Heath Care Frauds : The GlaxoSmithKline Case

In the health care industry ethics assume a special value and importance, since any neglect of ethics mostly results in very serious consequences. Every year we get to learn that billions are recovered by the government in health care frauds. Health care fraud may happen in various forms. The industry is replete with such examples, ranging from illegal prescription drug sales to overbilling for services. The use of Medicare Frauds Strike Force has been increased by the Obama administration and in many cases government has recovered quite a very large sum. These cases have put a question mark on the ethics of even some big and sophisticated names in the industry. The cases that have come to light have brought influential names under the scanner.

Among such cases that we come across, those involving the biggest sums are the kickback cases. Towards their prevention, the government has enacted several laws. At first, it is important to note that kickbacks are considered a type of health care fraud. Any kind of gift or monetary reward offered to influence prescription or to induce wrongful prescription of drugs is said to be kickback. However, it is not generally possible to prevent such cases fully since it is allowed to a certain level allowed in the pharmaceutical business. This factor also gives rise to a loophole in the implication and punishment mechanism.

The government has enacted some laws in this direction to prevent these frauds. The most important among them are the Federal Anti-Kickback Statute (“AKS”), the False Claims Act, and the Stark Law. The Anti Kickback statute prohibits any kind of willful solicitation or acceptance of remuneration to induce recommendations for health services. The government had started taking action and targeting such companies since as early as the 1970’s. However, the problem with such laws is that each one is quite complex and has regulatory safe harbors. Due to these safe harbors certain business practices receive immunity which could otherwise have been implicated by these laws. It is these safe harbors that the culprits frequently take advantage of.

Among such cases, the most notable which has come to view during recent years is that by the pharmaceutical giant GlaxosmithKline. In this case three fraud charges had been made against Glaxo by the US Food and Drug Administration. The first charge was of off label promotion of two anti-depressant drugs – Paxil and Wellbutrin. The off label use of a drug implies the drug is being marketed for some use without the necessary approval of FDA. There were a few more charges against GSK which included holding back compulsory data as well as making unsupported claims about its Diabetes drug Avandia.

The last and a very important charge was against the sales force of the company which is said to have used inappropriate methods to get the doctors to prescribe their drugs. The methods include very high fees for prescribing the drug. In the recent years such methods have come under heavy scrutiny. These charges bring both employee accountability and the company’s social responsibility under question. It clearly shows that companies may be keeping profits before ethics and social responsibility. Bribe and corruption are becoming quite big ethical issues, especially for the health care industry.

However, in the current case the company agreed to pay $3 billion towards the settlement of the charges against it. This is the largest sum paid by a pharmaceutical giant for settlement of fraud charges in the US history. But in Glaxo’s case what gets especially highlighted is its marketing ethics. The charge against its sales force was of bribing physicians for prescription of its drugs. The sales force of GSK offered the physicians incentives to prescribe GSK products as well as free holidays and tours along with additional funds to go on speaking tours.

In case of the health care industry, it is imperative for companies to conform to high ethical and medical standards in its marketing and promotional activities. Moreover, nothing should be offered so as to influence the prescribing practice. Wheras in the current case, it was seen that these ethical rules or obligations had been kept aside. GSK not only violated the basic ethics but also the strict rules set by the government. The government has set strict rules regarding gifts from pharmaceutical representatives being made to the physicians. In the given case the company pleaded guilty to the allegations leveled by FDA against it. A government official had reacted to this incident by saying that the pharmaceutical industry sees these settlements just as costs of doing business and nothing else.

Such frauds clearly indicate a lapse in corporate social responsibility on part of the organization. GSK on its website states that it operates in a way to reflect its social and ethical values and connects its business decisions to ethical, social and environmental concerns. It mentions as transparency as a important aspect of its business operation. Transparency is most important factor when it comes to building trust with its stakeholders. It also says that it has implemented a number of initiatives to improve transparency in its activities. However, still a big lapse appeared and that puts a question mark on GSK’s corporate social responsibility and ethics.

We can also mark that, there is an imminent need to bring proper changes to the culture of the company so as to promote accountability and ethical behavior among the employees. Along with transparency and accountability the emphasis needs to be on ethical practices with regard to interaction with physicians. GSK’s culture is said to lay special emphasis on transparency. It describes its core values as transparency, respect for people, patient focus and integrity. But this act was in total disregard of its cultural values and norms, which means, it had lost focus on its culture. It is time that it should take a new approach to increase focus on its culture and also to improve the work culture. The biggest challenge before GSK in this case is changing or improving the work culture.

An effective corporate governance structure is required to prevent such things from happening in future. In such a case it is essential that the corporate governance framework or structure encourages and promotes transparency, remains consistent with law as well as the division of responsibilities among the different supervisory authorities is clearly outlined. A clear outlining of authorities and responsibilities can improve accountability in the organization to a great extent.

To improve health system performance and to encourage ethical practices it is absolutely essential to improve accountability first. There is a need to take some extra steps than just putting checks and restraints to improve accountability. The administrator will need to form strategies with focus on compliance with law.

In such cases, whether it is the case of kickbacks or medical error or another unethical practice, there arises the need to inculcate a deep sense of accountability in every employee in the organization. Each and every employee from the top to the bottom should be brought within its ambit. It is necessary to include everyone. It is also necessary to let them know their goals and standards clearly as well as the responsibilities should be made clear. Along with these things there should be rewards to further encourage accountability. It is absolutely important for organizations to implement processes and procedures through which bad behavior can be identified and punished and also good behavior brought to light and rewarded appropriately. One important thing to be kept in mind in light of such cases is that providing incentives on basis of sales volume rather than individual behavior may only encourage unethical behavior.

It is imperative for pharmaceutical company or any health care company to properly manage ethical dilemmas as the losses are not only financial in such cases but there are even bigger implications involved. The most important thing is the reputational damage that these incidents cause, which may take a very long time to restore. It is therefore important that both the employees and the company adhere to ethical behavior for maintaining the relationship between and society and for proper handling of its corporate social responsibility. Businesses should not forget they have certain responsibilities towards the society and should not keep it aside for petty business advantages. It is essential for business organisations in this direction to maintain proper compliance with the laws and regulations as well as its social and moral ethics.

References:

Alix Partners. (2012, January). Health Care Fraud: No Time to Kickback and Relax. In Alix Partners. Retrieved April 6, 2013, from

HYPERLINK “http://www.alixpartners.com/en/LinkClick.aspx?fileticket=xHHbp57gluM%3D&tabid=1199” http://www.alixpartners.com/en/LinkClick.aspx?fileticket=xHHbp57gluM%3D&tabid=1199

Novella, S. (2012, July 4). GSK Pays $3 Billion Fine. In Science Based Medicine. Retrieved April 6, 2013, from HYPERLINK “http://www.sciencebasedmedicine.org/index.php/gsk-pays-3-billion-fine/” http://www.sciencebasedmedicine.org/index.php/gsk-pays-3-billion-fine/

Andrianjafy, D. (2012, July 3). GlaxoSmithKline to pay $3bn in US drug fraud scandal. In Expert Comment. Retrieved April 7, 2013, from HYPERLINK “http://blogs.kent.ac.uk/kbs-news-events/2012/07/expert-comment-glaxcosmithkline-to-pay-3bn-in-us-drug-fraud-scandal/” http://blogs.kent.ac.uk/kbs-news-events/2012/07/expert-comment-glaxcosmithkline-to-pay-3bn-in-us-drug-fraud-scandal/

Shepherd, R. (2012, July 2). GlaxoSmithKline Pleads Guilty In Fraud Case Over Failure To Report Safety Data. In Medical News Today. Retrieved April 7, 2013, from http://www.medicalnewstoday.com/articles/247341.php