The Pervasiveness of Health Care Corruption as Shown by Another Roundup of Legal Settlements

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Yves here. This post is important, not simply for chronicling health care corruption, but also in demonstrating how, just as in financial services, the individuals responsible are not targeted for fines or prosecution.

By Roy Poses, MD, Clinical Associate Professor of Medicine at Brown University, and the President of FIRM – the Foundation for Integrity and Responsibility in Medicine. Cross posted from the Health Care Renewal website

Legal settlements are one way to document unethical and even corrupt behavior by large health care organizations, even if they may not deter bad behavior in the future.  It is time for another roundup of settlements by large pharmaceutical and device companies, presented in alphabetical order

Abbott Laboratories

This one goes back to late December, 2013.  As described in the Chattanoogan (from Tennessee):

Abbott Laboratories, a global healthcare company, has agreed to pay $5.475 million to settle alleged violations of the False Claims Act, and other federal laws and regulations in connection with the operation of its medical device business which manufactures, markets and supplies carotid, biliary, and peripheral vascular products.

The US Justice Department accused Abbott of kickbacks to physicians,

 As alleged in the settlement agreement, between 2005 and 2010, through its employees and a third party continuing medical education providers, Abbott offered physicians paid teaching and training assignments, consulting arrangements, speaking engagements, and/or sponsorship grants for physician conferences, for the purpose of inducing physicians to arrange for or recommend that the hospitals with which they were affiliated purchase or order Abbott’s carotid, biliary and peripheral vascular products.

Note in particular that the kickbacks were disguised as payments for consulting or speaking. 

As is usual in such cases, no individual seems to have paid any penalty or been subject to any punishment.  Because this was a legal settlement, the company did not admit wrongdoing.

Abbott’s previous issues are discussed here, including a $1.6 billion settlement in 2012

Baxter International

This was reported in April, 2014 by Modern Healthcare,

 Baxter International agreed to pay $64 million to settle a class-action lawsuit that alleged the Deerfield, Ill.-based company and some of its competitors colluded to raise prices of plasma-based therapies.

Unlike the other cases above and below, this seemed to be a purely financial misadventure, although one that clearly increased health care costs,

Hospitals and drug distributors, saying they bought the plasma products at inflated prices, sued in 2009 Baxter; Victoria, Australia-based CSL; and the Plasma Protein Therapeutics Association, an Annapolis, Md.-based trade group.

Once more, the company admitted no wrongdoing, and no individuals seemed to be subject to any negative consequences.  

Baxter International’s previous misadventures are here, including the striking case of its marketing of contaminated and sometimes deadly heparin made from Chinese pigs. 

Endo Health Solutions

This one is from February, 2014, as reported by Bloomberg

Endo Health Solutions entered a deferred-prosecution agreement and will pay $193 million to settle whistle-blower claims that it marketed the shingles drug Lidoderm for unapproved purposes, the U.S. said.

Endo will pay $20.8 million in forfeitures and $171.9 million in civil false claims settlements with the states and the U.S. government, the Justice Department said today in a statement. 

This one was all about marketing for uses not approved by the US Food an Drug Administration,

Between 2002 and 2006, Endo sales managers instructed some representatives on how to expand ‘sales conversations’ with doctors beyond the treatment of shingles-related pain, the U.S. said. Under the deferred-prosecution agreement, Endo admitted that it intended Lidoderm to be used for uses not approved by the U.S. Food and Drug Administration, the Justice Department said. 

Note that this case involves false claims, that is, fraud, because it is illegal to bill government programs for unapproved uses.

Again, no individual suffered any consequences, and the company offered the usual kind of statement that admitted neither responsibility nor guilt,

‘We are pleased to resolve this matter and are confident that we have robust programs in place to assist us in satisfying our legal and regulatory agreements,’ Endo Chief Executive Officer Rajiv De Silva said in a statement.  

One wonders, as usual, why a company would pay so much merely to avoid the legal expenses of a trial, unless of course the lawyers suspected the trail would not go well?


This one was about hiding quality problems due to cost-cutting from investors, as reported by Reuters in March, 2014.  

Hospira Inc has agreed to pay $60 million to resolve a class action lawsuit accusing the drug maker of misleading investors about quality control problems that undermined an initiative to improve the
company’s margins and operations.

The details included,

As Hospira was promising to address issues raised by the U.S. Food and Drug Administration following inspections, the plaintiffs said the company was ‘making the problems worse by gutting quality control efforts through cost cutting aimed at boosting short-term profitability.’

The lawsuit said those cost-cutting moves stemmed from a March 2009 initiative called ‘Project Fuel’ intended to increase shareholder value by eliminating underperforming and duplicative units and reducing its global workforce.

Plaintiffs contended the cuts in the budget and workforce hurt Hospira’s quality control efforts, particularly at Rocky Mount, the company’s largest facility.

An FDA inspection in January 2010 of the Rocky Mount facility found a number of problems with the company’s quality control and drug validation processes, the lawsuit said, and the agency issued a warning letter that April.

Note that this involved quality control problems presumably in drug or device production, possibly leading to safety risks for patients.  Yet it was investors who brought the lawsuit.

Note also that this seemed to be a clear case in which cost-cutting measures meant to improve short-term corporate revenue lead to problems that could have caused such risks.  

One interesting feature of this case was that company executives were named as defendant (presumably again because it was investors, not patients or law-enforcement officials who initiated the suit.)

The lawsuit … also named executives including Chief Executive Officer Michael Ball as defendants,…

I cannot find any information about whether these executives were personally liable for any payments, however.   


This is yet another settlement involving the marketing of Neurontin, as reported by Bloomberg in April, 2014,

Pfizer Inc the world’s biggest drugmaker, agreed to pay $190 million to end a lawsuit claiming it violated federal antitrust laws by delaying generic versions of its Neurontin epilepsy drug. 

Pfizer agreed to settle the class-action litigation pending in federal court in Newark, New Jersey, according to a filing today. U.S. District Judge Faith Hochberg must approve the accord, which would cover purchasers of Neurontin from December 2002 to August 2008. 

Note that this settlement, like many others, is of matter from a long time ago.  When it comes to bad behavior by big health care corporations, any form of justice is not swift.

Note also that this is only the latest chapter in the long saga of Neurontin, for whose mis-marketing Pfizer has already shelled out a lot of money (see this post to start, and here for the collection).  Pfizer has an amazing record of bad behavior on view here.  In fact, it has had a conviction as a Racketeering Influenced Corrupt Organization (RICO) on the basis of its previous marketing of Neurontin (look here).

This particular bad behavior involved included,

 improperly listing certain patents with the U.S. Food and Drug Administration,
engaging in illegal promotion and sales of Neurontin for unapproved uses, filing and maintaining sham litigations with respect to certain patents, and making misrepresentations to the patent courts,

Note that while much of this was legalistic, illegal marketing was in there too.

Once more, I found nothing about any negative consequences for individuals who authorized, directed, or implemented questionable actions.


So it is all drearily familiar.  Big health care organizations seem to repeatedly engage in deceptive marketing, providing kickbacks to health professionals, fraudulent billing, anti-competitive practices, etc, etc.  These practices increase health care costs, and may risk patients’ health and safety.  Many of these practices are corrupt, at least according to the Transparency International definition of corruption, “abuse of entrusted power for private gain.”  Drug and device companies, for example, are entrusted to provide safe and effective products.  Deceptive marketing, kickbacks to health professionals to encourage overuse, and cutting quality control to cut costs all seem to be examples of abuse of this entrusted power.  The private gain obviously goes to any managers and executives who score bigger bonuses due to the increases in revenue that result. 

Yet there are very few examples of any individuals who gained ever being subject to any negative consequences.  Given that lack, and the lack of any requirement for corporate leaders to admit responsibility, much less guilt, is it any surprise that these practices go on and on.  The failure of current limp legal efforts against health care corruption is evident by how many corporations have become ethical repeat offenders.   (Note that in fact, as noted above, one of the pharmaceutical companies above actually was convicted of being a RICO, racketeering influenced
corrupt organization, yet that conviction seemed to have no real negative consequences for the organization or any of the people involved.)

As I have said again and again, pervasive bad behavior by large health care organizations has got to be a major cause of our ongoing health care dysfunction.

So, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue.

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  1. mmckinl

    Great piece Yves … could you find an industry that doesn’t enjoy the corruption of governance? … I can’t think of one …

    1. Banger

      Yes, the problem of corruption is society-wide but when it manifests itself in materials that we put in our bodies it rises to another level of evil alogside, of course, the U.S. killing machine that uses wars to make money.

  2. Middle Seaman

    We know by now that there are two classes of citizens in the US. One class consists of people working for a living and the more equal class of crooks that rob and lie for a living. The latter class falls under a different set of rules. This includes: no personal responsibility, robbing and lying apply only to the company they are associated with and the word jail disappeared from their dictionaries.

    Seems reasonable to the Obama administration.

  3. LAS

    Oh, there are persons who suffer personal punitive punishment – unfortunately it is the whistle-blowers usually who pay.

  4. cnchal

    Remember, the President of The United States went on television (by the way, I have never ever seen such a media slut. On TV at least once a day.) and said, there were no laws broken when it came to the lead up and aftermath of the GFC. A lie.

    Corruption at the highest levels of government leads to corruption everywhere else, and leaves no room for honesty.

    Look at the corruption and lies that led to the Iraqi war. The leaders of the US swore on a stack of bibles that Saddam had weapons of mass destruction and was a threat to everyone else. The UN weapons inspector, Hans Blix said basically, they had none and couldn’t make them if they tried. How many have died and suffered, and are continuing to die and suffer, from that corruption.

    The MSM jeered at Hans Blix and drowned him out, wanting a war. Wars sell advertising air time and make money. To hell with the casualties.

    Corruption has grown to such a scale, that those that do not practice it, are left in the financial dust.

  5. Ernesto Lyon

    But their vaccines are perfectly safe and effective, cause they would never lie about those, they’re too crucial.

    The USA would instantly turn into some third world hell hole if we didn’t vaccinate every kid 50+ times, and everyone would be walking around in iron lungs cause polio would come back.

    Vaccines are sold at a loss by pharma as a service to the world. Right?

    Actually not. Vaccines are a revenue line for pharma. It’s in their favor to scare the hell out of everyone to sell more vaxxes. Fierce Vaccines is a business monitoring site, it is not an advocacy group.

    1. Marcie

      I agree with you Ernesto Lyon. And there remains the question of who pays for vaccine injury and our autistic generations of children (cough) that’s not caused by vaccinations . And why don’t we know what causes autism? I calculated that the cost of treating autism for the next generation is in the trillions of dollars.

      The pharmaceutical companies don’t pay. It is health insurance companies, the families and our tax dollars that pay for these environmental batteries. They make me sick pushing all those vaccinations. How did we allow the government to be taken over by pharmaceutical companies?

  6. lambert strether

    It would be nice to have a per capita number for the “corruption tax,” because then we could see how much of the difference between our astoundingly high health care costs, and costs i the rest of the world, is due to that cause.

    1. orthomama

      You can’t leave out all the ancillary folks who contribute to high healthcare costs via corruption.
      Example – Medicaid. Of course there is the fraud, waste and abuse by the usual suspects (docs, home health services, ambulance companies, pharma companies…) but you also have to include the cost of do-nothing “oversight” (fed and state inspector general and other prosecutors that don’t prosecute) and the 3rd party administrators that drop the ball on the job (like it appears Xerox did in Texas)
      you need to create not just a corruption tax, but a corruption tax multiplier to keep count of the exponential effects of corruption and fraud. (doc fraud * cost of staffing hapless state and federal oversight * contracts paid to hapless private administrators) = corruption tax to the power of 3.

  7. impermanence

    The organization of society always leads to the same result…fraud, lying, stealing, cheating, and other pleasantries.

    1. OpenThePodBayDoorsHAL

      Yes but periodically the pervasiveness, scale, and impact of a totally corrupt society hit a high point and we attempt to do something about it. Think Magna Carta. Question is, how long do “we” wait? This time around feels a lot like a very fast slide downwards, to a place where it would be very difficult to claw back. The level of control today is breathtaking.

  8. Erwin Gordon

    I don’t know why it’s surprising to anyone. This started with the AMA in the late 19th century and has just been getting progressively worse since then. 99% of the population is brainwashed into believing that what passes for science in the allopathic medical community into believing that it’s germs that cause disease and therefore just inevitable that they everyone will die from disease unless the clowns in pharmaceutical companies will somehow create a magic pill that will somehow magically cure them of whatever disease they have. It’s up there with those that believe that printing money will somehow create wealth. And this is after people have spent the majority of the first 25 years of their life in school!?! Truly breathtaking!!!

  9. MaroonBulldog

    Of course the plaintiffs’ lawyers who bring these lawsuits are all as pure as the driven snow, right? No crass or corrupt motives for them, ever?

    1. Marcie

      The lawyers act as a control against the poisoning, maiming and killing of innocent victims. Lawsuits serve a purpose. Pharmaceutical kill, poison and maim with impunity and it is very hard to prevail in a lawsuit against patient harm.

      Tort reformists have been successful in taking away our right to sue.

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