie, resident journalist and healthcare historian. He began covering healthcare in 1983 and hasn’t stopped since. Dave writes his own column, “Burda on Health,” for us, contributes weekly blog posts, and manages our weekly e-newsletter and weekly podcast, 4sight Friday and 4sight Roundup. Dave believes that healthcare is a business like any other business, and customers—patients—are king. If you do what’s right for patients, good business results will follow. Follow Burda on Twitter @DavidRBurda and on LinkedIn.