Does Corporate Crime Pay?

The New York Times of September 17, 2015 has an interesting piece by Nicholas Kristof regarding Johnson & Johnson’s antipsychotic drug Risperdal.  The column is based on a new book by Steven Brill which is being serialized on The Huffington Post.

Risperdal has benefits and side effects.  Those side effects include strokes in the elderly and development of large breasts in boys.  Johnson & Johnson manipulated and covered up the research data to hide the bad side effects.  Johnson & Johnson was ultimately caught, entered a plea of guilty, and paid more than $2 billion in fines.  Nevertheless, through aggressive marketing, including marketing to the elderly, children and adolescents, marketing for off-label uses, and lobbying of states, including Texas, to use Risperdal instead of generics, Risperdal had $30 billion in sales.

It is estimated Johnson & Johnson’s profit for sales in the U.S. will be $19 billion and another $10 billion in foreign sales.

You would think heads would roll at Johnson & Johnson if a crime was committed that resulted in a $2 billion penalty and harm to so many consumers.  Not so.  The person in charge of marketing, Alex Gorsky, evaded personal criminal prosecution and was made C.E.O.  His pay for 2014 was $25 million.

On September 18, 2015, it was announced that federal prosecutors have announced a settlement with General Motors for failing to disclose over a period of 10 years a known ignition switch safety defect tied to at least 124 deaths.  There will be no prosecution of individuals.  General Motors will only pay a $900 million fine and return to business as usual.  The mother of a dead 16-year-old said, “That’s giving General Motors and the other auto manufacturers permission to do it again.  And all of the people who were killed . . . including my daughter, will have lost their lives in vain.”  She is exactly right.  It will be profit before people every time unless and until the decision makers are made to pay.

Finally, it was also announced on September 17, 2015 that a new study proves Paxil, an antidepressant manufactured by GalaxaSmithKline, is not safe and effective for adolescents.  The key to understanding the significance of this major study is that the researchers used the same data that was used by the manufacturer to reach the opposite result 15 years ago.  Adverse effects from taking or withdrawing from Paxil include violent acts and suicide.  After 15 years of clear sailing, I doubt the manufacturer much cares what researchers have to say now.

Loretta Lynch, U.S. Attorney General, has announced a new emphasis on holding individuals responsible for corporate crime.  If she carries out this policy, maybe corporate crime won’t pay, but it seems to for the present.