Harsher Punishments Proposed for Drug Companies that Put Consumers at Risk


July 03, 2011

Whistleblower can conjure up images of a "stool pigeon" or tattle tale, but when it comes to keeping big corporations in line, whistleblowers help protect us all. One of the biggest ways that whistleblowers have helped protect the public is by holding drug companies accountable for making greedy decisions that put innocent people at risk.

A huge settlement was awarded last year to the FDA against the drug company GlaxoSmithKline in the amount of $750 million dollars. The amount included $150 million to settle criminal charges for knowingly selling adulterated drugs and $600 million in civil penalties.

This was a result of a suit brought by Cheryl D. Eckard, a quality manager for the company. Whistleblower laws have provisions that protect employees from retaliation for exposing wrongdoing by their employer and typically are enforced by a number of government agencies.

An example of this is the U.S. Department of Labor (DOL) and its divisions that enforce several major laws that directly protect whistleblowers or have provisions to shield employees from retaliation for reporting violations of the laws, refusing to engage in any action made unlawful by the laws, or participating in any proceedings under the laws.

Cheryl Eckard had warned GlaxoSmithKline of problems with their products and recommended recalls of defective products and warned the company that she would call the Food and Drug Administration (FDA) to report the problems. In answer, the company chose to lay her off. Eckard then notified the FDA and sued under the whistleblower law, and the FDA launched a criminal investigation. In 2005, armed federal marshals seized $2 billion worth of drugs, and the company's Puerto Rico plant was also closed down in 2009. The suit then resulted in the $750 million award.

This may seem like a large award, but it is not as large as it might seem when considering the amount of revenue generated by these drug companies. The U.S. sentencing commission, a federal regulator, is now proposing that harsher punishments be meted out for executives of drug companies who are found guilty of strict liability offenses.

No longer will executives be allowed to hide behind the iron curtain and claim that they had no idea of what was happening within their own company. These changes would result in heavier fines and even jail time for health care company executives, who the FDA is going to pursue, even if they were not directly aware of what their company was doing.

Just after the proposal for these new laws, the former C.E.O. of KV Pharmaceutical Co., Marc Hermelin, was given a 30 day jail sentence and assessed nearly $2 million in penalties for misdemeanor violations of the Food, Drug, and Cosmetic Act. Hermelin pleaded guilty to selling oversized morphine pills that put consumers at risk.

The new sentencing guidelines would provide for punishments to be increased, essentially treating misdemeanor crimes like felony offenses.

  • In crimes involving between $1 million and $7 million, there would be a two-level increase in punishment.
  • In crimes involving between $7 million and $20 million, there would be a three-level increase in punishment.
  • In crimes involving $20 million and over, there would be a four-level increase.

The serious harm that goes along with healthcare fraud and the need for aggressive and appropriate law enforcement action to prevent it warrants these types of punishments. Critics of the FDA and pharmaceutical companies have been pushing for criminal consequences against drug company executives instead of just imposing large fines.

You may be considering disclosing information regarding actions by a drug company and/or drug company executive that may be putting the public at risk. Before blowing the whistle, it is a good idea to seek the advice of an experienced Whistleblower attorney, to ensure that you are protected by a whistleblower law or similar provision in another law. Federal whistleblower laws mandate only the minimums to which all states must adhere. States are allowed to create their own whistleblower laws that include or expand upon the minimum protections afforded by the Federal laws.

Our Georgia whistleblower lawyersare available to assist clients throughout all of Georgia and the Southeast, including but not limited to Albany, Athens, Atlanta, Augusta, Columbus, Gainesville, Macon, Marietta, Rome, Roswell, Savannah, Smyrna, Valdosta, Warner Robins and all smaller cities and rural areas in the state. No matter where you are located our attorneys are just a phone call away, and we will even come to you. Call us 24 hours a day/7 days a week for your Free Consultation at 1-800-LAW-NEED (1-800-529-6333). You can also visit us online at www.montlick.com and use our Free Case Evaluation Form or 24-hour Live Online Chat.

Category: Personal Injury

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