more glaxo-china…

Posted on Saturday 27 July 2013

Back from Maine today in time for a mega-nap. This is a follow-up from the last post written on the road
by Ed Silverman

The ongoing scandals that GlaxoSmithKline faces in China – bribes involving senior execs and clinical trial failures in R&D – have caused some investor anxiety, but the shares have mostly traded in the same narrow range since these episodes erupted [back stories herehere and here]. Although Glaxo execs say it is not possible to estimate the financial impact. China generated in the low single digits percent of total company revenue. But there is one way in which this mushrooming controversy could cause Glaxo serious trouble. As part of its $3 billion settlement last year to resolve civil and criminal charges of selling drugs for unapproved uses and withholding clinical trial data, among other things, [read more here] the drugmaker signed a corporate integrity agreement, which required creating an internal compliance program to monitor business practices [here is the CIA]. A violation could lead the US Department of Health and Human Services Office of Inspector General to seek to exclude the drugmaker from contracts with federal healthcare programs, such as Medicare and Medicaid. This is big business, of course, and so any whiff of trouble that could impact the CIA has investors on alert.

On a conference call this morning to discuss the latest earnings, Glaxo ceo Andrew Witty was asked whether Glaxo staff believe the scandals in China would have an effect on the CIA, since it is known that US authorities are probing the drugmaker for violations of the Foreign Corrupt Practices Act [this is the law] and the UK’s Serious Fraud Office is also conducting a probe. Witty, however, breezed past the question without offering a response. We asked the HHS OIG, and this is what a spokesperson provided us: “Our CIAs focus on US laws, especially those relating to Federal health care programs [including Medicare and Medicaid]. However, if conduct that happened overseas also violated applicable US laws, we would assess whether the situation implicated any CIA provisions.” In other words, an impact cannot be ruled out.

To what extent, if any, the worst-case scenario for Glaxo might occur – exclusion from dealings with federal health care programs – remains unclear, of course. Although the feds are loathe to pursue an entire company, especially a large drugmaker that sells a plethora of medicines that, in some cases, may not be easily afforded or obtained from other suppliers. This would hurt purchasers and patients. Just the same, the prospect that the feds are keenly aware of the circumstances understandably has the drugmaker on edge, and this will likely be the case for some time, especially as Glaxo [GSK] operations are put under a microscope in other locales. Perhaps the feds would seek to exclude an executive or two instead of the entire company. For now, though, investors may not want to be entirely sanguine about the outcome.
I don’t personally know much about the specifics of the Pharmaceutical Industry’s misadventures outside of psychiatry, but I gather that the current of corrupt marketing runs deep wherever there’s an opening. And it’s not altogether clear what a Corporate Integrity Agreement really means, but I assume it’s analogous to being on parole. But the China Affair following so closely behind the the $3 B settlement does bring us closer to the line between punishment that is just "the cost of doing business" and some kind of substantive punishment that might actually change things. And there’s yet another welcome twist:
Health Law & Policy Matters
By Stephanie D. Willis
July 24th, 2013

Today, in the latest news to come out of China regarding the GSK bribery investigation, the Chinese Health Ministry announced that 39 employees at a hospital in southern Guangdong Province would be punished for taking illegal kickbacks of $460,000 from two unnamed drug companies between January 2010 and December 2012. The 39 employees include nine doctors who were dismissed, suspended or had their licenses revoked for allegedly directly receiving kickbacks, as well as the vice chairman of the hospital’s trade union and two people in charge of the hospital’s relationship with the drug companies.  Moreover, an unnamed American citizen has been detained in China in connection with the wider Chinese investigation into that country’s drug company corruption scandal.  It is not known which drug company employed the American citizen…
They’re punishing the actual people involved, not just corporations. Unlike our Supreme Court, I don’t see corporations as individuals. People take bribes, people pay bribes, people jury-rig Clinical Trials, and people are swayed by sexual favors – not corporations. Doctors have already signed an Individual Integrity Agreement when they graduate from medical school called the Hippocratic Oath. So "nine doctors who were dismissed, suspended or had their licenses revoked" is as it should be. The impersonal "corporation" moniker leads to an anthropomorphism that actually obscures the truth. I wince when people say things like "doctors [psychiatrists] just want to medicate people" or "people just want medications for a ‘quick fix’." While that’s true for some doctors and some patients, the generalization by class isn’t kosher. But we can’t counter it unless we’re willing to punish the offenders as they are revealed. The Chinese don’t seem to have a problem about that. If our medical boards are unwilling to pull the licenses of heavy offenders or a University Administration tolerates a misbehaving Chairman [as my University did], we have to live with the class epithet.

Not that the corporate entities are off the hook. It seems like they have gotten away with something like the "too big to fail" or "too important to fail" excuse for far too long ["Although the feds are loathe to pursue an entire company, especially a large drugmaker that sells a plethora of medicines that, in some cases, may not be easily afforded or obtained from other suppliers"]. If there’s an essential fact in this industry, it’s that there are plenty of generic manufacturers waiting in the wings. And that brings up the financial lever of the century – patent rights. Without a patent, the Pharmaceutical Industry is stopped in its tracks. Make the penalty for extreme corporate misbehavior a revoked patent, then punish the involved employees [and participating doctors], and I doubt we would have any continuing problems.
    July 27, 2013 | 7:23 PM

    It is ridiculous how the U.S. justice system lets business corporations get away with murder— often literally. It is corrupting. It allows sociopaths to rule exorbitant amounts of wealth and power. It is unjust when individuals are punished to the fullest extent of the law for street crimes while people who steal much more, and hurt far more people aren’t even held responsible for their decisions, much less the damage their decisions have caused.

    July 27, 2013 | 10:47 PM


    A literary review of the DSM-5

    Philosopher Ian Hacking, famous for analysing the effects of psychological and neuroscientific knowledge on how we understand ourselves, has reviewed the DSM-5 for the London Review of Books.

    Lost in the Forest
    Ian Hacking

    DSM-5: Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition by the American Psychiatric Association
    American Psychiatric Publishing, 947 pp, £97.00, May, ISBN 978 0 89042 555 8

    a work cited by hacking in his review

    Diagnostic liquidity: Mental illness and the global trade in DNA ANDREW LAKOFF University of California, San Diego

    Abstract. The increasing global circulation of information, capital, and human bodies operates in relation to regulatory techniques- at local, national, and transnational levels – that both encourage and constrain these flows. Studies of the creation and enactment of standards regimes provide helpful tools for the analysis of the practices involved in creating zones of potential circulation. This article combines an ethnographic description of the process of transnational standards-coordination with an analysis of the political contexts in which such commensuration practices unfold. It follows a particulars et of transnational flows, involving human DNA, biomedical knowledge, and capital, whose direction is intimately related to the relative presence of regulatory and technical regimes within different national spaces. “Information is, at the end of the day, the coin of the genomics realm.”1

    this article is chapter 1of book by Andrew Lakoff “pharmaceutical reason: knowledge and value in global psychiatry” 2005 Cambridge

    “When a French biotechnology company seeks patients in Buenos Aires with
    bipolar disorder for its gene discovery program, they have unexpected trouble
    finding enough subjects for the study. In Argentina, the predominant form of
    mental health expertise – psychoanalysis – does not recognize the legitimacy
    of bipolar disorder as a diagnostic entity. This problem points to a broader set
    of political and epistemological debates in global psychiatry. Drawing from an
    ethnography of psychiatric practice in Buenos Aires, Andrew Lakoff follows the
    contested extension of novel techniques for understanding and intervening in
    mental illness. He charts the globalization of the new biomedical psychiatry, and
    illustrates the clashes, conflicts, alliances, and reformulations that take place when psychoanalytic and biological models of illness and cure meet. “

    July 27, 2013 | 10:51 PM

    I didn’t read all of that, but welcome home!

    July 28, 2013 | 2:33 PM

    We know how these coined “Phoney Scandals” are handled…a few headlines…then a team of lawyers and a well funded PR campaign later they just disappear…It’s all about who has the money, & who buys the influence which determines the outcome.

    How many times has this scenario been played out before…a fine, another CIA, and back to business as usual…

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