Corporate Fraud
Introduction
Corporate fraud is referred to activities done by people or individuals that are not honest and not accepted by the law and carried out to benefit the person or the company involved. Corporate is done in a secretive way and if discovered they result in economic scandals and financial involvement. It is difficult to suspect any fraud activities in the beginning since they are started as small activities and not intended to continue (Wells, 2011). Government prevents corporate fraud by putting in place laws, policies and methods to detect such activities before they generate. The papers will analysis the corporate fraud in GlaxoSmithKline, the effects and the outcome. GlaxoSmithKline (GSK) is among the top vaccine manufacturers in the United States. It was accused of undertaking illegal activities such as bribing doctors who in return faked the whole process of research. It was forced to pay $3 billion; the money was to be used to pay civil and criminal liability and illegal prescription of drugs.
According to the laws and policies during the application to the FDA, a company must clearly indicate the use of each drug. After the products have been certified by the FDA that there are good and effective then the company must ensure it promotes its activities according to the law. In the year 2002, the government launched a probe and it discovered that Paxil and other antidepressants treatment were not effective in treating depression in children and young adults. Between years 1994-2001 GSK has conducted clinical trials to check the effectiveness of Paxil whether it is able to cure depression in children and adolescents, all these clinical trials did not succeed. According to the statistics released by the clinical trials, it shows that young adult who used Paxil to treat the illness they have high chances attempting to or committing suicide compared to those that used Placebo to treat depression (Griffin, Posner, & Barker, 2013). A certain company was hired by the GSK to promote Paxil treatment and a medical journal was prepared, published and distributed misleading the public that the drug was indeed the best in the market to treat the illness. The government alleged that the company was sponsoring activities such holding launch programs, dinner programs and spa programs and paying the speaker who was speaking to the audience. The GSK sales representatives were accused by the prosecutors for using the medical journal to support the Paxil. In the year 2003, there were so many reports of suicide cases among teen taking the Paxil treatment, FDA discovered that most of Paxil patients have attempted to commit suicide or have that though compared with placebo patients. The Food and Drug Administration warned the public on the increasing attempts of suicidal attempts by labelling the Paxil drug.
GSK was accused of using PR firms and holding lavish dinners to convince the doctors to promote and prescribe Wellbutrin. They claimed the drug can be used by individuals who want to lose weight, to do away with drug addiction and it can be used to treat arousal disorders. According to FDA Wellbutrin can only be used to treat depression but not any other illness. Those who were marketing the drug were asked to tell the public the positive outcome that comes with taking the drug such as being happy, strong and healthy. Doctors were involved in this scandal by taking a bribe from GSK to promote Wellbutrin treatment, for example, Doctor Drew Pinsky was mentioned in the hearing of the case for accepting to take money to promote the treatment. According to prosecutor’s company employees who succeeded in promoting the Wellbutrin drug were rewarded by bonuses and those who failed to cooperate who forced to take annual leaves (Dukes, Braithwaite & Maloney, 2014).
The GSK was accused of failing to report data to FDA that Avandia which was used to treat diabetes diseases is increasing heart problems in patients. In 2007, a medical journal was published by Dr. Steven Nissen who is a cardiologist was showing that the Avandia drug is increasing the risk of heart attack in patients with type 2diabetes. By the time the Avandia fraud was uncovered by Nissen many patients have already taken it and it had earned the company a lot of money. In a matter of time, the heart attack risk has increased and the GSK reviewed its data in 2005 and 2006 and the statistics showed that there was indeed increase in the heart attack in patients with type 2diabetes. In the year 2006, the GSK reported the matter to the FDA through the agency did not alert the public in time and the company continues to market the product whereas the staff of GSK continued to market the product. The United States alleged that the company is promoting Avandia to treat asthma which was not approved or to be used in such circumstance (Peng & Meyer, 2016). The company promoted this drug by giving false information that it can also be used to treat chronic obstructive pulmonary disease. It was discovered that also the GSK prescribed Lamictal drugs against what the FDA has approved. Other allegations showed that GSK negotiated bribery with the doctors and health professional to convince them to support its products to the patient.
The GSK was found guilty by the Chinese authority for paying money to the hospital and medical professionals to promote its drugs in China using a traveling agency to pay doctors, government officials, and hospitals. The GSK used almost $ 450 million to carry out this fraud. There was a forgery of receipts for purchases though no transaction took place and they also faked conference attendance. When confronted the GSK denied that it was involved in the bribes. An internal investigation was done and GSK admitted that certain employees in the company were involved which broke the Chinese policies and laws. The Chinese highlighted how the Chinese consumers were affected by this bribe. According to Chinese officials, GSK bribed the officials who were in charge of the investigation. As a result, five senior managers of the GSK were arrested and accused of committing a crime. Mark Reilly who was the chief executive of GSK in China also was found guilty and was to serve a suspended prison sentence. Other seniors’ managers were found guilty and received suspended sentence also the GSKs local subsidiary was found guilty and were fined US$ 490milion.The company was also being investigated by other countries, for example, Poland and Jordan for allegations of bribing doctors and other medical staffs. After the accusations, the GSK sales dropped thirty percent in China (Selman & Leighton, 2010).
In the year 2007, the Avandia drug was officially prohibited in Europe and doctors were to prescribe other medicine to the patients instead of Avandia. In the year 2010, FDA had a discussion on whether to ban the drug or not from the United States market (Australia, 2016). They concluded that Avandia should be allowed to sell but to limit its use. Doctors should only give the drug to patients who only showed positive outcomes after using it and the patients should always be informed of the risk associated with the drug. GSK was allegedly accused of failing to report prices between the year 1994 and 2003, the company reported fake drug price that resulted in the company to underpay rebates which belonged to Medical Drug debate. According to the law, the company is required to report the lower prices and the highest prices that it charged its clients, based on the prices it should pay a quarter of the income to the rebates. It is evident that the company was underpaying the Medicaid and it was overcharging certain hospitals and to resolve these allegations the company agreed to pay $30 million, the federal government was paid $118,792,931 and $20,235,000 to public health services (Garrett, 2014).
Criminal and civil resolutions required the GSK to have five years contract integrity with bodies of health services these bodies will ensure that the GSK implement and make changes on how it does its business (Gabriel, 2014). These changes include changing its sales force which will ensure that it remove compensation based on sales objectives and territories. GSK is also required by the corporate integrity agreement to have transparency research methods and publication policies and to ensure that it follows are the policies in its business with various health care services. The agreement also requires that GSK staffs be individually held accountable for any misconduct and sales reps not to pay for achieving the sales target rather be paid on the quality delivered. The criminal investigation assured the public that it will continue to track down all pharmacies that chose to benefit themselves from the public’s health.
References
Australia, C. L. (2016). Global Business. Cincinnati OH: Cengage Learning US.
Dukes, M. N. G., Braithwaite, J., & Maloney, J. P. (2014). Pharmaceuticals, corporate crime and public health. Cheltenham, UK; Northampton, MA : Edward Elgar Publishing.
Gabriel, J. M. (2014). Medical monopoly: Intellectual property rights and the origins of the modern pharmaceutical industry. Chicago: The University of Chicago Press.
Garrett, B. (2014). Too big to jail: How prosecutors compromise with corporations. Cambridge, Massachusetts: The Belknap Press of Harvard University Press.
Griffin, J. P., Posner, J., & Barker, G. R. (2013). The Textbook of Pharmaceutical Medicine. New York, NY: John Wiley & Sons.
Peng, M. W., & Meyer, K. E. (2016). International business. Australia: Cengage Learning.
Selman, D., & Leighton, P. (2010). Punishment for sale: Private prisons, big business, and the incarceration binge. Lanham, Md: Rowman & Littlefield Publishers.
Wells, J. T. (2011). Corporate fraud handbook: Prevention and detection. Hoboken, N.J: Wiley.
