Sam Uretsky

Honor, Integrity Get In the Way of Profits

In 1858 Edward Robinson Squibb founded a pharmaceutical company in Brooklyn, NY. In general, the company did well, although its pink toothpaste never really became popular. In 1921 the company coined its slogan: "The priceless ingredient in every product is the honor and integrity of its maker." In 1989, Squibb merged with BristolMyers to form a company that has projected 2007 revenues of about $20 billion. On May 11, it was announced that the company plans to plead guilty to the charge of making false statements to the government -- which could result in a fine of as much as $1 million, or about 1/14th of the CEOs annual salary before bonuses. This guilty plea will put an end to a government investigation of BristolMyers‚ efforts to maintain its monopoly on Plavix, a drug that does a little bit to reduce the risk of heart attacks and strokes, and an awful lot to keep BristolMyers very profitable. For a priceless ingredient, that one went cheap. Lying to the government is the same charge that got Martha Stewart 5 months of jail time, 5 months of home arrest and 2 years of probation, and she only made a few hundred thousand on the deal. Who knew the Department of Justice gave quantity discounts?

Purdue Pharma, the maker of Oxycontin, and three of its executives, never made claims for their integrity, but paid a higher price, $600 million, for the misdemeanor charge of misbranding their drug. The company had claimed that Oxycontin poses less risk of addiction than other narcotics, because its long-acting formulation led to a slow drop off in blood levels compared to the rapid decline seen with other morphine derivatives. The basis for the claim had been debunked decades ago, but it still helped Oxycontin reach $1 billion a year in sales.

Then the New York Times reported on a system of reimbursements (okay, kickbacks) in which physicians buy erythropoietin, a drug which increases the red blood cell counts, from the manufacturers, Johnson & Johnson and Amgen, get reimbursed by the patients' insurance companies, but also get rebates from the drug manufacturers based on the amount of drug purchased. This system led more than a few canny physicians to increase the dose of the drug.

Erythropoietin was originally approved under the Orphan Drug Act of 1983, a law that was intended to induce drug makers to develop treatments for rare diseases, where there would be no financial inducement to invest in research without special tax treatment and patent protection, Erythropoietin was originally marketed for the anemia associated with kidney failure -- rare. Not long afterwards, somebody noticed that the same drug could be used to treat the anemia associated with cancer therapy -- not rare. First-year sales of the drug were about $200 million. In the words of Daddy Warbucks "Some have called me dirty capitalist, but I've merely used the imagination and common sense and energy that kind Providence gave me."

President Kennedy once said, "My father always told me that all businessmen were sons of bitches, but I never believed it till now." They haven't improved with age. A few years of living with the philosophy that "government is not the solution to our problem, government is the problem" have had an effect on corporate mentality. That's not to mention corporate morality, because there doesn't seem to be much of that.

Congress has been working at reviving the Food & Drug Administration from its condition of comatose corporate collegiality, and judging from the news reports, there may be something happening. Johnson & Johnson even announced that it wouldn't ask for approval to market a new heart stent because a study showed that a rival product was more effective. But the lesson we're supposed to learn is that we need regulatory agencies, and we need regulation, and corporate morality can stand alongside jumbo shrimp and military intelligence in the oxymoron hall of fame. If we're really lucky, we'll still remember by the next election.

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y.

From The Progressive Populist, June 15, 2007

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