Ethics in pharmaceutical sales

The pharmaceutical industry is a highly competitive business and its success is dependent on the sales and marketing of each drug.[1] The cost of research and development for each drug is hundreds of millions of dollars. In 2005 the research and development expenditure for the biopharmaceutical industry within Europe and the US was 15,474 million euro.(The Pharma Industry Figures, 2006). Some health economists peg the current cost of drug development at US$1.3 billion, others at US$1.7 billion[3] The actual drug discovery and the drug development can take years. After which, testing and clinical trials are required prior to getting approval by regulatory boards. After launching the drug the company has much at stake as it has already outlaid millions of dollars the success of its sales is an important factor to the success of the company.

A pharmaceutical sales representative is the key part within the sales of all drugs.[1] They ensure the healthcare profession is informed of the benefits of the drug along with the safety and the side effects according to the dictate of the company employing them. The term used is ethical promotion, which can be described as communication of ethical values to promote their product to the physician. (Wright & Lundstrom, 2004)

Pharmaceutical fraud involves activities that result in false claims to insurers or programs such as Medicare in the United States or equivalent state programs for financial gain to a pharmaceutical company.[1] There are several different schemes[5] used to defraud the health care system which are particular to the pharmaceutical industry. These include: Good Manufacturing Practice (GMP) Violations, Off Label Marketing, Best Price Fraud, CME Fraud, Medicaid Price Reporting, and Manufactured Compound Drugs. The Federal Bureau of Investigation (FBI) estimates that health care fraud costs American taxpayers $60 billion a year.[6] Of this amount $2.5 billion was recovered through False Claims Act cases in FY 2010. Examples of fraud cases include the Pfizer $2.3 billion settlement and Merck $650 million settlement. Damages from fraud can be recovered by use of the False Claims Act, most commonly under the qui tam provisions which rewards an individual for being a "whistleblower", or relator (law).[7]

Antipsychotic drugs are now the top-selling class of pharmaceuticals in America, generating annual revenue of about $14.6 billion. Every major company selling the drugs — Bristol-Myers Squibb, Eli Lilly, Pfizer, AstraZeneca and Johnson & Johnson — has either settled recent government cases, under the False Claims Act, for hundreds of millions of dollars or is currently under investigation for possible health care fraud. Following charges of illegal marketing, two of the settlements set records last year for the largest criminal fines ever imposed on corporations. One involved Eli Lilly’s antipsychotic Zyprexa, and the other involved Bextra. In the Bextra case, the government also charged Pfizer with illegally marketing another antipsychotic, Geodon; Pfizer settled that part of the claim for $301 million, without admitting any wrongdoing.[8]

On 2 July 2012, GlaxoSmithKline pleaded guilty to criminal charges and agreed to a $3 billion settlement of the largest health-care fraud case in the U.S. and the largest payment by a drug company.[9] The settlement is related to the company's illegal promotion of prescription drugs, its failure to report safety data,[10] bribing doctors, and promoting medicines for uses for which they were not licensed. The drugs involved were Paxil, Wellbutrin, Advair, Lamictal, and Zofran for off-label, non-covered uses. Those and the drugs Imitrex, Lotronex, Flovent, and Valtrex were involved in the kickback scheme.[11][12][13]

The following is a list of the four largest settlements reached with pharmaceutical companies from 1991 to 2012, rank ordered by the size of the total settlement. Legal claims against the pharmaceutical industry have varied widely over the past two decades, including Medicare and Medicaid fraud, off-label promotion, and inadequate manufacturing practices.[14][15]

• Inverse benefit law
• Pharmaceutical marketing