Feds found Pfizer too big to nail

Discussion in 'Economics' started by pupu, Apr 3, 2010.

  1. pupu


    Another example on how things get done in the US


    Internal company documents show that Pfizer and Pharmacia (which Pfizer later bought) used a multimillion-dollar medical education budget to pay hundreds of doctors as speakers and consultants to tout Bextra.

    Pfizer said in court that "the company's intent was pure": to foster a legal exchange of scientific information among doctors.

    But an internal marketing plan called for training physicians "to serve as public relations spokespeople."

    Too big to nail

    But when it came to prosecuting Pfizer for its fraudulent marketing, the pharmaceutical giant had a trump card: Just as the giant banks on Wall Street were deemed too big to fail, Pfizer was considered too big to nail.

    Why? Because any company convicted of a major health care fraud is automatically excluded from Medicare and Medicaid. Convicting Pfizer on Bextra would prevent the company from billing federal health programs for any of its products. It would be a corporate death sentence.

    Prosecutors said that excluding Pfizer would most likely lead to Pfizer's collapse, with collateral consequences: disrupting the flow of Pfizer products to Medicare and Medicaid recipients, causing the loss of jobs including those of Pfizer employees who were not involved in the fraud, and causing significant losses for Pfizer shareholders.
  2. Someone protect the Pfizer shareholders! The implications that they should never be hurt is that Pfizer is thus allowed to do anything it wants to increase "shareholder value", and that includes illegal things. Interesting.

    I also really love the analogy to "too big to nail" because the underlying theme in both cases is moral hazard. The banks knew they could take the risks since they would be saved. And Pfizer knew that it couldn't get booted from Medicare and so it pursued the illegal practices.

    The regulators could of course also force Pfizer to simply sell off its Bextra drug and prohibit only that drug from Medicare, but then that would actually make sense! You can't defend corporate oligarchy so well if you start using common sense.