The Latest Case
This latest story got only desultory US coverage from the wire services. The most complete version is in the European Commission press release.
The basics were:
The European Commission has imposed fines of € 10 798 000 on the US pharmaceutical company Johnson & Johnson (J&J) and € 5 493 000 on Novartis of Switzerland. In July 2005, their respective Dutch subsidiaries concluded an anticompetitive agreement to delay the market entry of a cheaper generic version of the pain-killer fentanyl in the Netherlands, in breach of EU antitrust rules.
In more detail,
J&J initially developed Fentanyl and has commercialised it in different formats since the 1960s. In 2005, J&J's protection on the fentanyl depot patch had expired in the Netherlands and Novartis' Dutch subsidiary, Sandoz, was on the verge of launching its generic fentanyl depot patch. It had already produced the necessary packaging material.However, in July 2005, instead of actually starting to sell the generic version, Sandoz concluded a so-called 'co-promotion agreement' with Janssen-Cilag, J&J's Dutch subsidiary. The agreement provided strong incentives for Sandoz not to enter the market. Indeed, the agreed monthly payments exceeded the profits that Sandoz expected to obtain from selling its generic product, for as long as there was no generic entry. Consequently, Sandoz did not offer its product on the market. The agreement was stopped in December 2006 when a third party was about to launch a generic fentanyl patch.The agreement therefore delayed the entry of a cheaper generic medicine for seventeen months and kept prices for fentanyl in the Netherlands artificially high - to the detriment of patients and taxpayers who finance the Dutch health system.
The obligatory colorful bits,
Why did J&J and Novartis conclude that agreement? According to internal documents Sandoz would abstain from entering the Dutch market in exchange for 'a part of [the] cake'. Instead of competing, Janssen-Cilag and Sandoz agreed on cooperation so as 'not to have a depot generic on the market and in that way to keep the high current price'. Janssen-Cilag did not consider any other existing potential partners for the so-called 'co-promotion agreement' but just focused on its close competitor Sandoz. Sandoz engaged in very limited or no actual co-promotion activities.
So,
The Commission therefore concluded that the object of this agreement was anticompetitive and infringed Article 101 of the Treaty on the functioning of the European Union (TFEU).
Johnson and Johnson's Ever Lengthening Unhappy Legal History
There have been so many settlements made by, fines assessed against, and other adverse legal actions affecting Johnson and Johnson in the recent past that we must make a major revision of our summary of such cases (see same appended at the end of this post.)
There have been so many settlements made by, fines assessed against, and other adverse legal actions affecting Johnson and Johnson in the recent past that we must make a major revision of our summary of such cases (see same appended at the end of this post.)
Yet despite all these actions, there is no hint that anything will change at the company. After all, it is extremely profitable, and all the fines, while they individually appear large, are not a big fraction of the money it brings in. And, as we have noted far too often, not one of these actions actually provides any negative consequences, much less severely punishes anyone at the company who authorized, directed, or implemented the bad behavior.
Instead, the leadership of the company continues to make itself very rich. As we wrote here, Mr William Weldon, the outgoing CEO on whose watch most of the misbehavior resulting in the legal actions listed in the appendix below occurred, retired with a huge retirement package, after receiving extremely generous compensation prior to that. The new CEO as of April, 2012, Mr Alex Gorsky, per the company's 2013 proxy statement, already owns more than 190,000 Johnson and Johnson shares, and received $10,977,109 total compensation in 2012. Mr Weldon received over $29 million in total compensation just for 2012, the year in which he retired. Other top executives received from over $3.5 million to over $8 million. One can only imagine how much top executives are making this year.
So Johnson and Johnson, once admired for proclaiming in its famous credo to "put the needs and well-being of the people we serve first," now seems to put its own hired managers first. It boggles the mind that despite this amazing record of bad behavior, the executives who presided over it still have jobs, have made no obvious changes in how they manage the company, and in fact continue to get ridiculously rich. The board of directors, which includes the President of the University of Michigan, a Professor and Emeritus Chancellor and Vice President of Health Affairs at Emory, a Professor at MIT, a former FDA Commissioner, and Senior Fellow at the Brookings Institute, and the Vice Chancellor of Health Sciences, Dean of the David Geffen School of Medicine at the University of California, Los Angeles (UCLA); Chief Executive Officer of the UCLA Health System, who seemingly ought to care about the integrity of evidence, protecting patients from harm, and the need for simple honesty, have not obviously done anything about the apparent massive violation of the company credo that has made its managers wealth. Other than the stockholder lawsuit discussed below, the supposed owners of the company seem to be mute.
When will the straws break the camel's back? In the absence of such a fracture, I repeat like an old, broken record...
Many of largest and once proud health care organizations now have recent records of repeated, egregious ethical lapses. Not only have their leaders have nearly all avoided penalties, but they have become extremely rich while their companies have so misbehaved.
These leaders seem to have become like nobility, able to extract money from lesser folk, while remaining entirely unaccountable for bad results of their reigns. We can see from this case that health care organizations' leadership's nobility overlaps with the supposed "royalty" of the leaders of big financial firms, none of whom have gone to jail after the global financial collapse, great recession, and ongoing international financial disaster (look here). The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent. As Massachusetts Governor Deval Patrick exhorted his fellow Democrats, I exhort state, federal (and international, for that matter) law enforcement to "grow a backbone" and go after the people who were responsible for and most profited from the ongoing ethical debacle in health care.
Again, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.
These leaders seem to have become like nobility, able to extract money from lesser folk, while remaining entirely unaccountable for bad results of their reigns. We can see from this case that health care organizations' leadership's nobility overlaps with the supposed "royalty" of the leaders of big financial firms, none of whom have gone to jail after the global financial collapse, great recession, and ongoing international financial disaster (look here). The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent. As Massachusetts Governor Deval Patrick exhorted his fellow Democrats, I exhort state, federal (and international, for that matter) law enforcement to "grow a backbone" and go after the people who were responsible for and most profited from the ongoing ethical debacle in health care.
Again, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.
Appendix - Johnson and Johnson Recent Legal Record
2010
- Convictions in two different states in 2010 for misleading marketing of Risperdal
- A guilty plea for misbranding Topamax in 2010
2011
- A guilty plea for misbranding Topamax in 2010
2011
- Guilty pleas to bribery in Europe in 2011 by Johnson and Johnson's DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses in 2011 (see this link for all of the above)
- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post here)
2012
- A guilty plea for marketing Risperdal for unapproved uses in 2011 (see this link for all of the above)
- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post here)
2012
- In 2012, testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post here).
- Also in 2012, Johnson & Johnson was fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look here).
- Also in 2012, Johnson & Johnson announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this post).
- Also in 2012, Johnson & Johnson was fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look here).
- Also in 2012, Johnson & Johnson announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this post).
2013
- In 2013, Johnson & Johnson settled case by shareholders alleging that management made misleading statements and withheld material information about manufacturing problems (see this post)
- In 2013, Johnson & Johnson Janssen subsidiary pleaded guilty to a charge of misbranding Risperdal, and settled for a total of $2.2 billion allegations that it promoted the drug for elderly demented patients and adolescents without an indication, and despite evidence of its harms (see this post).
- In 2013, Johnson & Johnson DePuy subsidiary agreed to settle with multiple plaintiffs for $2.5 billion allegations that it sold defective mental-on-metal artificial hip, and hid evidence of its harms .
- In 2013, Johnson & Johnsonn Janssen subsidiary was found by two juries to have concealed harms of its drug Topamax (see this post for this and above case).
- In 2013, Johnson & Johnson Ethicon subsidiary's Advanced Surgical Products and two of its executives agreed to settle charges by US FDA that is sold mislabeled products used to sterilize equipment such as endoscopes (see this post).
- In 2013, Johnson & Johnson fined by European Commission for anticompetitive practices, that is, collusion with Novartis to delay marketing generic version of Fentanyl (in the current post above).
