CORPORATE CRIME in the pharmaceutical industry

By the same author I n e q u a l i t y , C r i m e and P u b l i c Policy

CORPORATE CRIME in the pharmaceutical industry

John Braithwaite

Routledge & Kegan Paul
L o n d o n , B o s t o n , M e l b o u r n e and Henley

First published in 1984 by Routledge & Kegan Paul pic 39 Store Street, London WC1E7DD, England 9 Park Street, Boston, Mass. 02108, USA 464 St Kilda Road, Melbourne. Victoria 3004, Australia and Broadway House, Newtown Road, Henley-on-Thames, Oxon RG91EN, England Photoset in 10 on 12 Times Roman by Kelly Typesetting Ltd, Bradford-on-Avon, Wiltshire and printed in Great Britain by Billing and Sons, Worcester ©John Braithwaite 1984 No part of this book may be reproduced in any form without permission from the publisher, except for the quotation of brief passages in criticism Library of Congress Cataloging in Publication Data Braithwaite, John.

Corporate crime in the pharmaceutical industry. Bibliography: p. Includes index. 1. Commercial crimes - Case studies. 2. Corporations Corrupt practices - Case studies. 3. Drug trade - United States - Employees - Corrupt practices - Case studies. 4. Professional ethics. 5. White collar crimes. I. Title. [DNLM: 1. Drug industry-Standards. 2. Crime. QV773B814cJ HV6769.B7 1983 364.1'68 83-11149 ISBN 0-7102-0049-8

Contents

Preface 1 2 3 4 5 6 7 8 9 I n t r o d u c t i o n : an i n d u s t r y c a s e study of c o r p o r a t e c r i m e Bribery Safety t e s t i n g of d r u g s : from n e g l i g e n c e to fraud Unsafe manufacturing practices Antitrust T h e c o r p o r a t i o n as p u s h e r D r u g c o m p a n i e s and t h e T h i r d W o r l d Fiddling S t r a t e g i e s for c o n t r o l l i n g c o r p o r a t e c r i m e A p p e n d i x G e t t i n g i n t e r v i e w s with c o r p o r a t e e x e c u t i v e s Notes Bibliography Index

vii 1 11 51 110 159 204 245 279 290 384 389 408 428

V

Preface

T h i s b o o k is an i n d u s t r y c a s e study of c o r p o r a t e c r i m e . It a t t e m p t s t o d e s c r i b e t h e w i d e v a r i e t y o f t y p e s o f c o r p o r a t e c r i m e which occur w i t h i n o n e i n d u s t r y . W h e n I t a u g h t a c o u r s e on c o r p o r a t e c r i m e at t h e U n i v e r s i t y of C a l i f o r n i a , I r v i n e , in 1979 I found that s t u d e n t s had a n a m o r p h o u s u n d e r s t a n d i n g o f t h e subject a s a n i n c o m p r e h e n s i b l e evil p e r p e t r a t e d by the p o w e r f u l . They w e r e at a loss to d e s c r i b e p a r t i c u l a r e x a m p l e s . P a r t o f t h e p u r p o s e o f this b o o k i s t o fill this g a p b y d e s c r i b i n g m a n y e x a m p l e s o f c o r p o r a t e c r i m e , e x a m p l e s w h i c h s h o w t h e d e p t h a n d s e r i o u s n e s s o f the c r i m e p r o b l e m in the p h a r m a c e u t i c a l industry. T h e b o o k also has a n a n a l y t i c a l p u r p o s e w h i c h i s m o r e i m p o r t a n t t h a n its d e s c r i p t i v e function. This is to use t h e p h a r m a c e u t i c a l i n d u s t r y ' s e x p e r i e n c e t o t e n t a t i v e l y e x p l o r e t h e effectiveness o f different t y p e s o f m e c h a n i s m s for t h e c o n t r o l o f c o r p o r a t e c r i m e . M o s t of t h e c h a p t e r s h a v e a first s e c t i o n w h i c h d e s c r i b e s several c o r p o r a t e c r i m e s , followed b y a n i n t e r p r e t i v e section which uses i n f o r m a t i o n g a i n e d from i n t e r v i e w s with c o r p o r a t e e x e c u t i v e s and o t h e r s to cast light on p o s s i b l e policy i m p l i c a t i o n s from t h e s e case studies. S o m e of my i n f o r m a n t s will not be p l e a s e d with t h e way I have w r i t t e n t h e b o o k . T h e y will think it a o n e - s i d e d a c c o u n t which f o c u s e s a t t e n t i o n o n p h a r m a c e u t i c a l i n d u s t r y a b u s e s t o the exclusion of all t h e w o r t h w h i l e t h i n g s t h e i n d u s t r y has a c h i e v e d for m a n k i n d . A f t e r all, t h e p h a r m a c e u t i c a l i n d u s t r y has b e e n r e s p o n sible for r e m o v i n g t u b e r c u l o s i s , g a s t r o e n t e r i t i s , and d i p h t h e r i a from a m o n g t h e ten l e a d i n g c a u s e s o f d e a t h i n d e v e l o p e d c o u n t r i e s . U n f o r t u n a t e l y , it is t h e j o b of c r i m i n o l o g i s t s to e x p l o r e the s e a m y vii

Preface side of h u m a n e x i s t e n c e . If a c r i m i n o l o g i s t u n d e r t a k e s a study of m u g g i n g or m u r d e r , no o n e e x p e c t s a ' b a l a n c e d ' a c c o u n t which g i v e s d u e c r e d i t to t h e fact t h a t m a n y m u g g e r s are good family m e n , l o v i n g f a t h e r s w h o p r o v i d e their c h i l d r e n w i t h a C h r i s t i a n u p b r i n g i n g , o r p e r h a p s g e n e r o u s p e o p l e w h o h a v e s h o w n a willingness t o h e l p n e i g h b o u r s i n t r o u b l e . Y e t c r i m i n o l o g i s t s are e x p e c t e d t o p r o v i d e such ' b a l a n c e ' w h e n t h e y s t u d y c o r p o r a t e c r i m i n a l s . T h e fact t h a t I h a v e not e m p h a s i s e d their good d e e d s d o e s not m e a n t h a t I am not g r e a t l y a p p r e c i a t i v e of t h e a s s i s t a n c e and hospitality afforded me by i n f o r m a n t s from t h e i n d u s t r y . I o w e an intellectual debt to many w h o have d o n e previous research on the p h a r m a c e u t i c a l i n d u s t r y . It w o u l d be i m p o s s i b l e to m e n t i o n all by n a m e . P a r t i c u l a r l y useful, h o w e v e r , h a v e b e e n the i n v e s t i g a t i v e j o u r n a l i s m of M o r t o n M i n t z of t h e Washington Post, t h e work on t h a l i d o m i d e of t h e I n s i g h t T e a m of The Sunday Times of L o n d o n , a n d t h e s c h o l a r s h i p o f M i l t o n S i l v e r m a n and G a r y Gereffi. D i s c u s s i o n s and c o r r e s p o n d e n c e with B r e n t Fisse and Bud Loftus w e r e influential in c h a n g i n g t h e d i r e c t i o n of my t h i n k i n g on key d i l e m m a s . I a m also i n d e b t e d t o D a v i d B i l e s , R i c h a r d G a v e n , Bill G i b s o n , R o y H a r v e y , K a t h e r i n e P i t t , Ivan P o t a s , P e t e r R h e i n s t e i n , B r u c e S w a n t o n and G r a n t W a r d l a w for critical c o m m e n t s o n e a r l i e r drafts o f t h e m a n u s c r i p t . V a l e r i e B r a i t h w a i t e and Gil G e i s p r o v i d e d great a s s i s t a n c e d u r i n g t h e A m e r i c a n f i e l d w o r k stage o f t h e r e s e a r c h . A p p r e c i a t i o n i s a l s o d u e t o J a n i n a B u n c and A n n e t t e W a t e r s for their p a i n s t a k i n g and a c c u r a t e t y p i n g of t h e m a n u s c r i p t . I am grateful to the A u s t r a l i a n - A m e r i c a n E d u c a t i o n a l F o u n d a t i o n for s u p p o r t with a F u l b r i g h t F e l l o w s h i p t o c o n d u c t t h e fieldwork and t o t h e A u s t r a l i a n I n s t i t u t e of C r i m i n o l o g y for s u p p o r t i n g t h e project in A u s t r a l i a .

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1

Introduction: an industry case study of corporate crime

T h e m a j o r i t y o f p e o p l e w h o w o r k i n t h e p h a r m a c e u t i c a l industry s u b s c r i b e to high s t a n d a r d s of integrity and do e v e r y t h i n g in their p o w e r to stay w i t h i n t h e c o n s t r a i n t s of the law. In the c o u r s e of this r e s e a r c h , I m e t p h a r m a c e u t i c a l e x e c u t i v e s w h o i m p r e s s e d me with t h e s i n c e r i t y o f t h e i r c o m m i t m e n t t o t h e p u b l i c welfare m u c h m o r e t h a n m a n y o f t h e i n d u s t r y ' s critics i n p o l i t i c s , r e g u l a t o r y a g e n c i e s , t h e p u b l i c i n t e r e s t m o v e m e n t , and a c a d e m i a . Valerie B r a i t h w a i t e accompanied me to many pharmaceutical c o m p a n i e s , forever c o n s t r a i n i n g m e from d r i v i n g o n t h e w r o n g side o f t h e r o a d . O n e d a y , a s w e d r o v e back t o N e w Y o r k , she said: 'But t h e s e p e o p l e a r e s o n i c e , J o h n . D o you think they really are c o r r u p t ? ' M y initial r e s p o n s e w a s : "You've s p e n t the day being s h o w n a r o u n d and t a k e n t o lunch b y the c o m p a n y ' s public r e l a t i o n s staff. T h e y ' r e paid to be n i c e . S o m e p e o p l e in t h e s e c o m p a n i e s get paid a lot of m o n e y b e c a u s e t h e y ' r e g o o d at being r u t h l e s s b a s t a r d s , and o t h e r s get big m o n e y t o e n t e r t a i n p e o p l e like you b e c a u s e t h e y ' r e g o o d a t b e i n g n i c e . ' But really t h a t w a s a n i n a d e q u a t e a n s w e r . I r r e s p e c t i v e of w h a t t h e y ' r e paid to b e . m o s t o f t h e m in fact are principled p e o p l e . T h e r e a r e t h r e e t y p e s o f p r i n c i p l e d p e o p l e i n the p h a r m a c e u t i c a l i n d u s t r y . F i r s t , t h e r e a r e t h o s e w h o directly p a r t i c i p a t e i n c o m p a n y a c t i v i t i e s w h i c h d o p u b l i c h a r m , but w h o sincerely believe the c o m p a n y p r o p a g a n d a w h i c h tells t h e m that they are c o n t r i b u t i n g t o t h e i m p r o v e m e n t o f c o m m u n i t y h e a l t h . S e c o n d , t h e r e are p e o p l e w h o p e r c e i v e t h e c o m p a n y t o b e e n g a g i n g i n c e r t a i n socially harmful p r a c t i c e s and fight t o o t h and nail w i t h i n t h e o r g a n i s a t i o n to s t o p t h o s e p r a c t i c e s . T h i r d , t h e r e are p e o p l e w h o have n o direct I

1971: 51).Introduction: an industry case study of corporate crime c o n t a c t with socially harmful c o r p o r a t e p r a c t i c e s . they should b e viewed a s a c t o r s w h o a s s u m e c e r t a i n r o l e s . A n o t h e r r e s p o n d e n t . U n d e r s t a n d i n g h o w ' o r d i n a r y m e n are led t o d o e x t r a o r d i n a r y t h i n g s ' can b e g i n with r o l e . for e x a m p l e . I am r e m i n d e d of o n e g e n t l e m a n w h o had a sign.d o z e n m e n i n t h e A u s t r a l i a n p h a r m a c e u t i c a l i n d u s t r y . not by t h e a c t o r ' s p e r s o n a l i t y . R a t h e r than think of c o r p o r a t e a c t o r s a s i n d i v i d u a l p e r s o n a l i t i e s . T h e j o b t h e y d o w i t h i n t h e o r g a n i s a t i o n p r o d u c e s social benefits. O n e m u s t q u e s t i o n t h e proclivity i n a n individualistic c u l t u r e to l o c a t e t h e s o u r c e of evil d e e d s in evil p e o p l e . t h e quality c o n t r o l m a n a g e r w h o i s e x a c t i n g i n e n s u r i n g t h a t no d r u g l e a v e s t h e plant w h i c h is i m p u r e or o u t s i d e specificat i o n s . C o n s i d e r . ' G o for t h e j u g u l a r ' .n i n e p e r cent o f the m a n a g e m e n t s t u d e n t b o a r d s o f d i r e c t o r s not only refused t o withd r a w t h e d a n g e r o u s d r u g . U s i n g d e l a y i n g tactics t o k e e p a d a n g e r o u s but profitable drug on t h e m a r k e t is s o m e t h i n g 2 . e x c u s e d his o w n r u t h l e s s n e s s with: i n b u s i n e s s y o u can c o m e up a g a i n s t a dirty s t i n k i n g b u n c h of c r o o k s . T h e n you h a v e to b e h a v e like a c r o o k yourself. and they do that j o b with integrity and dedication. b u t t h e quality c o n t r o l m a n a g e r d o e s t h e j o b of e n s u r i n g that at least it is not a d u l t e r a t e d . but also u n d e r t o o k legal o r political m a n o e u v r e s to forestall efforts of t h e g o v e r n m e n t to ban it. a r g u a b l y o n e o f t h e m o s t powerful h a l f . on t h e wall b e h i n d his desk.p l a y i n g e x p e r i m e n t s . T h e r e q u i r e m e n t s o f t h e s e roles a r e defined by t h e o r g a n i s a t i o n . o t h e r w i s e you get d o n e like a d i n n e r . It m i g h t be t h a t t h e d r u g itself c a u s e s m o r e h a r m t h a n good b e c a u s e o f side-effects o r a b u s e . m o s t c o r p o r a t e c r i m e s i n the p h a r m a c e u t i c a l i n d u s t r y c a n n o t be e x p l a i n e d by the p e r v e r s e p e r s o n a l i t i e s of their p e r p e t r a t o r s . " N e v e r t h e l e s s . T h e decision facing the b o a r d w a s a real-life s i t u a t i o n which had c o n f r o n t e d t h e U p j o h n c o m p a n y : ' s h o u l d it r e m o v e from t h e m a r k e t a drug which had b e e n found t o e n d a n g e r h u m a n life? S e v e n t y . 1977: 197).* This w a s t h e s a m e a c t i o n a s t h e U p j o h n b o a r d itself t o o k . a n action w h i c h 97 p e r cent o f a s a m p l e o f 7 1 r e s p o n d e n t s classified as 'socially i r r e s p o n s i b l e ' ( A r m s t r o n g . I n s t e a d we s h o u l d "pay a t t e n t i o n to t h e factors t h a t lead o r d i n a r y m e n to do e x t r a o r d i n a r y things' ( O p t o n . Most of the principled people in p h a r m a c e u t i c a l c o m p a n i e s are in this last c a t e g o r y . In h a s t e n i n g to p o i n t o u t t h a t not all p h a r m a c e u t i c a l e x e c u t i v e s a r e nice g u y s . A r m s t r o n g (1977) a s k e d a l m o s t t w o t h o u s a n d m a n a g e m e n t s t u d e n t s from t e n c o u n t r i e s to play t h e roles of b o a r d m e m b e r s of a t r a n s n a t i o n a l p h a r m a c e u t i c a l c o m p a n y .

The unquestionable artificiality of l a b o r a t o r y role-playing e x p e r i m e n t s m a y n e v e r t h e l e s s share s o m e o f t h e very artificiality w h i c h is t h e stuff from w h i c h i m m o r a l c o r p o r a t e d e c i s i o n s are made: [ T ] h e usual r e s t r a i n t s on a n t i s o c i a l b e h a v i o r o p e r a t e t h r o u g h a s e l f . a role p l a y e r in an u n r e a l ' g a m e ' t h a t e v e r y o n e is ' p l a y i n g ' ( S t o n e .. h o w e v e r . w h e n p e o p l e die as a result of t h e k i n d s of socially i r r e s p o n s i b l e m a n o e u v r e s of the U p j o h n b o a r d in this c a s e . 1975: 2 3 5 ) .m a k e r s . a n d c o l l e c t i v e a c t i o n .c o n t e m p t u o u s for their part in it. M u h l e m a n e t a l . Bern et al.m a k i n g . 1968.c o n d e m n a t i o n for a g g r e s s i o n is to rely on g r o u p d e c i s i o n . H e n c e . 1964. that isn't b e i n g d o n e by me but through me as an a c t o r . B u r n s t e i n and V i n o k u r . P s y c h o l o gists call this t e n d e n c y for c a u t i o u s i n d i v i d u a l s to s u p p o r t m o r e h a z a r d o u s g r o u p d e c i s i o n s t h e ' g r o u p risky shift p h e n o m e n o n ' . . G r o u p t h i n k ( J a n i s . h o w e v e r . . T h e p h e n o m e n o n i s far from u b i q u i t o u s . B a n d u r a ( 1 9 7 3 : 213) e x p l a i n e d the basic p s y c h o l o g y o f 'rule b y nobody'. 1973. division of d e c i s i o n . 1976. so that no single i n d i v i d u a l feels r e s p o n s i b l e for w h a t is e v e n t u a l l y d o n e . T h r o u g h division of l a b o r . . W h e n c a u t i o u s c h o i c e s a r e m o r e socially d e s i r a b l e . social o r g a n i s a t i o n s go to g r e a t l e n g t h s to d e v i s e s o p h i s t i c a t e d m e c h a n i s m s for o b s c u r i n g r e s p o n s i b i l i t y for d e c i s i o n s that affect o t h e r s a d v e r s e l y .. W a l l a c h a n d K o g a n . 1971) and w h a t A r e n d t ( 1 9 6 5 ) r e f e r r e d to as 'rule by n o b o d y ' are i m p o r t a n t in c o r p o r a t e d e c i s i o n . g r o u p p r e s s u r e s can actually 3 3 . 1 9 6 5 . S h a w .m a k i n g w h i c h results i n h u m a n suffering. . p e o p l e can b e c o n t r i b u t o r s t o cruel p r a c t i c e s and b l o o d s h e d w i t h o u t feeling p e r s o n a l l y r e s p o n s i b l e or s e l f . 1 9 7 3 . 1965.m a k i n g . C a r t w r i g h t . [ O n e ] b u r e a u c r a t i c p r a c t i c e for r e l i e v i n g s e l f .i m a g e : T c a n ' t see m y s e l f d o i n g that' In an institutional s e t t i n g . T h e r e a r e a large n u m b e r o f p s y c h o l o g i c a l s t u d i e s d e m o n s t r a t i n g t h a t m e m b e r s of a g r o u p will risk m o r e as g r o u p m e m b e r s t h a n they will as i n d i v i d u a l s ( S t o n e r .Introduction: an industry case study of corporate crime t h a t o r d i n a r y p e o p l e a p p e a r willing t o d o w h e n a s k e d t o play the role of i n d u s t r y d e c i s i o n . to s u g g e s t t h a t it h a p p e n e d b e c a u s e the U p j o h n b o a r d i s m a d e u p o f evil m e n d o e s little t o a d v a n c e e x p l a n ation of the p h e n o m e n o n . W a l l a c h et al. 1976). I n d e e d . P e o p l e in g r o u p s b e h a v e in w a y s t h a t w o u l d be i n c o n c e i v a b l e for any o f t h e m a s i n d i v i d u a l s .

T h e following p a s s a g e in a l e t t e r from t h e c o m p a n y to the c a m p at A u s c h w i t z d e m o n s t r a t e s t h e a t t i t u d e o f I . W h e n a N e w York board meeting decides to continue marketing a dangero u s d r u g in a T h i r d W o r l d c o u n t r y . G . such w o r k lays a f o u n d a t i o n for u n d e r s t a n d i n g h o w it is p o s s i b l e for d e c e n t p e o p l e to do i n d e c e n t d e e d s . H o e c h s t and B a y e r . G . . G . 1975) found t h a t victim visibility inhibited a g g r e s s i o n .000 concentration-camp workers passed through I. p r o d u c e a c a u t i o u s shift ( M a d a r a s and B e r n . and b o t h a m o n g the w o r l d ' s largest t h i r t y c o r p o r a t i o n s . A u s c h w i t z . I . T w e l v e t o p I . F a r b e n c o m p a n y . 0 0 0 o f t h e m w e r e w o r k e d t o d e a t h ( B o r k i n . are d e s c e n d e d from G e r m a n y ' s I .m a k i n g is t h e d i s t a n c e in s p a c e and t i m e b e t w e e n the h a z a r d o u s d e c i s i o n . into effectively t h r e e c o m p a n i e s : H o e c h s t . A n o t h e r e x p e r i m e n t i n a s o m e w h a t m o r e n a t u r a l i s t i c setting ( T u r n e r et a l . facilities a t A u s c h w i t z w e r e s o e n o r m o u s that they used m o r e e l e c t r i c i t y t h a n t h e e n t i r e city o f B e r l i n . G . t h e victims could h a r d l y be m o r e r e m o t e from t h e killers. T h i s b o o k d o c u m e n t s a b o m i n a b l e h a r m which g r o u p d e c i s i o n m a k i n g i n t h e p h a r m a c e u t i c a l i n d u s t r y has caused o n m a n y o c c a s i o n s .G. W h i l e e x t r a p o l a t i o n from t h e r e s e a r c h o f p s y c h o l o g i s t s t o the real w o r l d of t r a n s n a t i o n a l c o r p o r a t i o n s is p r o b l e m a t i c in the e x t r e m e . A t least 2 5 . F r a s e r et a l . F a r b e n t o the subjects o f its d r u g testing: 4 4 . F a r b e n e x e c u t i v e s w e r e s e n t e n c e d t o t e r m s o f i m p r i s o n m e n t for slavery and m i s t r e a t m e n t offences a t t h e N u r e m b e r g w a r c r i m e s trials. M i l g r a m ' s ( 1 9 6 5 ) e x p e r i m e n t s s h o w e d t h a t p e o p l e w e r e m o r e willing t o a d m i n i s t e r electric s h o c k s w h e n t h e y w e r e less likely to see or be seen by the victim of t h e shock. 1978: 127).Introduction: an industry case study of corporate crime 1968.m a k e r and the victim of t h e decision. B A S F and B a y e r . built and o p e r a t e d a m a s s i v e c h e m i c a l p l a n t at A u s c h w i t z with slave l a b o u r : t h e I . W i t h o u t offering e x p l a n a t i o n s o f p r e d i c t i v e v a l u e . G . 1971). I . T h e ' c o l l e c t i v e evil' o f m a n y p h a r m a c e u t i c a l c o m p a n i e s i s m a n i f e s t e v e n t h o u g h s o m a n y 'nice p e o p l e ' w o r k for t h e m . t h e p s y c h o l o g i c a l l i t e r a t u r e at least s u c c e e d s in r e n d e r i n g s e e m i n g l y i m p l a u s i b l e e v e n t s plausible. ' s d r u g t e s t i n g p r o g r a m . t h e A l l i e s b r o k e u p I . A p p r o x i m a t e l y 300. After the S e c o n d W o r l d W a r . t h e l a r g e s t and third largest c o m p a n i e s i n world pharm a c e u t i c a l sales r e s p e c t i v e l y . A n o t h e r v a r i a b l e w h i c h d i s t i n g u i s h e s individual from c o r p o r a t e d e c i s i o n . F a r b e n r a n k s with the S t a n d a r d Oil Trust a s o n e o f t h e t w o g r e a t e s t c a r t e l s i n w o r l d h i s t o r y . G . O t h e r s d i e d i n I . G . G . .

L a R o c h e . H o e c h s t i n J u n e 1955 a p p o i n t e d F r i e d r i c h J a e h n e . W e shall k e e p y o u p o s t e d o n d e v e l o p m e n t s c o n c e r n i n g this e x p e r i m e n t . s e n t e n c e d t o seven y e a r s at N u r e m b e r g . After t h e w a r . built u p o n m a s s i v e profits i t m a d e b e t w e e n t h e t w o w o r l d w a r s from sales o f h e r o i n and m o r p h i n e t o t h e u n d e r w o r l d . G . O n c e A l l i e d c o n t r o l l o o s e n e d . t h e A l l i e s insisted t h a t n o n e o f t h e c o n v i c t e d w a r c r i m i n a l s b e a p p o i n t e d t o the b o a r d s o f t h e n e w I . I n d e e d . a history of fraud in t h e safety testing of 3 5 . c o m p a n i e s . to its s u p e r v i s o r y b o a r d . W e n e e d a p p r o x i m a t e l y 150. w e will t a k e p o s s e s s i o n o f t h e w o m e n . S w i t z e r l a n d ' s H o f f m a n . C o n t e m p o r a r y o b s e r v e r s o f p h a r m a c e u t i c a l c o r p o r a t i o n s offer little s o l a c e t h a t t h e i n d u s t r y ' s p r e s e n t is m u c h less sordid t h a n its r e c e n t p a s t . we w o u l d a p p r e c i a t e y o u r p r o c u r i n g for us a n u m b e r o f w o m e n . 1977: 5 8 ) . B a y e r a p p o i n t e d Fitz ter M e e r . C l i n a r d et al. o n e o f the twelve war criminals sentenced to imprisonment at N u r e m b e r g . . All subjects died. . . D e s p i t e t h e i r e m a c i a t e d c o n d i t i o n . In S e p t e m b e r of t h a t y e a r he w a s elected C h a i r m a n . We r e c e i v e d y o u r a n s w e r but c o n s i d e r the price of 200 m a r k s a w o m a n e x c e s s i v e . . howe v e r . beyond the financial reach of most of the world's population.'s ( 1 9 7 9 : 104) c o m p r e h e n s i v e study of c o r p o r a t e c r i m e i n A m e r i c a n b u s i n e s s found p h a r m a c e u t i c a l c o m p a n i e s to have more than three times as many serious or m o d e r a t e l y s e r i o u s law v i o l a t i o n s p e r firm a s o t h e r c o m p a n i e s i n the s t u d y . T h e t e s t s w e r e m a d e . . I t will also b e d e m o n s t r a t e d h o w five o f A m e r i c a ' s largest p h a r m a c e u t i c a l c o m p a n i e s laid t h e foundat i o n s for t h e i r i n d u s t r i a l e m p i r e s by i n t e r n a t i o n a l price-fixing a r r a n g e m e n t s t h r o u g h o u t t h e 1950s w h i c h k e p t t h e new ' w o n d e r d r u g s ' . t h e y w e r e found satisfactory.Introduction: an industry case study of corporate crime In c o n t e m p l a t i o n of e x p e r i m e n t s with a n e w soporific d r u g . it will be a r g u e d t h a t t h e p h a r m a c e u t i c a l i n d u s t r y has a w o r s e r e c o r d of i n t e r n a t i o n a l b r i b e r y and c o r r u p t i o n t h a n any o t h e r i n d u s t r y ( C h a p t e r 3 ) . We shall c o n t a c t you s h o r t l y on t h e subject of a n e w load ( G l o v e r . B o r k i n ( 1 9 7 8 ) has d o c u m e n t e d i n horrifying detail h o w t o d a y ' s l e a d e r s i n t h e i n t e r n a t i o n a l p h a r m a c e u t i c a l i n d u s t r y b r u t a l i s e d its slave l a b o u r force in t h e i r q u e s t to build an industrial e m p i r e to m a t c h H i t l e r ' s political e m p i r e . . We p r o p o s e to pay not m o r e t h a n 170 m a r k s a h e a d . . as C h a i r m a n of its b o a r d in 1956. the broad spectrum antibiotics. I f a g r e e a b l e . L a t e r it will be seen h o w a n o t h e r of t h e t o p five c o m p a n i e s . R e c e i v e d t h e o r d e r of 150 w o m e n . . .

T h e unfort u n a t e reality w i t h w h i t e .i m p o s e d p e n a l t i e s discussed i n this b o o k .c o l l a r c r i m e i s t h a t c o u r t s .r e d u c t i o n s t r a t e g i e s . they a r e c r i m i n a l in o t h e r s . T h u s . and a d i s t u r b i n g r e c o r d of criminal n e g l i g e n c e in the unsafe m a n u f a c t u r e of drugs ( C h a p t e r 5). 1981).909 r e s p o n d e n t s from eight c o u n t r i e s ( S c o t t and A l . and s o m e t i m e s t h e p u b l i c . 6 . but a t t r a n s f o r m a t i o n s t o institutional a r r a n g e m e n t s and t h e law a s c r i m e . or of e m p l o y e e s acting on behalf of a c o r p o r a t i o n . T h e focus will be on the s t r u c t u r a l p r e c o n d i t i o n s for the c r i m e r a t h e r t h a n on the c r i m i n a l . g . This view is c o n f i r m e d by a c r o s s n a t i o n a l s t u d y of a t t i t u d e s to t h e s e r i o u s n e s s of c r i m e a m o n g 1. p r o b a t i o n .T h a k e b . A d r u g c o m p a n y e x e c u t i v e allowing his c o m p a n y t o m a r k e t a d r u g " k n o w i n g t h a t it m a y p r o d u c e harmful side-effects for most indiv i d u a l s ' w a s r a t e d in t h e U n i t e d S t a t e s as c o m m i t t i n g a c r i m e m o r e s e r i o u s t h a n all of t h e F B I index offences e x c e p t m u r d e r and r a p e . T h i s b o o k is not d i r e c t e d at h o w to c h a n g e p e o p l e in o r d e r to p r e v e n t such c r i m e . F o l l o w i n g S u t h e r l a n d ( 1 9 4 9 ) . c o m m u n i t y service o r d e r .c o l l a r c r i m e is an a r b i t r a r y o b f u s c a t i o n b e c a u s e for m a n y of t h e t y p e s of illegal activities disc u s s e d in t h i s b o o k p r o v i s i o n exists in law for b o t h civil and c r i m i n a l p r o s e c u t i o n o f t h e s a m e c o n d u c t . r e v o c a t i o n o f l i c e n c e . i n t e r n a l discipline o r d e r o r o t h e r c o u r t . f i n e . q u e s t i o n s of i n d i v i d u a l b l a m e w o r t h i n e s s will not loom large here until t h e c o n c l u d i n g c h a p t e r of t h e b o o k . pillars o f respecta b i l i t y w h o m a y be p r o m i n e n t in c h a r i t y w o r k or t h e c h u r c h . T y p e s o f c o n d u c t w h i c h are subject only t o d a m a g e s a w a r d s w i t h o u t a n y a d d i t i o n a l p u n i s h m e n t ( e . T h e c o n d u c t c o u l d b e p u n i s h a b l e b y i m p r i s o n m e n t . T h e y are often e x c u s e d b e c a u s e they are p a r a g o n s o f s u c c e s s . M o s t o f the c o r p o r a t e c r i m e s d i s c u s s e d in this b o o k w e r e not punished by law e v e n t h o u g h t h e y w e r e punishable. t h e civil-criminal d i s t i n c t i o n is a d o u b t f u l o n e ( F r i e b e r g . I t a k e t h e view t h a t to e x c l u d e civil v i o l a t i o n s from a c o n s i d e r a t i o n of w h i t e . p u n i t i v e d a m a g e s ) are not w i t h i n t h e d e f i n i t i o n o f c o r p o r a t e c r i m e a d o p t e d h e r e . fine. c o r p o r a t e c r i m e i s defined h e r e as c o n d u c t of a c o r p o r a t i o n . 1977). w h i c h is p r o s c r i b e d and p u n i s h a b l e by law. " M o r e o v e r . W h i l e such r e a c t i o n s d e s e r v e c o n d e m n a t i o n b e c a u s e o f their class b i a s . I f o n e m e a s u r e s t h e s e r i o u s n e s s o f c r i m e a c c o r d i n g t o public i n d i g n a t i o n a g a i n s t t h e offence in t h e c o m m u n i t y at l a r g e . t e n d to e x c u s e it b e c a u s e t h e i n d i v i d u a l s involved are s i n c e r e a n d e l o q u e n t i n justifying t h e i r b e h a v i o u r . while s o m e o f the p r a c t i c e s d i s c u s s e d a r e civil m a t t e r s in s o m e p a r t s of t h e w o r l d . In g e n e r a l . t h e n this b o o k is a b o u t s e r i o u s c r i m e .Introduction: an industry case study of corporate crime d r u g s ( C h a p t e r 4 ) .

T h e US w a s the only c o u n t r y in w h i c h m a r k e t i n g a d r u g with harmful side-effects w a s j u d g e d a s d e s e r v i n g less p u n i s h m e n t t h a n r a p e . T h i s b o o k is an i n d u s t r y case study of c o r p o r a t e c r i m e which a t t e m p t s t o u n d e r s t a n d t h e m e c h a n i c s o f t h e r a n g e o f types o f c o r p o r a t e c r i m e c o m m o n in o n e i n d u s t r y sector. Social science passes t h r o u g h w h a t m i g h t be r o u g h l y classified as four s t a g e s after a p r o b l e m s e r i o u s l y g r a b s t h e a t t e n t i o n o f s c h o l a r s for t h e first t i m e . I n S w e d e n .c o m p a n y e x e c u t i v e s b e i n g put b e h i n d bars. My view is t h a t statistical studies are p e r h a p s a s p r e m a t u r e t o d a y a s they w e r e w h e n S u t h e r l a n d (1949) u n d e r t o o k t h e first statistical study of c o r p o r a t e c r i m e . t h e r e is r e a s o n to f a v o u r a lot of d r u g . W i t h o u t a 7 . O n a v e r a g e . At first. U S r e s p o n d e n t s favoured o v e r five y e a r s ' i m p r i s o n m e n t for d r u g c o m p a n y e x e c u t i v e s w h o p e r p e t r a t e d this ' o f f e n c e ' . and 1 am not o n e of t h e m . s c h o l a r s h i p is limited to a r m c h a i r c o n c e p t u a l i s i n g of and theorising about the p h e n o m e n o n . r i g o r o u s e x p e r i m e n t a l s t u d i e s are a t t e m p t e d i n w h i c h key v a r i a b l e s a r e strictly c o n t r o l l e d . A l s o i n t e r e s t i n g w a s the f i n d i n g t h a t U S r e s p o n d e n t s w e r e r e l a t i v e l y less p u n i t i v e t o w a r d this c o n d u c t t h a n r e s p o n d e n t s from all of t h e r e m a i n i n g seven c o u n t r i e s . larceny and a u t o m o b i l e theft. h o w e v e r . It h a r d l y n e e d s to be a r g u e d t h a t we are not yet r e a d y for e x p e r i m e n t a l s t u d i e s as we c o u l d not begin to g u e s s w h i c h w o u l d be the key v a r i a b l e s t o c o n t r o l . m a r k e t i n g a d r u g with harmful side-effects w a s j u d g e d to be a crime deserving longer t e r m s of imprisonment than robbery. T h e finding is s u r p r i s i n g b e c a u s e m a r k e t i n g a d r u g with d a n g e r o u s sideeffects is not e v e n an offence unless t h e p r o d u c t is actually b a n n e d or there has been criminal negligence. e v e n m u r d e r w a s j u d g e d as d e s e r v i n g less p u n i s h m e n t t h a n selling a d r u g with harmful side-effects. M o s t o b s e r v e r s w o u l d a g r e e . t h a t t h e o r i s i n g a b o u t c o r p o r a t e c r i m e c a n n o t a d v a n c e m u c h further until it b e c o m e s b e t t e r i n f o r m e d by e m p i r i c a l w o r k . t h e n with statistical s t u d i e s (which t h e m s e l v e s see r e f i n e m e n t t h r o u g h d e s c r i p t i v e t o c o r r e l a t i o n a l t o c a u s a l a n a l y s e s ) . Such a study w a s c a l c u l a t e d a s t h e sort m o s t likely t o a d v a n c e o u r u n d e r s t a n d i n g o f c o r p o r a t e c r i m e as a social p h e n o m e n o n .Introduction: an industry case study of corporate crime T h a t i s . Then empirical work begins: first w i t h q u a l i t a t i v e case s t u d i e s . T h e q u e s t i o n is w h e t h e r r e s e a r c h e r s s h o u l d b e j u m p i n g a h e a d t o statistical s t u d i e s of c o r p o r a t e crime or if research resources should be concentrated in q u a l i t a t i v e c a s e s t u d i e s . a g g r a v a t e d a s s a u l t . b u r g l a r y . a n d f i n a l l y . F o r t h o s e w h o s u p p o r t a 'just d e s e r t s ' m o d e l of c r i m i n a l s e n t e n c i n g .

o p e r a t i o n b y vital i n f o r m a n t s . A n i n d u s t r y . M o r e i m p o r t a n t l y . a f a l t e r i n g a t t e m p t to p a i n t a b r o a d e r c a n v a s is justified so t h a t the w o r k m i g h t h a v e r e l e v a n c e t o the i m p o r t a n t c o n c e p t u a l g r o u n d w o r k b e i n g laid by j u r i s t s w o r k i n g from their a r m c h a i r s .000 p a g e s o f C o n g r e s sional oversight hearings. I am i n d e b t e d to S e n a t o r K e n n e d y ' s staff for a l l o w i n g me full access t o t h e S e n a t e J u d i c i a r y C o m m i t t e e files d u r i n g m y m o n t h i n W a s h i n g t o n . D i s p r o p o r t i o n a t e e m p h a s i s will be p l a c e d on d a t a from t h e U n i t e d S t a t e s . i n c o m b i n a t i o n with t h e interviews. Meaningful research on t r a n s n a t i o n a l c o r p o r a t i o n s is difficult w i t h i n o n e set of n a t i o n a l b o u n d a r i e s .Introduction: an industry case study of corporate crime q u a l i t a t i v e u n d e r s t a n d i n g o f t h e c o n t o u r s o f c o r p o r a t e c r i m e s and h o w t h e y u n f o l d . and t h e n t o i n t e r v i e w i n t h e U n i t e d S t a t e s the h e a d q u a r t e r s . T h e o r i g i n a l s t r a t e g y for i n t e r v i e w s with e x e c u t i v e s w a s to m e e t w i t h p e o p l e at t h e level of chief e x e c u t i v e officer or s e c o n d in c o m m a n d of Australian subsidiaries of A m e r i c a n transnationals. c o m p a n y d o c u m e n t s l o d g e d with r e g u l a t o r y a g e n c i e s . In the United States. I am m o r e c o n v i n c e d t h a n ever t h a t a s u p e r i o r u n d e r s t a n d i n g of a p a r t i c u l a r c r i m e in a p a r t i c u l a r firm is g a i n e d w h e n t h e r e s e a r c h e r h a s a g r a s p of h o w t h e industry w o r k s as a whole. 1 had t h e p l e a s u r e o f w a d i n g t h r o u g h s o m e 100.w i d e case s t u d y o f c o r p o r a t e c r i m e has b e e n c h o s e n in p r e f e r e n c e to a m o r e d e t a i l e d study of a p a r t i c u l a r offence or a p a r t i c u l a r c o m p a n y partly b e c a u s e t h e latter are m o r e v u l n e r a b l e t o w i t h d r a w a l o f c o . These were goldmines of information. the liberal use o f q u o t e s from p h a r m a c e u t i c a l e x e c u t i v e s t h r o u g h o u t the text will a t t e m p t to i l l u m i n a t e t h e social c o n s t r u c t i o n o f t h e p h e n o m e n o n b y the a c t o r s themselves. e n a b l e d me to piece t o g e t h e r the organisational decisionm a k i n g p r o c e s s e s lying b e h i n d s o m e o f t h e a b u s e s r e v e a l e d i n the Senate hearings. w e c a n n o t begin t o c o m p r e h e n d w h a t lies b e h i n d t h e q u a n t i t a t i v e d e s c r i p t i o n s . w h i c h . P r i n c i p a l s o u r c e s o f d a t a w e r e i n t e r v i e w s w i t h i n f o r m a n t s . i n a d d i t i o n t o being the largest m a n u f a c t u r e r of p h a r m a c e u t i c a l p r o d u c t s . The present work is international in scope. a n d p u b l i c d o c u m e n t s ( t r a n s c r i p t s o f e v i d e n c e a t t r i a l s . b o t h within t h e industry and o u t s i d e it. M o r e o v e r . H a v i n g c o m p l e t e d t h e s t u d y . S c o u r i n g t h e s e files. t r a n s c r i p t s o f g o v e r n m e n t investigations of the industry). at this stage of t h e i n t e l l e c t u a l d e v e l o p m e n t of the field. Particularly valuable were the K e n n e d y S u b c o m m i t t e e transcripts. is t h e d o m i c i l e for half of the w o r l d ' s t o p fifty p h a r m a c e u t i c a l c o r p o r a t i o n s .

9 in G u a t e m a l a a n d 2 in t h e U n i t e d K i n g d o m . p u b l i c i n t e r e s t a c t i v i s t s . T h e full story must b e p i e c e d t o g e t h e r and c r o s s . T a b l e 1.1 lists t h e l o c a t i o n s o f t h e formal i n t e r v i e w s w i t h e x e c u t i v e s . k n o w s a n y t h i n g like the full story o f illegal b e h a v i o u r i n t h e p h a r m a c e u t i c a l i n d u s t r y . R e s e a r c h e r s t e n d t o o v e r e s t i m a t e t h e difficulties o f g e t t i n g interv i e w s w i t h t o p e x e c u t i v e s a b o u t c o r p o r a t e c r i m e .c h e c k e d from m u l t i p l e s o u r c e s . it is w r o n g to a s s u m e that all o n e m u s t do is get s e n i o r e x e c u t i v e s to ' c o m e c l e a n ' . N e v e r t h e l e s s . I n s o m e c a s e s .75 in t h e U n i t e d S t a t e s . O n e o f the significant i n f o r m a n t s in this study w a s t h e p r e s i d e n t of a major t r a n s n a t i o n a l w h o e n j o y e d a n a n n u a l r e m u n e r a t i o n from t h e c o m p a n y o f o v e r U S $ 7 0 0 . t h e h e a d q u a r t e r s i n t e r v i e w s w e r e d o n e first. N o n e of t h e i n f o r m a n t s is identified by n a m e . a t t e m p t s w e r e m a d e t o ask e x e c u t i v e s q u e s t i o n s after they had given e v i d e n c e b e f o r e t h e R a l p h E n q u i r y i n t o t h e p h a r m a c e u t i c a l industry held i n A u s t r a l i a d u r i n g 1978. O n e r e s e a r c h goal w a s to e x p l o r e t h e diffusion of a c c o u n t a b i l i t y for law v i o l a t i o n s b e t w e e n h e a d q u a r t e r s and s u b s i d i a r i e s i n t r a n s n a t i o n a l c o r p o r a t i o n s . and officers i n r e g u l a t o r y a g e n c i e s i n t h e U n i t e d S t a t e s . N o e x e c u t i v e .l e v e l e x e c u t i v e s t o e n s u r e that t h e i r s u p e r i o r s are not t a i n t e d with k n o w l e d g e o f illegal c o n d u c t . A u s t r a l i a and t h e U n i t e d K i n g d o m . A n a p p e n d i x sets out t h e s t r a t e g i e s w h i c h w e r e used i n soliciting and c o n d u c t i n g t h e s e i n t e r v i e w s . 0 0 0 . T h e s e s u p p l e m e n t a r y i n t e r v i e w s t o g e n e r a t e leads from o t h e r s o u r c e s w e r e a l m o s t e q u a l i n n u m b e r t o t h e formal i n d u s t r y interv i e w s . 15 in A u s t r a l i a . s e n i o r e x e c u t i v e s 9 .Introduction: an industry case study of corporate crime e x e c u t i v e s t o w h o m t h e A u s t r a l i a n s a n s w e r e d . M o s t i n t e r v i e w s w e r e longer t h a n a n h o u r in d u r a t i o n . officers in t h e P h a r m a c e u t i c a l M a n u f a c t u r e r s A s s o c i a t i o n s [ P M A s ] i n e a c h c o u n t r y visited ( e x c e p t G u a t e m a l a ) . A l m o s t half of these i n t e r v i e w s w e r e with e x e c u t i v e s at t h e level of chief e x e c u t i v e officer of a s u b s i d i a r y or a m o r e s e n i o r p e r s o n at h e a d q u a r t e r s . and s u b s i d i a r y i n t e r v i e w s later. but 13 lasted for less t h a n thirty m i n u t e s . A total of 131 i n t e r v i e w s w e r e c o n d u c t e d . Often it is part of the j o b of l o w e r . h o w e v e r . t h e industry i n t e r v i e w s w e r e t h e m o r e i m p o r t a n t s o u r c e o f i n f o r m a t i o n . In t h e e n d . E x e c u t i v e s often m a k e i t t h e i r b u s i n e s s not t o k n o w a b o u t c e r t a i n t h i n g s g o i n g on b e l o w t h e m in t h e o r g a n i s a t i o n . I t o o k i n t e r v i e w s w h e r e I could get t h e m . I n a d d i t i o n t o t h e s e formal i n t e r v i e w s . M u c h m o r e v a l u a b l e w e r e t h e i n t e r v i e w s with i n f o r m a n t s w h o had left t h e i n d u s t r y . 10 in M e x i c o . M o r e o v e r . W i t h c o r p o r a t e c r i m e r e s e a r c h . no m a t t e r h o w s e n i o r . T h e s e fleeting q u e s t i o n and a n s w e r sessions p r o v i d e d n o i n f o r m a t i o n o f v a l u e .

H. Mex. US.1 an industry case study of corporate crime F o r m a l i n t e r v i e w s with p h a r m a c e u t i c a l e x e c u t i v e s . R o b i n s American Hospital Supply Allergan Anabolic ICL pharmaceutical sales. US. US. Aust. US. Aust. 1978-80 World rank in No. this b o o k s e e k s to inform not only the g e n e r a l public but also pharmaceutical executives. UK US. Aust.Aust. Aust. Guat. Aust.. Aust. US. Mex. Aust. Aust. Aust. Aust. Mex. Aust. Guat. Aust. Aust. 1977 ( G e r e f f i . Guat. Guat. US. Guat.Introduction: TABLE 1. 1979) Domicile 1 2 3 4 5 7 8 9 III 11 13 14 15 17 18 19 21 23 26 27 28 29 in 38 4(1 41 43 44 1 nr. US US. US US. Aust. US. US. US US.inked Germany US Germany Switzerland Switzerland US US Switzerland US IS I s us Japan US UK US us us UK US UK US us us us us us us us us us us Unranked Unranked Unranked us h a v e n e i t h e r the t i m e nor m u c h i n c e n t i v e t o s n o o p a r o u n d trying t o find out a b o u t c r i m i n a l b e h a v i o u r within o t h e r c o m p a n i e s . of interviews 2 4 6 1 5 2 1 3 12 2 6 5 2 7 2 12 5 2 1 3 3 9 3 1 3 4 6 6 7 4 1 1 TOTAL = 131 ( Duntries in which interviews conducted Guat.. Aust. US. US US.. US.. HI . US Guat. H e n c e ... Searle Baxter-Travenol 3M Richardson-Merrell Sterling D r u g Syntex A. US Company Hocchst-Rousscl Merck Bayer C'iba-Geigy Hoffman-La Roche Warner-Lambert Pfizer Sandoz Lilly Upjohn Squibb Bristol-Myers Takeda Schering-Plough Glaxo Abbott Johnson & Johnson Cvanamid ICI SmithKline Wellcome G.. US. Aust. Aust. D. Mex. Aust. Aust.

A m e r i c a n s p e r c e i v e the high p u r p o s e s of A m e r i c a n foreign policy and n a t i o n a l security as a d v a n c e d if fighters a r e b o u g h t from L o c k h e e d r a t h e r t h a n from a foreign p o w e r . c o r r u p t or c o m p r o m i s e t h a t t r u s t . failing t h a t . Conversely. It will be s h o w n t h a t t h e s e types of b r i b e r y are c o m m o n in the international pharmaceutical industry. M a n y of t h e p a y m e n t s to m i n i s t e r s and officials by p h a r m a ceutical c o m p a n i e s are extorted by the recipients. but with what R e i s m a n ( 1 9 7 9 : 75) h a s called "variance b r i b e s ' .1 9 7 0 s . or. Bribery is defined as t h e giving of r e w a r d s b e y o n d t h o s e allowed by law to e n t i c e a p e r s o n w i t h a duty of trust to p e r v e r t . T h e c o n c e r n o f this c h a p t e r will not b e with m i n o r ' g r e a s e ' p a y m e n t s to get b u r e a u c r a t s to do t h e j o b t h e y are paid for. the point r e m a i n s t h a t h e r e w e are 11 . to e n t i c e a c u s t o m s officer to allow t h e b a n n e d p r o d u c t into the c o u n t r y . I r r e s p e c t i v e o f t h e a l l o c a t i o n o f guilt b e t w e e n t h e t w o p a r t i e s .w i s e m o r a l relativism s e e m s to h a v e b e e n the r e a c t i o n from m a n y following t h e L o c k h e e d scandal of t h e m i d .2 Bribery A w o r l d l y . If the a c c e p t e d p r a c t i c e in S a u d i A r a b i a is to give t h e royal family a piece of t h e a c t i o n w h e n t h e y buy s o m e aircraft from y o u .m a n u f a c t u r i n g plant can hardly be r a t i o n a l i s e d as in the n a t i o n a l i n t e r e s t . B r i b e r y has a less a c c e p t a b l e gloss if its p u r p o s e is to p e r s u a d e a h e a l t h official to a l l o w a d a n g e r o u s d r u g on to the m a r k e t . B r i b i n g an i n s p e c t o r to t u r n a blind eye to an u n s a n i t a r y d r u g . then w h o are A m e r i c a n s or B r i t o n s to say that t h e i r w a y s of d o i n g b u s i n e s s are m o r a l l y s u p e r i o r ? I n any c a s e . r e s p o n d e n t s told o f m a n y s i t u a t i o n s w h e r e i t w a s the c o m p a n y w h i c h initiated t h e illegal t r a n s a c t i o n . E x t o r t i o n is defined as t h e soliciting of a b r i b e .

A d i s g r u n t l e d e m p l o y e e of M e r c k stole the p r o c e s s for m a k i n g a l p h a m e t h y l d o p a ( ' A l d o m e t ' ) . t h e C y a n a m i d s u b s i d i a r y .Bribery d e a l i n g with c o n d u c t w h i c h c a n n o t b e b e n i g n l y t o l e r a t e d a s 'cust o m a r y b u s i n e s s p r a c t i c e i n foreign c o u n t r i e s ' . T h e local firm t h e n s u b m i t s exactly t h e s a m e r e s e a r c h d a t a on t h e safety of t h e d r u g in o r d e r to h a v e its p r o d u c t a p p r o v e d . Italy was f r e q u e n t l y m e n t i o n e d as the c o u n t r y w h e r e such b r i b e s . T o begin w i t h . a n d on o t h e r o c c a s i o n s t h e e m p l o y e e initiates t h e e s p i o n a g e . A l o n g w i t h f i v e c o n f e d e r a t e s . It w a s g e n e r a l l y a c c e p t e d that paying off h e a l t h i n s p e c t o r s i n c e r t a i n Third W o r l d c o u n t r i e s w a s n o r m a l and a c c e p t a b l e business practice. A n y set of d a t a w h i c h carefully m e e t s all t h e legal r e q u i r e m e n t s will suffice to get a p e r m i t n u m b e r to p r i n t on all b o t t l e s . Such secrets arc necessarily m a d e a v a i l a b l e t o g o v e r n m e n t s for n e w p r o d u c t a p p r o v a l . t h e g o v e r n m e n t d o e s not have a testing laboratory. w e r e passed to t h e Ministry of H e a l t h . a f o r m e r e m p l o y e e of L e d e r l e L a b o r a t o r i e s . 12 . He set up a spy ring which sold m i c r o f i l m c o p i e s of secret d o c u m e n t s and stolen c u l t u r e s of m i c r o .o r g a n i s m s to six Italian d r u g firms ( D a v i e s .h y p e r t e n s i v e d r u g . T h e c o m p e t i t o r w h o w a s offered t h e p l a n s t u r n e d t h e m d o w n a n d notified M e r c k . m a y b e a r little r e s e m b l a n c e t o t h e p r o d u c t t o which the subm i t t e d s a f e t y . M a n y p i r a t e m a n u f a c t u r e r s are a l l o w e d to o p e r a t e in Italy in violation of international patent a g r e e m e n t s . N o t all forms of b r i b e r y s e e m e d to b o t h e r e x e c u t i v e s in the p h a r m a c e u t i c a l i n d u s t r y . ' G u a t e m a l a n executives a l s o said it w a s c o m m o n t h e r e for g o v e r n m e n t officials to hand o v e r n e w d r u g r e g i s t r a t i o n d'Kumentation to local firms in e x c h a n g e for a 'few h u n d r e d q u e t z a l s [ d o l l a r s ] ' . often of o n l y a few t h o u s a n d d o l l a r s . there was considerable c o n c e r n o v e r t h e b r i b i n g of g o v e r n m e n t officials to get t r a d e secrets c o n c e r n i n g m a n u f a c t u r i n g p r o c e s s e s . M o s t n o t o r i o u s a m o n g t h e p h a r m a c e u t i c a l s p i e s w a s Dr S i d n e y M a r t i n F o x . possibly in a bath t u b .t e s t i n g d a t a r e l a t e s . a n a n t i . Fox w a s c o n v i c t e d and imp r i s o n e d u n d e r t h e F e d e r a l Stolen P r o p e r t y s t a t u t e b y a N e w Y o r k c o u r t in J a n u a r y 1966. T h e p r o d u c t it m a n u f a c t u r e s . 2 T h e n o f c o u r s e t h e r e i s t h e m o r e s t r a i g h t f o r w a r d kind o f i n d u s trial e s p i o n a g e w h e r e e m p l o y e e s sell secrets directly t o their c o m p a n y ' s c o m p e t i t o r . 0 0 0 by o n e firm a l o n e . On some occasions the crime is in response to a b r i b e to t h e spy. In G u a t e m a l a no o n e is going to c h e c k w h e t h e r the c o n t e n t s of the bottle c o r r e s p o n d to the information in t h e p r o d u c t r e g i s t r a t i o n d o c u m e n t s . 1976). F o x and h i s a s s o c i a t e s a r e b e l i e v e d to have b e e n paid £ 3 5 . H o w e v e r .

f i n a n c e . ( D a v i e s . i k n o w t h a t m o s t o f t h e major p h a r m a c e u t i c a l c o m p a n i e s .78 m.c o m p a n y c r i m e s are less s e r i o u s t h a n w h e n c o n s u m e r s are t h e v i c t i m s . m a r k e t i n g a n d legal p e r s o n n e l . with o c c a s i o n a l v e n t u r e s i n t o t h e m a n u f a c t u r i n g p l a n t . E x p e r i e n c e t h e r e fore t a u g h t m e t o limit d i s c u s s i o n s o f b r i b e r y t o t o p m a n a g e m e n t . t h e s u b j e c t w a s b r o a c h e d w i t h a s t a n d a r d line: 'I've read a lot in t h e n e w s p a p e r s a b o u t L o c k h e e d and b r i b i n g foreign g o v e r n m e n t officials. 1976: 131). W e ' r e i n t h e b u s i n e s s o f saving h u m a n lives. and t h e N e w Y o r k C o u r t a t t h e criminal h e a r i n g a s s e s s e d t h e firm's l o s s e s at f 1. Talking to executives about bribery I had m o r e difficulty in g e t t i n g e x e c u t i v e s to talk a b o u t b r i b e r y t h a n any o t h e r s u b j e c t . T h e p u b l i c r e l a t i o n s staff w e r e also n o t p a r t i c u l a r l y effusive o n t h e subject.Bribery C y a n a m i d c l a i m e d t h a t F o x ' s d e f e c t i o n h a s cost it 100 m. In 1962 C y a n a m i d had w o n a d a m a g e s suit a g a i n s t F o x . ' E n d o f d i s c u s s i o n . T h e r e w e r e a c o u p l e o f s p e c t a c u l a r i n s t a n c e s o f b e i n g e v i c t e d from offices w h e n I p u s h e d t o o hard on this sensitive i s s u e . So I followed a different a p p r o a c h .a g a i n s t . ' A l t e r n a t i v e l y : ' L o o k I w o n ' t d e n y t h a t t h e r e w a s a t i m e w h e n b r i b e r y did go o n . and t h a t leads t o h i g h e r ethical s t a n d a r d s t h a n y o u ' l l find i n any o t h e r i n d u s t r y . i n c l u d i n g y o u r o w n . h a v e d i s c l o s e d t o the S E C [Securit i e s and E x c h a n g e C o m m i s s i o n ] t h e m a k i n g o f c o r r u p t p a y m e n t s i n 13 . essentially a 'no b a b e in the w o o d s ' s t r a t e g y . E v e n w i t h i n this s e l e c t s u b s a m p l e I frequently d e c i d e d not to r a i s e t h e ugly issue lest a fragile r a p p o r t be s h a t t e r e d . but n o t any m o r e . m o v i n g from office to l a b o r a t o r y to office. In t h e early i n t e r v i e w s . A quality assurance manager or medical d i r e c t o r in A u s t r a l i a or t h e U n i t e d S t a t e s typically leads a s h e l t e r e d life. T h e first p r o b l e m w a s t h a t m o s t r e s p o n d e n t s g e n u i n e l y k n e w n o t h i n g about the subject. dollars in lost sales a n d t h a t it s p e n t 30 m. d o l l a r s to d e v e l o p the stolen p r o c e s s and c u l t u r e s . not t h e r e p u t a b l e c o m p a n i e s . D o y o u t h i n k m a n y o f y o u r c o m p e t i t o r s i n the p h a r m a c e u t i c a l i n d u s t r y e n g a g e in t h a t sort of a c t i v i t y ? ' A n d I w o u l d get a fairly s t a n d a r d a n s w e r : ' T h e p h a r m a c e u t i c a l industry d e a l s with s e r v i n g t h e p u b l i c m o r e t h a n any o t h e r i n d u s t r y . I t i s t h e latter t y p e of b r i b e r y w h i c h will be t h e c o n c e r n of this c h a p t e r . T h e c o n s e q u e n c e s o f t h e s e c o m p a n y . W h e n I tried to talk to t h e s e p e o p l e a b o u t b r i b e r y all I a c h i e v e d w a s a loss of r a p p o r t for t h e t h i n g s w h i c h t h e y c o u l d tell m e s o m e t h i n g a b o u t .

Bribery m a n y p a r t s o f t h e w o r l d . I've s p o k e n t o p e o p l e a t the S E C w h o i n t e r v i e w c o m p a n i e s o n such m a t t e r s and they tell m e t h a t the p r a c t i c e s a r e still w i d e s p r e a d . W h y do large c o r p o r a t i o n s feel that t h e y h a v e to do this sort of t h i n g ? " In o t h e r w o r d s , "I'm no b a b e in t h e w o o d s . I k n o w y o u d o it, but w h y ? ' ' T h e a p p r o a c h almost never failed to elicit a l e n g t h y and r e v e a l i n g d i s c u s s i o n . A m o n g t h e 27 US e x e c u t i v e s on w h o m I tried t h e "no b a b e in t h e w o o d s ' a p p r o a c h , n o n e d e n i e d t h a t b r i b e r y had b e e n w i d e s p r e a d i n the past a m o n g A m e r i c a n p h a r m a c e u t i c a l c o m p a n i e s , and only 6 d e n i e d that b r i b e r y w a s still c o m m o n t o d a y a m o n g A m e r i c a n p h a r m a c e u t i c a l c o m p a n i e s . Of t h e 21 w h o felt t h a t b r i b e r y still w a s c o m m o n , h o w e v e r , only 1 felt t h a t it w a s as c o m m o n t o d a y as it had b e e n in t h e past. As we shall see later, t h e r e a r e g r o u n d s for s u s p e c t i n g that o n t h e l a t t e r p o i n t t h e o t h e r 2 0 e x e c u t i v e s may h a v e b e e n d e s c r i b i n g the situation accurately. T h e g r e a t a d v a n t a g e o f t h e "no b a b e i n the w o o d s ' a p p r o a c h was t h a t it g a v e r e s p o n d e n t s little to lose by s p e a k i n g truthfully. So long as 1 did n o t select an o v e r l y sensitive m a r k , I found that it did not e n g e n d e r aggression so much as respect: here was someone on w h o m t h e y w e r e not w a s t i n g their t i m e , s o m e o n e w h o k n e w a little a b o u t t h e s u b j e c t . T h e usual public r e l a t i o n s b l u r b w o u l d be a w a s t e of t i m e , a n d t h a n k G o d for that! R e l i e v e d of the b u r d e n of having to e x p r e s s t h e c o m p a n y l i n e , s o m e o f t h e m g e n u i n e l y enjoyed t h e rare o p p o r t u n i t y t o talk s e r i o u s l y a b o u t a d i l e m m a w h i c h t r o u b l e d t h e m w i t h a p e r s o n from o u t s i d e .

The extent of bribery
T h e offices o f t h e U S S e c u r i t i e s and E x c h a n g e C o m m i s s i o n ( S E C ) are g o l d m i n e s of information about "questionable p a y m e n t s ' by A m e r i c a n c o r p o r a t i o n s . V a l e r i e B r a i t h w a i t e and I spent a n u m b e r o f d a y s r e a d i n g and p h o t o c o p y i n g d o c u m e n t s i n the W a s h i n g t o n , N e w Y o r k a n d L o s A n g e l e s offices o f t h e S E C a s well a s i n t e r v i e w ing s e v e r a l officers. T h e m o s t c e n t r a l d o c u m e n t s relating t o each c o m p a n y a r e listed i n T a b l e 2.1 (p. 3 1 ) , but i n s o m e c a s e s t h e s e w e r e s u p p o r t e d b y a large n u m b e r o f a d d i t i o n a l c o m p a n y d o c u m e n t s . R e a d e r s m a y r e q u e s t further i n f o r m a t i o n a b o u t t h e s e d o c u m e n t s b y writing to me. T h e w e a l t h of i n f o r m a t i o n arises largely from the S E C ' s volunt a r y d i s c l o s u r e p r o g r a m m e . C o m p a n i e s which p a r t i c i p a t e d i n this p r o g r a m m e w e r e led t o u n d e r s t a n d that such p a r t i c i p a t i o n would
14

Bribery l e s s e n t h e l i k e l i h o o d t h a t t h e o v e r l o a d e d S E C staff w o u l d p r o c e e d w i t h e n f o r c e m e n t a c t i o n a g a i n s t t h e m . N o formal g u a r a n t e e against p r o s e c u t i o n was given, however. U n d e r the voluntary p r o g r a m m e , the c o m p a n y conducts a detailed investigation of corrupt payments by e m p l o y e e s u n d e r t h e a u s p i c e s of ' p e r s o n s not involved in the a c t i v i t i e s i n q u e s t i o n ' , and t h e n m a k e s a v a i l a b l e t o the S E C staff'all details c o n c e r n i n g the questionable practices uncovered' (Herlihy a n d L e v i n e , 1976: 5 8 5 ) . I n t h e p u b l i c d i s c l o s u r e s t h e S E C g e n e r a l l y a l l o w e d c o m p a n i e s t o p r o t e c t their b u s i n e s s c o n t a c t s b y d e s c r i b i n g e v e n t s w h i l e w i t h h o l d i n g t h e n a m e s o f t h e r e c i p i e n t s and the countries where corrupt payments were m a d e . A b o u t t h i r t y o t h e r c o m p a n i e s which S E C i n v e s t i g a t i o n found t o h a v e a p a r t i c u l a r l y bad r e c o r d on q u e s t i o n a b l e p a y m e n t s w e r e forced into c o n s e n t d e c r e e s . A m a j o r r e q u i r e m e n t of the c o n s e n t d e c r e e s w a s a n e x t r a o r d i n a r i l y d e t a i l e d d i s c l o s u r e o f the c i r c u m s t a n c e s s u r r o u n d i n g s u s p e c t e d c o r r u p t p a y m e n t s . I n e x c h a n g e for such d e t a i l e d d i s c l o s u r e and c e r t a i n r e f o r m s of the c h e c k s and b a l a n c e s w i t h i n t h e c o m p a n y for the p r e v e n t i o n o f b r i b e r y , t h e S E C a g r e e d n o t to p r o s e c u t e for any c r i m i n a l a c t i o n . To this end it is a g r e e d t h a t t h e d i s c l o s u r e s i n t h e c o n s e n t d e c r e e are not t o b e t r e a t e d as e v i d e n c e of any criminal act. As G e i s ( 1 9 7 9 : 23) has r e m a r k e d , t h e c o r p o r a t i o n in e s s e n c e says: T d i d n ' t do it, but I w o n ' t do it a g a i n . ' "Burglars m i g h t wish t h e y had it so g o o d ' , G e i s p l e a d s . I n e q u i t a b l e t h o u g h i t c e r t a i n l y is, t h e reality i s that t h e S E C d o e s n o t h a v e t h e r e s o u r c e s t o i n v e s t i g a t e every c o m p a n y s u s p e c t e d of b r i b e r y in t h e s a m e w a y as p o l i c e d e p a r t m e n t s are able to investig a t e m o s t o f f e n d e r s c a u g h t in t h e act of or s u s p e c t e d of b u r g l a r y . T h e v o l u n t a r y d i s c l o s u r e and c o n s e n t d e c r e e p r o g r a m m e s w e r e m e a n s o f m a k i n g t h e m o s t o f t h e s e limited r e s o u r c e s . T h e y a t least p e r m i t t e d a c r u d e c h e c k on the e x t e n t of c o r r u p t p a y m e n t s by all of t h e l a r g e s t A m e r i c a n c o r p o r a t i o n s . T h e S E C a t o n e t i m e looked a t t h e foreign b u s i n e s s p r a c t i c e s of all t h e F o r t u n e 500 c o m p a n i e s . R e s e a r c h e r s w h o h a v e e n g a g e d i n d e t a i l e d scrutiny o f t h e c o r r u p t i o n r e v e a l e d b y t h e S E C d i s c l o s u r e p r o g r a m m e s all a g r e e t h a t the p h a r m a c e u t i c a l i n d u s t r y is r e v e a l e d as h a v i n g o n e of t h e w o r s t records. Of t h e 32 i n d u s t r i e s t h a t spent m o r e t h a n SI million in i m p r o p e r o v e r s e a s p a y m e n t s , h a l f w e r e i n aircraft, oil, food and d r u g s . Seven were in d r u g s , which was the most c o m m o n (Clinard et al., 1979: 199). 15

Bribery . . . t h e t w o l a r g e s t identifiable g r o u p s w e r e drug m a n u f a c t u r e r s and c o m p a n i e s e n g a g e d i n p e t r o l e u m refining and r e l a t e d s e r v i c e s ( S E C , 1976). . . . t w e l v e [ p h a r m a c e u t i c a l ] c o m p a n i e s had m a d e v o l u n t a r y d i s c l o s u r e s , which w a s the h i g h e s t n u m b e r for any industry equal only to t h e oil i n d u s t r y ( K u g e l and G r u e n b e r g , 1977: 7 8 ) . It s e e m s t h a t c e r t a i n i n d u s t r i e s are p a r t i c u l a r l y p r o n e to e n g a g e in o v e r s e a s p a y m e n t s . H e a v y capital g o o d s i n d u s t r i e s , such a s a e r o s p a c e , a r m s , o r t h o s e i n d u s t r i e s that are closely r e g u l a t e d b y foreign g o v e r n m e n t a g e n c i e s , such a s p h a r m a c e u t i c a l c o m p a n i e s , a r e s u b j e c t to u n u s u a l l y h e a v y p r e s s u r e s for payoffs ( H e r l i h y and L e v i n e , 1976: 5 6 6 ) . S i m i l a r l y , K e n n e d y and S i m o n ( 1 9 7 8 ) , in a classification of c o m p a n i e s d i s c l o s i n g c o r r u p t p a y m e n t s a c c o r d i n g t o i n d u s t r y , found " d r u g s ' to t o p t h e list with 10 e n t r i e s . A d a m s and R o s e n t h a l ( 1 9 7 6 ) . in t h e i r b r e a k d o w n by i n d u s t r y , classified 22 u n d e r "drugs and h e a l t h c a r e " , m o r e t h a n i n any o t h e r c a t e g o r y . All o f t h e s e r e v i e w s u n d e r e s t i m a t e t h e p r o p o r t i o n o f d o c u m e n t e d d i s c l o s u r e s w h i c h are a t t r i b u t e d t o p h a r m a c e u t i c a l c o m p a n i e s . E i t h e r t h r o u g h less t h a n e x h a u s t i v e search of S E C files, or because the disclosures a p p e a r e d l a t e r t h a n t h e i r d e a d l i n e s for p u b l i c a t i o n , all t h e a b o v e reviews have m i s s e d a c o n s i d e r a b l e n u m b e r of s u b s t a n t i a l d i s c l o s u r e s by pharm a c e u t i c a l c o m p a n i e s . T a b l e 2. 1 lists d i s c l o s u r e s of q u e s t i o n a b l e p a y m e n t s m a d e by 29 pharmaceutical c o m p a n i e s . Of the 20 US c o m p a n i e s w i t h t h e highest w o r l d w i d e sales i n p h a r m a c e u t i c a l p r o d u c t s , 19 have disclosed substantial questionable payments. No o t h e r i n d u s t r y g r o u p has a n y t h i n g a p p r o a c h i n g this record o f d o c u mented corrupt payments. T h e q u a l i t a t i v e and q u a n t i t a t i v e e v i d e n c e p r e s e n t e d i n this c h a p t e r s u s t a i n s t h e c o n c l u s i o n t h a t t h e p h a r m a c e u t i c a l i n d u s t r y i s m o r e p r o n e t o b r i b e r y t h a n any o t h e r i n i n t e r n a t i o n a l b u s i n e s s . P o s s i b l y this i s b e c a u s e , like a e r o s p a c e c o m p a n i e s , p h a r m a c e u t i c a l firms deal with big win or lose s i t u a t i o n s t h e n e w billion d o l l a r p r o d u c t t o b e a p p r o v e d , the ten million d o l l a r h o s p i t a l s u p p l y c o n t r a c t t o b e w o n . M o r e o v e r , the m u l t i t u d e o f r e g u l a t o r y d e c i s i o n s t o w h i c h p h a r m a c e u t i c a l c o m p a n i e s are s u b j e c t e d c r e a t e s m a n y o p p o r t u n i t i e s for b u y i n g off r e g u l a t o r s . T h e c o m p a n y a m o n g t h e t o p 2 0 U S p h a r m a c e u t i c a l firms which did not d i s c l o s e any q u e s t i o n a b l e p a y m e n t s w a s Eli Lilly. The amounts involved in corrupt payments disclosed by

16

Bribery p h a r m a c e u t i c a l c o m p a n i e s are s t a g g e r i n g especially c o n s i d e r i n g t h a t m a n y of t h e s e a m o u n t s do not consist of o n e or t w o huge p a y m e n t s . A u s t r a l i a n e x e c u t i v e s told m e t h a t i n s o m e A s i a n c o u n t r i e s d r u g r e g i s t r a t i o n s c o u l d be s e c u r e d for quite small c o r r u p t p a y m e n t s . "Slip t h e m $100 and y o u ' r e r i g h t , ' a s one e x p l a i n e d . I n c l u d e d in t h e m i l l i o n s of d o l l a r s d i s c l o s e d by m a n y of the c o m p a n i e s might be some hundreds or t h o u s a n d s of bribes. T h e c o r r u p t i o n often r e a c h e s t h e h i g h e s t levels o f g o v e r n m e n t . T h e following i n c i d e n t ( w h i c h d o e s not a p p e a r i n t h e S E C disc l o s u r e d o c u m e n t s ) w a s r e p o r t e d in the New York Times. In Italy, according to a former c o m p a n y executive w h o worked t h e r e for y e a r s , a d o z e n d r u g m a n u f a c t u r e r s , i n c l u d i n g s o m e A m e r i c a n c o m p a n i e s , o n c e b a n d e d t o g e t h e r t o back a n industrys p o n s o r e d bill in t h e Italian P a r l i a m e n t t h a t w o u l d have allowed m a n u f a c t u r e r s to sell their n o n p r e s c r i p t i o n p r o d u c t s in s u p e r m a r k e t s a n d o t h e r retail o u t l e t s . T h e r e , they would n o l o n g e r b e s u b j e c t t o price c o n t r o l . The c o m p a n i e s were assessed $80,000 each, according to the s o u r c e , w i t h t h e $1 million to be put into a war chest o f t h e Christian Democratic Party. T h e G o v e r n m e n t fell before the bill could be e n a c t e d , and it c o u l d not b e d e t e r m i n e d definitely w h e t h e r the m o n e y actually c h a n g e d h a n d s . B u t t h e i n f o r m a n t said it ' u n d o u b t e d l y had' (New York Times, 21 M a r c h , 1976). L e t u s n o w r e v i e w t h e d i s c l o s u r e s m a d e b y t h e largest c o m p a n i e s .

Merck & Co.
US r a n k in p h a r m a c e u t i c a l sales: 1. S o m e o f t h e e x e c u t i v e s w h o i n i n t e r v i e w e x p r e s s e d a worldly-wise a b s e n c e o f s u r p r i s e a t t h e e v i d e n c e o f w i d e s p r e a d bribing o f h e a l t h officials b y p h a r m a c e u t i c a l c o m p a n i e s w e r e n e v e r t h e l e s s s h o c k e d t o find M e r c k a m o n g t h o s e c o m p a n i e s with t h e worst r e c o r d s o f q u e s t i o n a b l e p a y m e n t s . M e r c k , like Lilly, is a c o m p a n y frequently held up by p e o p l e in t h e i n d u s t r y as a m o d e l of e x c e l l e n c e in quality and a p a r a g o n o f p r o p r i e t y . W h e n I a s k e d e x e c u t i v e s from o t h e r c o m p a n i e s w h e r e I s h o u l d go to learn a b o u t effective self-regulatory s y s t e m s , I w o u l d be told ' G o to M e r c k ' or ' G o to Lilly'. M e r c k has r e p o r t e d $3.6 million in q u e s t i o n a b l e p a y m e n t s in 39
17

Bribery foreign c o u n t r i e s , S2.3 million of it to third p a r t i e s w h o 'may have p a s s e d m o n e y o n t o g o v e r n m e n t e m p l o y e e s ' . M e r c k w a s o n e o f the few c o m p a n i e s w h i c h d i s c l o s e d p a y m e n t to a c a b i n e t - l e v e l official. N e i t h e r t h e n a m e o f t h e p e r s o n nor t h e c o u n t r y w a s specified, but the a m o u n t was $12,500. In one country, in which it was customary 'not t o a c k n o w l e d g e o r disclose c o r p o r a t e political c o n t r i b u t i o n s ' , the c o m p a n y admits that some contributions 'were made through t h e C o m p a n y ' s Swiss s u b s i d i a r y [ M e r c k , S h a r p e & D o h m e A . G . ] and recorded as promotional expenses'. M e r c k c l a i m e d its q u e s t i o n a b l e p a y m e n t s a s tax d e d u c t i o n s and c o n s e q u e n t l y has a g r e e d t o pay the U S I n t e r n a l R e v e n u e Service a d d i t i o n a l tax o f $ 2 6 4 , 0 0 0 . T h e I R S , h o w e v e r , i s c o n t i n u i n g investig a t i o n s for f u r t h e r v i o l a t i o n s o f t h e I n t e r n a l R e v e n u e C o d e . T h e c o r p o r a t i o n b l a m e d its a u d i t o r for failing to follow up on i n f o r m a t i o n a b o u t t h e q u e s t i o n a b l e p a y m e n t s . A special c o m m i t t e e of o u t s i d e e x p e r t s set up by t h e M e r c k b o a r d to i n v e s t i g a t e t h e m a t t e r c r i t i c i s e d t h e c h a i r m a n o f t h e b o a r d for i g n o r i n g w a r n i n g signals. The M e r c k p a y m e n t s were therefore notable in that there w a s e v i d e n c e o f t h e seniority o f b o t h r e c i p i e n t s and c o m p a n y officials w h o had t h e k n o w l e d g e to p u t a s t o p to t h e b u s i n e s s . T h e c o m m i t t e e r e a c h e d t h e following c o n c l u s i o n s a b o u t its c h a i r m a n a n d c h i e f e x e c u t i v e officer, H e n r y W . G a d s d e n . M r G a d s d e n w a s a w a r e t h a t p a y m e n t s o f t h e kind u n d e r investigation were rather c o m m o n in the conduct of business in s o m e foreign c o u n t r i e s , but stated t h a t p r i o r t o t h e i n v e s t i g a t i o n he did not b e l i e v e t h a t t h e C o m p a n y or its e m p l o y e e s w e r e i n v o l v e d in any such p a y m e n t s , e x c e p t for m i n o r g r a t u i t i e s . B a s e d on all t h e e v i d e n c e it r e c e i v e d d u r i n g t h e c o u r s e of the i n v e s t i g a t i o n , t h e C o m m i t t e e b e l i e v e s this i s a n a c c u r a t e s t a t e m e n t . The C o m m i t t e e was advised, however, that in two i n s t a n c e s p o s s i b l e w a r n i n g signals may h a v e b e e n s o u n d e d i n M r G a d s d e n ' s p r e s e n c e w h i c h could h a v e p r o m p t e d him t o p r o b e into t h e m a t t e r s n o w i n q u e s t i o n . M r G a d s d e n did not recall one o f t h e s e i n c i d e n t s . H e did not p u r s u e t h e s e c o n d which o c c u r r e d in A p r i l 1 9 7 5 ; h o w e v e r , he w a s i n f o r m e d at that t i m e t h a t line e x e c u t i v e s had g i v e n a s s u r a n c e t h e r e w e r e and w o u l d b e n o p r o b l e m s o f this n a t u r e a t M e r c k . M r G a d s d e n w a s a w a r e o f and a p p r o v e d t h e m a k i n g of a s u b s t a n t i a l foreign political c o n t r i b u t i o n , d i r e c t i n g t h a t t h e c o n t r i b u t i o n be m a d e only if it w a s legal to do so. 18

Bribery T h e c o m m i t t e e also r e a c h e d t h e s e c o n c l u s i o n s a b o u t R a y m o n d E . S n y d e r ( E x e c u t i v e Vice P r e s i d e n t , A d m i n i s t r a t i o n ) : Mr S n y d e r s t a t e d t h a t he w a s not i n v o l v e d in the a u t h o r i z a t i o n , a p p r o v a l o r r e c o r d i n g o f any o f the i m p r o p e r p a y m e n t s t o foreign g o v e r n m e n t e m p l o y e e s . F u r t h e r m o r e , h e stated that a l t h o u g h h e b e l i e v e d t h e C o m p a n y ' s foreign s u b s i d i a r i e s c o n f o r m e d to a g e n e r a l i n d u s t r y p r a c t i c e i n s o m e foreign c o u n t r i e s o f m a k i n g p a y m e n t s of m o d e s t s u m s of this t y p e , he k n e w of no specific major disbursement or improper documentation. There were r e c o l l e c t i o n s a m o n g o t h e r s i n t e r v i e w e d that [there w e r e ] o n s e v e r a l o c c a s i o n s t r a n s a c t i o n s i n v o l v i n g possible i m p r o p e r p a y m e n t s by foreign s u b s i d i a r i e s . . . [ a n d ] no c o r r e c t i v e s t e p s w e r e t a k e n a t t h a t t i m e . M r S n y d e r did not r e m e m b e r such specific d i s c u s s i o n s p r i o r to t h e w i d e publicity given to such g e n e r a l i n d u s t r y p r a c t i c e s in 1975, a l t h o u g h he t h o u g h t it p o s s i b l e t h a t s o m e such t r a n s a c t i o n s may h a v e b e e n involved i n r e v i e w s o f a n u m b e r of u n u s u a l a c c o u n t i n g i t e m s , i n c l u d i n g p a y m e n t s for w h i c h d o c u m e n t a t i o n did not a p p e a r t o b e c o m p l e t e . The c o m m i t t e e drew three general conclusions as to the nature and d e g r e e o f m a n a g e m e n t ' s a w a r e n e s s o f t h e p a y m e n t s and p r a c tices under investigation: (i) t h e r e w a s a n a t m o s p h e r e o f a c c e p t a n c e c r e a t e d b y t h o s e r e s p o n s i b l e for d i r e c t i n g and s u p e r v i s i n g the i n t e r n a t i o n a l and t h e financial affairs o f t h e C o m p a n y ; (ii) t h e r e w a s an effort by i n t e r n a t i o n a l line and c o n t r o l l e r p e r s o n n e l to k e e p d e t a i l s with r e s p e c t to such p a y m e n t s from c o m i n g to top m a n a g e m e n t attention on the assumption that, d e s p i t e t h e a t m o s p h e r e o f a c c e p t a n c e , t o p m a n a g e m e n t did not want to be involved; (iii) t h e r e w a s an a b s e n c e of effective p r o b i n g by t o p m a n a g e m e n t , d e s p i t e s o m e i n d i c a t i o n s t h a t such p r o b i n g w a s i n order. I n t h e s t a t e m e n t s t o t h e S E C , M e r c k e x c u s e d t h e b e h a v i o u r o f its p e r s o n n e l b y p o i n t i n g o u t that: T h e s e p a y m e n t s w e r e m a d e b e c a u s e t h e e m p l o y e e s involved g e n e r a l l y b e l i e v e d t h a t i) t h e y w e r e b e i n g p r e s s u r e d by foreign g o v e r n m e n t e m p l o y e e s t o m a k e such p a y m e n t s , ii) m a n a g e m e n t 19

Bribery a c c e p t e d t h e s e p r a c t i c e s as n e c e s s a r y to a c h i e v e sales goals in s o m e c o u n t r i e s a b r o a d , and iii) t h e y w e r e acting in t h e best interests of the C o m p a n y .

American Home Products
US r a n k in p h a r m a c e u t i c a l sales: 2 A m e r i c a n H o m e P r o d u c t s is a much larger company than Merck, b u t s m a l l e r in p h a r m a c e u t i c a l s , only 39 p e r cent of its sales being of d r u g s ( G e r e f f i . 1979: 13). A total of S3.4 million in q u e s t i o n a b l e p a y m e n t s w a s m a d e in 41 different c o u n t r i e s . A p p r o v a l s for g o v e r n m e n t p u r c h a s e s w o r t h S40.5 million w e r e o b t a i n e d b e t w e e n 1971 a n d 1975 by p a y i n g g o v e r n m e n t officials a c o m m i s s i o n r a n g i n g b e t w e e n 1 per c e n t and 15 p e r cent of the value of the sale. O t h e r p a y m e n t s w e r e m a d e "to o b t a i n action o n n e c e s s a r y g o v e r n m e n t c l e a r a n c e s ' . A m e r i c a n H o m e P r o d u c t s disclosed that: N o n - c o m m i s s i o n type p a y m e n t s were m a d e in a n u m b e r of c o u n t r i e s t o foreign g o v e r n m e n t e m p l o y e e s primarily i n c o n n e c t i o n with the granting of required g o v e r n m e n t a p p r o v a l s . . . . T h e t o t a l s do not i n c l u d e o c c a s i o n a l n o m i n a l g r a t u i t i e s and tips t o p e r s o n s p e r f o r m i n g r o u t i n e m i n i s t e r i a l d u t i e s (8K form l o d g e d with S E C : F e b . 7 6 : 4 ) . In a d d i t i o n to t h e a b o v e , t h e c o m p a n y a d m i t t e d to a legal charita b l e c o n t r i b u t i o n of $ 3 8 , 0 0 0 for an ' e s s e n t i a l l y political p u r p o s e " w h i c h w a s f a v o u r e d by a high g o v e r n m e n t official. A t t e n t i o n is d r a w n to this only to s h o w s o m e of t h e a c t i v i t i e s which are e x c l u d e d from t h e a g g r e g a t e f i g u r e s o n q u e s t i o n a b l e p a y m e n t s r e p o r t e d h e r e .

Warner-Lambert
US r a n k in p h a r m a c e u t i c a l s a l e s : 3 W a r n e r - L a m b e r t and its s u b s i d i a r y P a r k e - D a v i s disclosed S2.6 m i l l i o n in q u e s t i o n a b l e p a y m e n t s in 14 c o u n t r i e s . A bank a c c o u n t n o t o n t h e c o r p o r a t e b o o k s w a s used t o pay c o m m i s s i o n s o n g o v e r n m e n t sales i n s o m e c a s e s , w h i l e o t h e r c o m m i s s i o n s w e r e b o o k e d a s m a r k e t i n g e x p e n s e s . E r r o n e o u s tax d e d u c t i o n s from t h e s e paym e n t s w e r e m a d e t o t h e point w h e r e t h e c o m p a n y w a s obliged t o pay $ 3 2 5 , 8 3 9 i n a d d i t i o n a l t a x . T u c k e d a w a y i n t h e d o c u m e n t s l o d g e d with t h e S E C i s the a d m i s sion t h a t p a y m e n t s w e r e m a d e t o get n e w p r o d u c t s a p p r o v e d for 20

Bribery m a r k e t i n g : ' O t h e r p a y m e n t s w e r e m a d e t o foreign g o v e r n m e n t e m p l o y e e s to e x p e d i t e a variety of g o v e r n m e n t a l a c t i o n s with r e s p e c t t o p r i c e s , p r o d u c t r e g i s t r a t i o n s , d i v i d e n d s , t a x e s , and o t h e r m a t t e r s . ' (8K: M a r . 7 6 ) .

Pfizer
US r a n k in p h a r m a c e u t i c a l sales: 4 C o m p a r e d w i t h t h e t h r e e largest c o m p a n i e s . Pfizer disclosed t h e r e l a t i v e l y m o d e r a t e total o f $ 2 6 4 , 0 0 0 i n p a y m e n t s t o g o v e r n m e n t e m p l o y e e s i n t h r e e c o u n t r i e s . A n a d d i t i o n a l p a y m e n t o f $22,500 h a d b e e n m a d e t o a foreign t r a d e a s s o c i a t i o n 'which p a y m e n t had b e e n solicited with t h e i n d i c a t i o n t h a t it w o u l d be used to m a k e c o n t r i b u t i o n s to v a r i o u s political p a r t i e s in that foreign country". Pfizer also said t h a t it paid a further $ 2 1 , 0 0 0 as a 'professional fee', ' t h e r e c i p i e n t o f w h i c h i n d i c a t e d s o m e p o r t i o n m i g h t b e used t o m a k e a p a y m e n t t o foreign g o v e r n m e n t e m p l o y e s [sic]' (8K: M a r , 76).

Upjohn
US r a n k in p h a r m a c e u t i c a l sales: 6 U p j o h n has d i s c l o s e d t h e s e c o n d largest a m o u n t o f q u e s t i o n a b l e p a y m e n t s - an a g g r e g a t e of $4.2 million. An initial d i s c l o s u r e of $2.7 m i l l i o n in 22 c o u n t r i e s w a s soon followed by an a d m i s s i o n that e v i d e n c e for t h e l a r g e r sum of $4.2 million in 29 c o u n t r i e s w a s a v a i l a b l e . A n u n u s u a l e l e m e n t i n U p j o h n ' s d i s c l o s u r e i s the large s u m w h i c h i s c o n c e d e d a s h a v i n g b e e n paid t o n o n - g o v e r n m e n t hospital e m p l o y e e s - $474,000. No outside directors knew o f t h e p a y m e n t s but i n s i d e d i r e c t o r s e i t h e r k n e w o f t h e p a y m e n t s o r actually approved them.

Squibb
US r a n k in p h a r m a c e u t i c a l sales: 7 T h e d o c u m e n t e d h i s t o r y o f b r i b e r y w i t h S q u i b b goes back further than with most of the transnational pharmaceutical corporations. D u r i n g t h e 1960s S q u i b b w a s a s u b s i d i a r y of t h e O l i n M a t h i e s o n C h e m i c a l C o r p o r a t i o n . T h e illegal p a y m e n t s c o n c e r n e d $1.5 m i l l i o n w o r t h o f a n t i b i o t i c s m a n u f a c t u r e d b y S q u i b b and sent t o C a m b o d i a a n d V i e t n a m b e t w e e n 1958 and 1963 u n d e r t h e U S
21

T h e c a s h w a s g e n e r a t e d in t w o p r i n c i p a l w a y s : a third party would s u b m i t a false i n v o i c e for s e r v i c e s not actually r e n d e r e d . The a g e n t . A l s o c o n v i c t e d o f c o n s p i r a c y w e r e H e r b e r t G .9 million in 8 c o u n t r i e s b e t w e e n 1971 and 1976. 0 0 0 into a Swiss a c c o u n t for the benefit of a Dr A r n a u d . I t w a s s h o w n t h a t the c o m p a n y ' s a g e n t had p a i d b e t w e e n $ 3 0 .M y e r s b o a r d p r o v i d e s s o m e i n t e r e s t i n g insights i n its r e p o r t a b o u t h o w t h e p a y m e n t s .0 m i l l i o n in questionable paym e n t s . got O l i n off t h e h o o k ( M i n t z . 1967: 3 8 3 j ) . t h e l a t t e r $ 2 1 . . M i n t z ( 1 9 6 7 ) has p r o v i d e d a m o r e c o m p l e t e a c c o u n t of this legal b a t t l e . 4 O n 2 3 S e p t e m b e r . of N e w York. 0 0 0 and $ 4 0 . It h a p p e n e d t h a t t h e r e w a s a law w h i c h said in e s s e n c e t h a t a p e r s o n w h o had b e e n c o n v i c t e d of a felony could not t r a n s p o r t a w e a p o n in i n t e r s t a t e c o m m e r c e . In 1976 S q u i b b . r e c e i v e 22 . w a s in the e y e s of t h e law a p e r s o n a n d had a division t h a t m a d e w e a p o n s for use by the a r m e d forces. was convicted on 29 c o u n t s and fined a total of $ 2 9 . Bristol-Myers US r a n k in p h a r m a c e u t i c a l sales: 8 Bristol-Myers have disclosed $3. He also d e s c r i b e s one i n t e r e s t i n g sidelight o f O l i n ' s c o n v i c t i o n .p r e s i d e n t i n H o n g K o n g and the F a r E a s t Intern a t i o n a l C o r p . were concealed. h a v i n g cut its ties w i t h O l i n . After p r o t r a c t e d legal conflict O l i n p l e a d e d guilty to c o n s p i r a c y to m a k e false certificat i o n s a n d d e f r a u d t h e U n i t e d S t a t e s . Wolf. On 28 O c t o b e r . which were generally made in cash. in effect. 0 0 0 . disclosed q u e s t i o n a b l e p a y m e n t s of $1. O l i n ' s former r e g i o n a l v i c e . C o n g r e s s resolved the dilemma by enacting a law t h a t . T h i s c r e a t e d a legal p r o b l e m for O l i n . t h e major s h a r e h o l d e r in a C a m b o d i a n drug-importing firm. 1966 the U n i t e d S t a t e s C o u r t o f A p p e a l s affirmed t h e c o n v i c t i o n s . 5 0 0 . o f w h i c h W o l f s wife w a s p r e s i d e n t and sole stockh o l d e r . U S foreign aid r e g u l a t i o n s p r o h i b i t c o m m i s s i o n s and p r o m o t i o n a l a l l o w a n c e s to i m p o r t e r s for p l u g g i n g b r a n d n a m e s . and for o t h e r i m p r o p e r benefits i n c l u d i n g k i c k b a c k s . 1965 O l i n r e c e i v e d t h e m a x i m u m s e n t e n c e o f $ 1 0 .Bribery f o r e i g n aid p r o g r a m m e . 0 0 0 o n e a c h c o u n t . plus t w o o t h e r c o u n t s . A n i n v e s t i g a t i o n c o m m i t t e e a p p o i n t e d b y the B r i s t o l . 0 0 0 . T h e f o r m e r w a s fined $ 7 . the Phillip B a u e r C o . b e c a u s e it had b e e n c o n v i c t e d o f a felony.

t h e g e n e r a l m a n a g e r s w e r e a w a r e o f and a u t h o r i z e d t h e m a k i n g o f t h e p a y m e n t s . C o m m i s s i o n s paid t o c o m m i s s i o n a g e n t s w e r e a c c u r a t e l y r e c o r d e d i n the C o m p a n y ' s b o o k s . but t h e e n t r i e s did not fully disclose the u n d e r l y i n g n a t u r e o f t h e t r a n s a c t i o n s . or a C o m p a n y check would be drawn to an individual employee who w o u l d h a v e it c a s h e d . T h e t r a n s f e r s of funds involved w e r e all r e c o r d e d in the C o m p a n y ' s b o o k s . T h e s e p a y m e n t s are i n c l u d e d i n the f i g u r e s g i v e n e a r l i e r i n this r e p o r t (8K: A u g 7 6 ) . T h e i n v e s t i g a t i o n c o n c l u d e d t h a t n o m e m b e r o f the b o a r d o f d i r e c t o r s . after i n q u i r y . e m p l o y e e or n o n . knew that payments were being made. H o w e v e r . T h e c o m m i t t e e r e p o r t e d o n the following d e c i s i o n o f t h e B r i s t o l M y e r s B o a r d .(KX) w e r e c o n t e m p l a t e d i n four c o u n t r i e s w h e r e t h e g e n e r a l m a n a g e r s b e l i e v e d that the failure t o m e e t ' p r i o r c o m m i t m e n t s ' i n c o n n e c t i o n with past sales w o u l d p l a c e e m p l o y e e s i n d a n g e r o f physical h a r m . 23 . The e m p l o y e e thereafter d r e w funds from his a c c o u n t for t h e p u r p o s e of m a k i n g p a y m e n t s to a g o v e r n m e n t official or his i n t e r m e d i a r y . e x e c u t i v e s i n c l u d i n g financial p e r s o n n e l had varying d e g r e e s o f k n o w l e d g e o f t h e m a k i n g o f p a y m e n t s t o o b t a i n sales and o f facilitating p a y m e n t s . a d e c i s i o n w h i c h t h e S E C w a s a p p a r e n t l y willing t o accept. r e t a i n a p o r t i o n to c o v e r tax liability and p e r h a p s c o m p e n s a t i o n . but t h e e n t r i e s did not disclose t h o s e i n s t a n c e s in w h i c h it w a s a s s u m e d t h a t a p o r t i o n of t h e c o m m i s s i o n w o u l d u l t i m a t e l y go to a g o v e r n m e n t official (8K: A u g 7 6 ) .e m p l o y e e . A t I n t e r n a t i o n a l D i v i s i o n h e a d q u a r t e r s i n N e w Y o r k and R o m e . I n t h o s e c o u n t r i e s w h e r e p a y m e n t s w e r e m a d e . In a few i n s t a n c e s a C o m p a n y c h e c k d r a w n to t h e o r d e r of a C o m p a n y e m p l o y e e w a s d e p o s i t e d in that e m p l o y e e ' s personal bank account. W h i l e this investigation was u n d e r w a y . d e c i d e d t h a t this c o n c e r n o f t h e local m a n a g e r s w a s r e a s o n a b l e and a c q u i e s c e d i n p a y m e n t s not t o e x c e e d t h e f o r e g o i n g a m o u n t . T h e B o a r d . A r e a vice p r e s i d e n t s and r e g i o n a l d i r e c t o r s g e n e r a l l y had s o m e k n o w l e d g e o f p a y m e n t s m a d e i n t h e i r t e r r i t o r i e s (8K: A u g 7 6 ) . and d e l i v e r t h e b a l a n c e in cash e i t h e r back to a C o m p a n y r e p r e s e n t a t i v e or to t h e i n t e n d e d b e n e f i c i a r y .Bribery p a y m e n t . the B o a r d was informed t h a t p a y m e n t s o f a p p r o x i m a t e l y S148.

000 w e r e m a d e in the y e a r s 1972. 0 0 0 w e r e m a d e d u r i n g t h e y e a r s 1972 t h r o u g h 1976 to private consultants engaged to secure product registrations. 3 . I n a d d i t i o n . s u r p a s s e d all o t h e r p h a r m a c e u t i c a l c o m p a n i e s with questionable p a y m e n t s a m o u n t i n g to a s t a g g e r i n g $ 5 .8 million had to be s u p p l e m e n t e d in 1977 with further r e v e l a t i o n s . a r e l a t i v e l y small c o r p o r a t i o n c o m p a r e d w i t h s o m e o f t h o s e a b o v e ( c o n s o l i d a t e d net e a r n i n g s for five y e a r s to J u n e 1976 w e r e $208 m i l l i o n ) . T h e s e i n c l u d e d explicit reference to p a y m e n t s to secure product registrations: 2 . 0 0 0 w e r e m a d e d u r i n g t h e y e a r s 1972 t h r o u g h 1976. p a y m e n t s i n the a m o u n t o f a p p r o x i m a t e l y $ 3 7 .P l o u g h r e p o r t e d q u e s t i o n a b l e p a y m e n t s o f $1. 77). i n t h a t c o u n t r y . S e n i o r m a n a g e m e n t has b e e n a d v i s e d t h a t all or a p o r t i o n of t h e a f o r e s a i d p a y m e n t s may have b e e n p a s s e d on to p u b l i c officials r e s p o n s i b l e for p r o c e s s i n g the r e g i s t r a t i o n s or tax a s s e s s m e n t s a l t h o u g h it has no direct k n o w l e d g e o f any such p a y m e n t s . 8 million. I n a n o t h e r foreign c o u n t r y . E a r l y d i s c l o s u r e s of $0. or r e n e w a l s thereof. in c o n n e c t i o n with a p p l i c a t i o n s for p r o d u c t r e g i s t r a t i o n s in that c o u n t r y . p a y m e n t s t o t a l l i n g a p p r o x i m a t e l y $ 17. I n a n o t h e r foreign c o u n t r y .Bribery Schering-Plough US r a n k in p h a r m a c e u t i c a l sales: 9 S c h e r i n g . p a y m e n t s o f a p p r o x i m a t e l y $ 2 2 0 . Companies not ranked in the top 20 R a t h e r t h a n e x h a u s t i v e l y list the m i s d e e d s of all of the s m a l l e r t r a n s n a t i o n a l s . I t w a s c o n c e d e d that A H S ' h a s b e e n only 24 . 1975 and 1976 to c o n s u l t a n t s e n g a g e d to settle p r o p o s e d i n c o m e t a x a s s e s s m e n t s . to individuals who w e r e part-time consultants to a g o v e r n m e n t a g e n c y r e s p o n s i b l e for issuing such r e g i s t r a t i o n s (8K: A p r . T h i s figure d o e s not i n c l u d e q u e s t i o n a b l e p a y m e n t s b y c o m p a n i e s i n w h i c h A H S has m i n o r i t y i n t e r e s t s ( u p t o 5 0 p e r c e n t ) . only four of the m o r e r e v e a l i n g case s t u d i e s will be discussed: those of the A m e r i c a n Hospital Supply C o r p o r a t i o n . i n t h a t s a m e c o u n t r y . American Hospital Supply Corporation A m e r i c a n H o s p i t a l S u p p l y ( A H S ) .A m c h e n . R o r e r . S y n t e x and M e d t r o n i c .1 million b e t w e e n 1971 and 1976.

A H S specialises i n c o n t r a c t s t o s u p p l y h o s p i t a l s w i t h a w i d e r a n g e of r e q u i r e m e n t s from syringes to drugs. Belgium. Q a t a r . T h e a u d i t c o m m i t t e e r e p o r t o f 2 5 F e b r u a r y 1977 r e v e a l e d that q u e s t i o n a b l e p a y m e n t s . S a u d i A r a b i a . Iran. Brazil. M a n y o f t h e p a y m e n t s d i r e c t e d t o i n d i v i d u a l s i n these c o u n t r i e s w e r e l a u n d e r e d t h r o u g h Swiss b a n k a c c o u n t s . S a u d i A r a b i a . O t h e r intermediaries t h r o u g h w h i c h funds p a s s e d included public r e l a t i o n s c o n s u l t a n t s . Japan. mostly t h r o u g h a L i e c h t e n s t e i n t r u s t .' was submitted to A m e r i c a n H o s p i t a l ' s board of directors by m a n a g e m e n t at the time board a p p r o v a l for t h e e q u i p p i n g c o n t r a c t w a s s o u g h t . A p r o . 'for t h e benefit o f p e r s o n s i n c h a r g e o f t h e p r o j e c t . P h i l i p p i n e s . b e t w e e n 1972 and 1976. mainly c o m m i s s i o n s t o hospital a d m i n i s t r a t o r s who gave the c o m p a n y c o n t r a c t s . Norway. India. n o b o a r d a p p r o v a l to e n t e r i n t o fee or c o m m i s s i o n a r r a n g e m e n t s in 25 . Peru. w h i c h . A l t h o u g h A m e r i c a n H o s p i t a l policy r e q u i r e d b o a r d a p p r o v a l o f all c o n s u l t i n g a g r e e m e n t s t h a t e x c e e d e d $ 2 5 . T h e A H S p a y m e n t s w e r e t h e subject o f a n S E C c o n s e n t d e c r e e . Italy.6 million w a s p a i d . King Faisal Specialist Hospital T h e w o r s t a l l e g a t i o n set d o w n in t h e c o n s e n t d e c r e e c o n c e r n e d a m a j o r p r o j e c t t o e q u i p t h e n e w K i n g Faisal Specialist H o s p i t a l a t R i y a d h . G r e e c e . S p a i n . Mexico.SI. S o u t h K o r e a .000]. were m a d e in Australia. i n c l u d i n g a n e x p e n s e item identified a s ' C o m m i s s i o n s . T h e c o n s e n t d e c r e e p r o v i d e s a fascinating illustration of h o w the b o a r d of d i r e c t o r s can be p r o t e c t e d from t h e taint of k n o w l e d g e e v e n in a r e l a t i v e l y small c o m p a n y w h i c h is d i s p o s i n g of a very large amount of money.Bribery p a r t i a l l y successful in i n d u c i n g t h e s e foreign c o m p a n i e s to c o r r e c t p r a c t i c e s w h i c h v i o l a t e its P o l i c i e s ' . T u r k e y and V e n e z u e l a .f o r m a financial e a r n i n g s s t a t e m e n t p r o j e c t e d for t h e H o s p i t a l c o n t r a c t . law firms and an a r c h i t e c t u r a l firm o w n e d by hospital board m e m b e r s . France. p e r s o n s i n a n affected M i n i s t r y o f t h e S a u d i g o v e r n m e n t and p e r s o n s o f p o w e r and i n f l u e n c e with t h e Saudi g o v e r n m e n t ' . Austria. Israel. m a n d a t e d a hefty a u d i t c o m m i t t e e r e p o r t i n t o t h e i n t e r n a l affairs o f t h e c o r p o r a t i o n . Guatemala.506[. 0 0 0 i n fees. T h e c o n s e n t o r d e r a l l e g e s t h a t S4. Chile. a m o n g o t h e r t h i n g s .

I t w o u l d a p p e a r t h a t tax i m p l i c a t i o n s o f A H S ' s u n i o n p a y m e n t s w e r e a s o u r c e o f g r e a t e r c o n c e r n t h a n their p r o p r i e t y . many o t h e r types of questionable payments were m e n t i o n e d in the report of the audit c o m m i t t e e . 45-6). the t e r m used by A H S to d e s c r i b e p a y m e n t s to h o s p i t a l officials to secure sales of their p r o d u c t s . T h e r e c e i p t did not m e e t all t h e r e q u i r e m e n t s of M e x i c a n tax law and A H S / M e x i c o ' s i n d e p e n d e n t accountants determined it to be a nondeductible expense (pp. In o r d e r to e n d t h e p i c k e t i n g . 4 3 . A H S / M e x i c o paid $21. Union payments" In 1973 a n d 1974.600 i n c a s h to u n i o n officials to p e r s u a d e t h e m to p r e v e n t strikes or d e m a n d s b y u n i o n m e m b e r s for h i g h e r s e v e r a n c e pay. a c c o r d i n g t o A H S / M e x i c o officials. The e m p l o y e e p e r s u a d e d a union to picket the w a r e h o u s e in p r o t e s t of his firing. 4 ) . A H S / M e x i c o r e l o c a t e d a factory to a n o t h e r m a j o r city r e s u l t i n g in a layoff of w o r k e r s in its f o r m e r l o c a t i o n .4 ) . A m e r i c a n Hospital maintains that the personnel w o r k i n g on t h e p r o p o s e d c o n t r a c t failed to inform t h e highest c o r p o r a t e officers and d i r e c t o r s o f A m e r i c a n H o s p i t a l o f t h e m a t t e r a l l e g e d i n P a r a g r a p h 1 1 h e r e i n a b o v e (p. T h e s e p a y m e n t s . T h a t u n i o n official offered to s t o p t h e p i c k e t i n g in r e t u r n for a cash p a y m e n t to him. T h e A H S / M e x i c o p e r s o n n e l m a n a g e r refused t o m a k e t h e d i r e c t p a y m e n t i n cash b u t m a d e a $ 6 0 0 p a y m e n t to t h e p i c k e t i n g u n i o n in t h e form of a c h e c k m a d e p a y a b l e to t h e u n i o n in r e t u r n for a receipt from the u n i o n so t h a t t h e p a y m e n t could be d e d u c t e d for tax p u r p o s e s . In c o n j u n c t i o n with t h a t r e l o c a t i o n . the p e r s o n n e l m a n a g e r o f A H S / M e x i c o n e g o t i a t e d with the u n i o n official i n c h a r g e of t h e p i c k e t s . In J u l y 1976 a w a r e h o u s e e m p l o y e e of A H S / M e x i c o w a s fired. w e r e essentially b r i b e s t o u n i o n officials r a t h e r t h a n p a y m e n t s going t o the u n i o n to benefit t h e u n i o n as a w h o l e ( p p . Payments The 26 to physicians offered personal financial c o n s e n t d e c r e e alleges that A H S .Bribery c o n n e c t i o n w i t h t h e subject c o n t r a c t w a s sought o r o b t a i n e d b y m a n a g e m e n t . A p a r t from its H o s p i t a l D e v e l o p m e n t E x p e n s e s .

to 'misclassify g o o d s t o p e r m i t t h e i r i m p o r t a t i o n ' . w e find i n t h e c o n s e n t d e c r e e : c) In a t h i r d c o u n t r y . 1 Gifts to police officers The audit c o m m i t t e e report states: E a c h y e a r a few c u s t o m e r s affiliated w i t h the M e x i c a n g o v e r n m e n t w e r e g i v e n C h r i s t m a s o r b i r t h d a y gifts o f several 27 . I n c l u d e d in a list of q u e s t i o n a b l e p a y m e n t s . inter alia. Payments to customs officials W i t h r e s p e c t t o p h a r m a c e u t i c a l p r o d u c t s and m e d i c a l d e v i c e s . An example of an i m p l a n t a b l e d e v i c e w o u l d be a heart p a c e m a k e r . O t h e r p a y m e n t s w e r e m a d e t o ' i m p o r t A H S C g o o d s a t a l o w e r c u s t o m s rate t h a n t h a t m a n d a t e d b y M e x i c a n law for t h o s e p r o d u c t s ' . P a y m e n t s w e r e a l s o m a d e t o M e x i c a n c u s t o m s officials w h o e x t o r t e d the p a y m e n t s by threats of confiscation. 0 0 0 i n c o n n e c t i o n with t h e p r e s c r i p t i o n by such p h y s i c i a n s for i m p l a n t s of an A m e r i c a n H o s p i t a l subsidiary's device to meet what the c o m p a n y c o n t e n d s w e r e p r e v i o u s l y e s t a b l i s h e d c o m p e t i t i v e p r a c t i c e s ( p . Payments to health inspectors The report o f t h e audit committee states: A H S / M e x i c o in 1974 and 1975 paid a p p r o x i m a t e l y $5. i m p r o p e r p a y m e n t s to p h y s i c i a n s or o t h e r d e s i g n a t e d r e c i p i e n t s a m o u n t i n g t o $ 1 5 1 . p a y m e n t s to c u s t o m s officials can be a s e r i o u s m a t t e r if t h e y are m a d e t o facilitate t h e i m p o r t o f p r o d u c t s which a r e not a p p r o v e d a s safe a n d effective by t h e c o u n t r y c o n c e r n e d . Officials o f t h e s u b s i d i a r y stated that t h e s e p a y m e n t s w e r e m a d e t o c o n v i n c e t h e h e a l t h i n s p e c t o r s not t o r e p o r t the s u b s i d i a r y ' s violations o f t h e Mexican Health Code (p. 6. 43). T h e r e is insufficient i n d i c a t i o n i n t h e a u d i t c o m m i t t e e r e p o r t a s t o w h e t h e r this w o u l d b e t h e c a s e with A H S p a y m e n t s .000 to h e a l t h i n s p e c t o r s w h o i n s p e c t e d A H S / M e x i c o facilities. T h e r e p o r t simply states that A H S m a d e p a y m e n t s to M e x i c a n c u s t o m s officials in 1975.Bribery r e w a r d s t o d o c t o r s w h o used c e r t a i n i m p l a n t a b l e A H S medical devices in preference to c o m p e t i n g b r a n d s .).

4 . We a r e also told t h a t 'a p a y m e n t of a p p r o x i m a t e l y $49. 8 ) . U p o n p a y m e n t the supplier o f t h e invoice d e d u c t e d a commission ( w h i c h a p p e a r s t o h a v e r a n g e d from 6 % t o 15%) and a p p l i c a b l e t a x e s . ' O t h e r p a y m e n t s w e r e m a d e t o o b t a i n f a v o r a b l e and e x p e d i t i o u s tax s e t t l e m e n t s for 1972 a n d 1973 and to c a u s e the t e r m i n a t i o n of a fiscal i n s p e c t i o n ' (p. Cert a i n l y . w o u l d be paid to o n e or m o r e political p a r t i e s in recogn i t i o n o f p r i o r g o v e r n m e n t a l a c t i o n a l l o w i n g price i n c r e a s e s ' ( p .5 ) .Bribery h u n d r e d d o l l a r s c a s h . T h e a d d i t i o n a l 8 K R e p o r t for M a r c h 1976 says that ' T h e g r e a t e s t p o r t i o n o f the p a y m e n t s t o g o v e r n m e n t officials and e m p l o y e e s d e s c r i b e d in P a r a g r a p h A [$336. a sum of $ 8 3 7 . a l o n g w i t h p a y m e n t s from o t h e r c o m p a n i e s i n t h e s a m e b u s i n e s s . T h e s e c u s t o m e r s r a n g e d from g o v e r n m e n t officials a n d c u s t o m s officials to o r d i n a r y city p o l i c e m e n (p.000 in an u n n a m e d s u b s i d i a r y b e t w e e n 1971 and 1976] w a s m a d e to e x p e d i t e the regist r a t i o n of n e w p r o d u c t s . 7. and r e t u r n e d the balance to a senior executive o f t h e s u b s i d i a r y (8K A l : M a r . C h a r g e s w e r e m a d e o n the b o o k s o f t h e s u b s i d i a r y for t h e g o o d s or services d e s c r i b e d on the i n v o i c e s and t h e a m o u n t s d e d u c t e d for local i n c o m e tax p u r p o s e s . e m p h a s i s a d d e d ) .A m c h e n d i s c l o s u r e d o c u m e n t s are v a g u e c o n c e r n i n g h o w m u c h w a s a c t u a l l y involved i n q u e s t i o n a b l e p a y m e n t s . 8 ) .(KX) to a t r a d e a s s o c i a t i o n . // appears that such payments were made in connection with the registration of all products registered during the period covered by the investigation' (p. T h e R o r e r . 4 4 ) .A m c h e n d i s c l o s u r e t o t h e S E C e x p l a i n s h o w its slush fund w a s m a i n t a i n e d : T h e w i t h d r a w a l of t h e funds w a s a c c o u n t e d for e i t h e r by f i c t i t i o u s e n t r i e s on t h e b o o k s of t h e s u b s i d i a r y or as t h e p a y m e n t of i n v o i c e s p r o v i d e d b y third p e r s o n s w h o p r o v i d e d n o g o o d s o r s e r v i c e s t o t h e s u b s i d i a r y . 0 0 0 in p a y m e n t s for several specific p u r p o s e s w a s m e n t i o n e d . Rorer-Amchen T h e R o r e r . 7 6 : 4 ) . 28 . In a n o t h e r e x a m p l e : T h e p a y m e n t t o p e r m i t t h e use o f j o i n t p r o d u c t i o n facilities e n a b l e d t h e s u b s i d i a r y t o m o v e its o p e r a t i o n s t o a n o t h e r plant w i t h o u t c o m p l y i n g with g o v e r n m e n t a l r e g u l a t i o n s r e l a t i n g t o such m o v e ( p . a p p a r e n t l y w i t h the u n d e r s t a n d i n g that t h e p a y m e n t .

t h e p e r s o n is u n d e r s t o o d to have p r o v i d e d gifts to and e n t e r t a i n m e n t for g o v e r n m e n t officials w h o p a r t i c i p a t e d in p u r c h a s i n g d e c i s i o n s . 0 0 0 in c o m m i s s i o n s by S y n t e x .500 i n costs o f t r a n s p o r t a t i o n and l o d g i n g for r e p r e s e n t a t i v e s of a g o v e r n m e n t o w n e d m a r k e t i n g o r g a n i z a t i o n i n a foreign c o u n t r y . 1976. the b a l a n c e having b e e n paid to s u p p l i e r s of g o o d s and services to the o w n e r and i m p r o p e r l y classified a s m a i n t e n a n c e and corporate accounting records.000 i n q u e s t i o n a b l e p a y m e n t s . a foreign s u b s i d i a r y of t h e C o m p a n y p a i d a p p r o x i m a t e l y $6. B e t w e e n J a n u a r y 1974 and J u n e 1976 he w a s paid $ 2 2 1 . t h e r e w a s n o t h i n g i m p r o p e r w i t h r e s p e c t t o t h e s e a r r a n g e m e n t s (6K: O c t . T h e p u r p o s e o f such p a y m e n t w a s t o a l l o w t h e s e r e p r e s e n t a t i v e s t o visit d i s t r i b u t i o n and m a n u f a c t u r i n g facilities o f t h e C o m p a n y and s o far a s i s k n o w n t o m a n a g e m e n t . 76). 5 0 0 and $ 1 6 . T h e d o c u m e n t tells o f a r e g i o n a l sales m a n a g e r in a s u b s i d i a r y w h o left t h e c o m p a n y to w o r k a s a n i n d e p e n d e n t sales a g e n t . Further: D u r i n g t h e p e r i o d o f his e m p l o y m e n t b y t h e s u b s i d i a r y . ' $ 1 2 0 w a s paid in r e n t and a c c o u n t e d for as s u c h . T h e S y n t e x r e p o r t also tells of an official of a g o v e r n m e n t agency h a v i n g r e g u l a t o r y a u t h o r i t y o v e r S y n t e x p r o d u c t s from w h o m t h e c o m p a n y r e n t e d a 'small facility". I n his ' i n d e p e n d e n t ' s t a t u s S y n t e x w a s 'his p r i m a r y i f not his only principal". 5 0 0 in t h e y e a r s p r e c e d i n g his d e p a r t u r e from t h e company.' T h e r e p o r t also s t a t e s t h a t : D u r i n g t h e five y e a r s e n d e d July 3 1 . S u d d e n l y in O c t o b e r 1975 t h e m o n t h l y r e n t a l w a s i n c r e a s e d by t h e c o m p a n y from $120 to $920. The practice o f o v e r i n v o i c i n g and p a y i n g t h e s u r p l u s price t o repair charges on the p e o p l e w h o m a d e t h e p u r c h a s i n g d e c i s i o n w a s also u n c o v e r e d i n the Syntex investigation. 7 6 ) .Bribery Syntex W h i l e S y n t e x d i s c l o s e d only t h e relatively small a m o u n t o f $225. and t o h a v e m a d e c e r t a i n p a y m e n t s t o e x p e d i t e g o v e r n m e n t p a y m e n t o f i n v o i c e s for p r o d u c t s p u r c h a s e d (6K: Oct. 29 . s o m e o f t h e q u a l i t a t i v e i n f o r m a t i o n i n its 6 K r e p o r t a b o u t o t h e r p r a c t i c e s i s i n t e r e s t i n g . an e x t r a o r d i n a r y a m o u n t for a m a n w h o had been e a r n i n g b e t w e e n $ 1 1 .

H e . a sales c o m m i s s i o n o f 2 5 % w a s paid to an individual who was characterized as a distributor. 77: 3). p a s s e d on a m a j o r p o r t i o n of this c o m m i s s i o n to t h e p h y s i c i a n p l a c i n g o r d e r s . Medtronic M e d t r o n i c is a m e d i c a l d e v i c e c o m p a n y which is t h e largest m a n u f a c t u r e r o f h e a r t p a c e m a k e r s i n the w o r l d . In a n o t h e r c o u n t r y . 0 0 0 of this w a s d i r e c t e d to p h y s i c i a n s : I n o n e c o u n t r y c e r t a i n p r a c t i c e s w e r e found that w e r e q u e s t i o n a b l e o r i m p r o p e r u n d e r t h e laws o f t h a t c o u n t r y c o n s i s t i n g of p a y m e n t of e x p e n s e s for t r i p s for p h y s i c i a n s not r e l a t e d to b u s i n e s s p u r p o s e . 7 6 ) . r e l a t e d t o $194. in turn. Summary of SEC disclosures and related documents T h e w e l t e r o f d o c u m e n t s a v a i l a b l e i n t h e offices o f t h e S E C confirm t h e c o n c l u s i o n from t h e i n t e r v i e w s w i t h i n d u s t r y e x e c u t i v e s : b r i b e r y is r o u t i n e and w i d e s p r e a d in the international pharmaceutical 30 . a t t i m e s d u r i n g t h e five y e a r s e n d e d July 3 1. A t o t a l of $ 3 2 3 . P a y m e n t s . All b u t $ 6 7 . which was approximately 1 5 % o f t h e total sales i n t h a t c o u n t r y (8K: F e b .g o v e r n m e n t c u s t o m e r s l o c a t e d o u t s i d e the W e s t e r n h e m i s p h e r e in s u b s t a n t i a l l y all c a s e s . v a r i o u s p r a c t i c e s w e r e used w h i c h i n v o l v e d i n v o i c i n g i n a m o u n t s h i g h e r t h a n actual sales p r i c e s a n d s u b s e q u e n t l y refunding t h e difference a s r e q u e s t e d and d i r e c t e d b y t h e c u s t o m e r s (6K: O c t .Bribery D u r i n g t h e c o u r s e o f t h e r e v i e w i t w a s also n o t e d t h a t .262 w e r e m a d e t o two physicians who in return provided research papers of no substance. 5 6 3 in q u e s t i o n a b l e p a y m e n t s w a s d i s c l o s e d . and t h e d o n a t i o n o f e q u i p m e n t t o p h y s i c i a n s (8K: F e b . p a y m e n t s o f $8. I n t h i s s a m e c o u n t r y . with r e s p e c t to c e r t a i n n o n . 5 0 0 . 7 7 : 4 ) .000 o f sales over a p p r o x i m a t e l y two y e a r s . p a y m e n t of e x p e n s e s of t h e wife or family of a p h y s i c i a n to a c c o m p a n y him w h e n on M e d t r o n i c r e i m b u r s e d t r a v e l . 1976. T h e c o m p a n y i s i n c l u d e d h e r e b e c a u s e o f t h e c o n s i d e r a b l e a t t e n t i o n d e v o t e d t o the p a c e m a k e r i n d u s t r y i n this b o o k and b e c a u s e o f t h e e v i d e n c e from M e d t r o n i c o f d i r e c t e n t i c e m e n t s being offered t o p h y s i c i a n s t o use t h e i r p r o d u c t . t o t a l i n g $ 4 8 .

000 $359.000 $3.635 Company M e r c k <& Co.200 $307. 77 American Home Products Warner-Lambert Pfizer Upjohn Squibb Bristol-Myers Schering-Plough 2 3 4 6 7 8 9 $3.245. 76 8K: F e b . 75 P r o x y : Sept.806.256.7 8 Litigation: Feb. 75 F e b .919.563 1971 Rorer-Amchen Morton-Norwich Carter-Wallace Becton-Dickinson Alcon Allergan Medtronic 1 9 7 1 -6 1 9 7 1 -6 — 1971-6 1971-5 1973-7 31 .000 over$837.000 $2. 76 8K: M a r . 76 8K: A p r .303.000 1 9 7 3 -6 1 9 7 1 -5 1971 -5 1 9 7 1 -6 1 9 7 3 -5 1 9 7 0 -6 1 9 7 1 -6 1970-6 1970-5 1971-5 1970-5 1972-6 1972-5 1971-5 -6 $5.603. 7 6 8K: F e b . 75 All 8 K s : 7 6 . 7 6 D e c .000 $400. 76 8K: J a n . 77 8 K A 1 : M a r . 77 S7 (No.243.933 $51. 76 8K: M a y . 76 8K: Mar.000 $225. 76 10K: 76 10K: 77 8K: F e b .442. 1977 ( G e r e f f i . 1979) 1 Amount of questionable payments disclosed $3. 76 Sept. 7 6 10K: D e c . 76 6K: O c t . 2-56852) 8K: F e b .800. R o b i n s Miles American Supply Hospital 10 11 12 13 14 15 16 17 18 19 21) 22 23 24 Unranked Unranked Unranked Unranked Unranked Unranked Unranked $774. Apr. 76 8K: O c t . Searle Baxter-Travenol Revlon Dow 3M Richardson-Merrell Sterling D r u g Syntex A.000 $245. 76 Jul.700 $1. 76 A p r .570 $1. 2-58671. 76 8K: Mar. 7 6 8K: F e b .094. 77 8K: N o v .341 $1.000 $631.000 $3. 76 8K: Jul.000 $712. 7 6 8 K A 1 : M a r .1 S u m m a r y o f q u e s t i o n a b l e p a y m e n t s disclosed t o the S E C in the 1970s by US p h a r m a c e u t i c a l c o m p a n i e s US rank in pharmaceutical sales. 76 8K: F e b .000 $990. 76 Apr. 76 8K: F e b .000 $2.225. 76 S07 R e g s t .899 $323. 76 8K: M a r .000 $4.600 $197.000 $1. 77 Kennedy & Simon (1978:27) 8K: S e p t .150 $182.949 $1. H. D.Bribery T A B L E 2.OCX) $228. 76 8K: D e c . 76 8K: A u g .034.000 $1. 76 8K: M a y .160. Years of payments 1968-75 Major sources 8K: D e c .702 1971 -5 1971 -5 1971 -5 1 9 7 1 -6 1 9 7 1 -6 1971 -6 Abbott Laboratories Johnson & Johnson Cyanamid SmithKline G.127.220 $189.

hospital a d m i n i s t r a t o r s .Bribery i n d u s t r y . C r i m i n a l c h a r g e s a g a i n s t A H S e x e c u t i v e s are p r o c e e d i n g . E n g l i s h . In a d d i t i o n to t h e d i s c l o s u r e s o f this t y p e d o c u m e n t e d a b o v e . T h e A H S i n t r a v e n o u s solution w a s f o u n d t o b e ' c o n t a m i n a t e d with g r a m n e g a t i v e b a c t e r i a s . In 1979. R o b i n s and A l c o n r e v e a l e d p a y m e n t s t o s e c u r e g o v e r n m e n t p e r m i s s i o n for the m a r k e t i n g o f p r o d u c t s . A Washington Post r e p o r t of 8 F e b r u a r y 1976 c l a i m e d t h a t S e a r l e a s s u r e d c o n t i n u e d g o v e r n m e n t a p p r o v a l o f its birth c o n t r o l pills in I r a n by giving gifts to t h e r e l a t i v e s o f t h e d e c i s i o n m a k i n g official.s p e a k i n g p e o p l e s s o m e t i m e s t o o readily a s s u m e that t h e i r s t a n d a r d s of c o r r u p t i b i l i t y are far h i g h e r t h a n t h o s e of nonW e s t e r n c o u n t r i e s w h i c h have a t t r a c t e d m o s t a t t e n t i o n i n t h e b r i b e r y s c a n d a l s . tax a s s e s s o r s . A Los Angeles Times article on the free a v a i l a b i l i t y o f t h e ' y o u t h d r u g ' G e r o v i t a l i n N e v a d a m a d e the following points. staphyl o c o c c u s . H . and it 32 . a n d p r o b a b l y m o l d ' (La Prensa. W i t h i n t h e U n i t e d S t a t e s t h e state o f N e v a d a fulfils a s i m i l a r r o l e to s o m e T h i r d W o r l d c o u n t r i e s which are h a v e n s from p h a r m a c e u t i c a l r e g u l a t i o n . S e a r l e . R i c h a r d s o n M e r r e l l . t h e s a m e bill t h a t legalized G e r o v i t a l legalized l a e t r i l e .D i c k i n s o n w h e r e "a r e p r e s e n t a t i v e of a local g o v e r n m e n t h e a l t h official w a s paid $ 1 2 . c u s t o m s officers. T h e c a u s e o f d e a t h w a s ' t r a u m a t i c shock' d u e t o viral c o n t a m i n a t i o n . O b v i o u s l y . and large a m o u n t s o f m o n e y are involved. d r u g r e g i s t r a t i o n officials. c a b i n e t m i n i s t e r s . 25 O c t o b e r 1979). S t e r l i n g . the matter of greatest concern is the widespread p r a c t i c e of q u e s t i o n a b l e p a y m e n t s to m i n i s t e r s or officials to secure t h e r e g i s t r a t i o n or a p p r o v a l for sale of p r o d u c t s . 0 0 0 in cash to forestall the t h r e a t o f t h e g o v e r n m e n t official t o close o n e o f t h e C o m p a n y ' s p l a n t s ' (8K: Sept 7 6 : 2 ) . n i n e M e x i c a n w o m e n died i n t h e M o n t e r e y h o s p i t a l m a t e r n i t y w a r d after b e i n g g i v e n c o n t a m i n a t e d i n t r a v e n o u s solution m a n u f a c t u r e d b y A H S M e x i c o . C y a n a m i d . factory i n s p e c t o r s . A . health i n s p e c t o r s . a s c r i b e d by m a n y p e r s o n s as a c a n c e r t r e a t m e n t . p r i c i n g officials. T h e r e is a sad s e q u e l to the A m e r i c a n H o s p i t a l Supply d i s c l o s u r e t h a t M e x i c a n h e a l t h i n s p e c t o r s w e r e paid off 'not to r e p o r t the subsidiary's violations o f t h e Mexican H e a l t h C o d e ' . A l m o s t every t y p e o f p e r s o n w h o can affect t h e i n t e r e s t s o f t h e industry has b e e n the subject of bribes by pharmaceutical companies: doctors. and political p a r t i e s . F o r e x a m p l e . A l m o s t e q u a l l y d i s t u r b i n g i s t h e kind o f p a y m e n t r e v e a l e d b y B e c t o n .

o r h a v i n g t o e x p l a i n t h e b a n k a c c o u n t t o his s u p e r i o r s . the Las Vegas-based c o m p a n y t h a t m a k e s G e r o v i t a l . O n e F D A e m p l o y e e told o f a n i n s t a n c e o f a k i c k b a c k w i t h i n the US p h a r m a c e u t i c a l i n d u s t r y w i t h very s e r i o u s i m p l i c a t i o n s . The extent of the d o c u m e n t a t i o n of questionable payments by US c o m p a n i e s a s s e m b l e d in this c h a p t e r is a t r i b u t e to t h e relative o p e n n e s s o f U S g o v e r n m e n t a l p r o c e s s e s .000 by a small d r u g m a n u f a c t u r e r w h o he w a s t r y i n g to close d o w n . In spite of this they are offered b r i b e s from t i m e t o t i m e . i t r e p o r t e d t h e b e h a v i o u r o f its e m p l o y e e t o the F D A . T h e m a n u f a c t u r e r a t t e m p t e d to give t h e i n s p e c t o r a c h o i c e b e t w e e n t a k i n g t h e $ 1 0 . 2 0 ) . in contrast. I t i s t r u e t h a t U S F o o d and D r u g A d m i n i s t r a t i o n i n s p e c t o r s have a r e m a r k a b l e r e p u t a t i o n for i n t e g r i t y .1 ) r e c o u n t s t h e s t o r y of an F D A i n s p e c t o r w h o w a s offered $10. T h e t e s t i n g l a b o r a t o r y w a s said by my F D A i n f o r m a n t to be o n e of n o t o r i o u s l y low s t a n d a r d s . 0 0 0 quietly and not p r o s e c u t i n g . A p h a r m a c e u t i c a l c o m p a n y e m p l o y e e with r e s p o n s i b i l i t y for a n i m a l t o x i c o l o g y s t u d i e s w a s r e c e i v i n g illegal c o m m i s s i o n s from an o u t s i d e t e s t i n g l a b o r a t o r y t o which h e w a s s e n d i n g w o r k . O n t h e c o n t r a r y . . t h e i n s p e c t o r successfully convicted the m a n u f a c t u r e r . A N e v a d a i n v e s t i g a t i o n is p e n d i n g a g a i n s t t h e chief s t o c k h o l d e r of R o m .A m e r P h a r m a c e u t i c a l C o . F u l l e r ( 1 9 7 2 : 3 0 0 . N o n e ofthe E u r o p e a n executives. 33 .Bribery w a s d i s c l o s e d t h a t t h e bill's a u t h o r w a s r e n t i n g a c o n d o m i n i u m at T a h o e from a m a n on trial for s m u g g l i n g l a e t r i l e . 13 N o v . a n d t w o o t h e r m e n for allegedly b r i b i n g a s t a t e a s s e m b l y m a n to push a bill last M a y t h a t w o u l d h a v e m a d e G e r o v i t a l a v a i l a b l e i n t h e state w i t h o u t a p r e s c r i p t i o n (Los Angeles Times. T h e F D A successfully p r o s e c u t e d t h e c o n t r a c t t e s t i n g l a b o r a t o r y a n d w o u l d h a v e a l s o p r o s e c u t e d t h e d r u g c o m p a n y e m p l o y e e had h e not d i e d s o o n after i n v e s t i g a t i o n s b e g a n . m o s t o f t h e execut i v e s o f U S c o m p a n i e s i n t e r v i e w e d w e r e o f t h e o p i n i o n that their c o l l e a g u e s w e r e less p r o n e t o b r i b e r y t h a n E u r o p e a n p h a r m a ceutical executives. T h i s should not lead t o the a s s u m p t i o n that A m e r i c a n c o m p a n i e s are more corrupt than comp a n i e s o f o t h e r n a t i o n a l i t i e s . T h i s w a s a case of b o t h a t t e m p t e d b r i b e r y and b l a c k m a i l . T a k i n g his c h a n c e s o n t h e l a t t e r o p t i o n . w i t h o u t t h e i n s p e c t o r ' s k n o w l e d g e . a n d had b e e n r e g u l a r l y d e p o s i t i n g several h u n d r e d d o l l a r s a m o n t h in t h e a c c o u n t . P a r t I. 1979. T h e m a n u f a c t u r e r had o p e n e d a savings a c c o u n t for t h e i n s p e c t o r . T o t h e c r e d i t o f the p h a r m a c e u t i c a l c o m p a n y .

It is c o m m o n knowledge that in Latin A m e r i c a ministers responsible for h e a l t h are a l m o s t i n v a r i a b l y rich with w e a l t h which c o m e s l a r g e l y from t h e i n t e r n a t i o n a l p h a r m a c e u t i c a l i n d u s t r y .usually he is called a m i n i s t e r for social s e c u r i t y t o d i n n e r .l e v e l official.n o t a h e a l t h y s i t u a t i o n with p r o d u c t s h a v i n g a shelf-life of only a c o u p l e of y e a r s . A n d o f c o u r s e b o t h A m e r i c a n and E u r o p e a n t r a n s n a t i o n a l e x e c u t i v e s m a i n t a i n e d t h a t t h e i r r e l u c t a n c e t o b r i b e w a s m u c h g r e a t e r t h a n that of indigenous pharmaceutical companies in Third-World countries. p e r h a p s they do not. T h e g e n e r a l m a n a g e r o f t h e L a t i n A m e r i c a n subsidiary t a k e s t h e h e a l t h m i n i s t e r . T h e S E C d i s c l o s u r e s give a m i s l e a d i n g p i c t u r e of t h e n a t u r e of b r i b e r y in the i n t e r n a t i o n a l p h a r m a c e u t i c a l i n d u s t r y with r e s p e c t to the s e n i o r i t y of t h e r e c i p i e n t s o f p a y m e n t s . W h a t is clear is that in most c a s e s t h e t o p p e r s o n i n t h e s u b s i d i a r y had d e t a i l e d k n o w l e d g e . A p a y m e n t to a m i n i s t e r is often quite a s t r a i g h t f o r w a r d m a t t e r . T h e g e n e r a l m a n a g e r gives him an e n v e l o p e w i t h $ 1 0 . O n e i n f o r m a n t w h o had left t h e industry to w o r k with an i n t e r n a t i o n a l a g e n c y after m a n y y e a r s i n several Latin A m e r i c a n countries explained what happens.L a R o c h e to last the n a t i o n for m o r e t h a n ten y e a r s . M e r c k w a s t h e only p h a r m a c e u t i c a l c o m p a n y w h i c h d i s c l o s e d a p a y m e n t to a c a b i n e t .Bribery m a i n t a i n e d t h a t t h e y w e r e less c o r r u p t t h a n the A m e r i c a n s . 0 0 0 or $ 1 5 .000 from H o f f m a n . How bribes are passed T h e S E C d i s c l o s u r e s manifest c o n s i d e r a b l e differences b e t w e e n c o m p a n i e s i n t h e e x t e n t t o w h i c h t o p m a n a g e m e n t i n the U S had d e t a i l e d k n o w l e d g e o f t h e p a y m e n t s . F o r this r e a s o n such m i n i s t r i e s a r e a m o n g t h e most avidly s o u g h t b y p o l i t i c i a n s . t h e Swiss d r u g c o m p a n y . 0 0 0 in it and say 'My 34 . for allegedly favouring t h e i r p r o d u c t s w h e n s p e n d i n g the g o v e r n m e n t ' s m e d i c i n e b u d g e t ( H e l l e r . 1977: 5 6 ) .L a R o c h e . This fits w i t h e v i d e n c e from my i n t e r v i e w s . Y u d k i n ( 1 9 7 8 : 811) claims that t h e t w o h e a l t h officials had b o u g h t sufficient q u a n t i t i e s of an a n t i b a c t e r i a l a g e n t a n d a t r a n q u i l l i s e r from H o f f m a n . P e r h a p s t h e s e o p i n i o n s b e a r s o m e r e l a t i o n s h i p t o the reality. I n s o m e they clearly did: i n o t h e r s t h e r e w a s no way of k n o w i n g . M a y b e h e gets 1 5 p e r c e n t . T w o g o v e r n m e n t p h a r m a c e u t i c a l b u y e r s have b e e n i m p r i s o n e d i n K e n y a after c o n v i c t i o n for a c c e p t i n g b r i b e s of $14.

W h e r e a s i n M e x i c o t h e a t t i t u d e s e e m s t o b e t h a t foreign b u s i n e s s should pay for e v e r y t h i n g i t g e t s . p e r h a p s i n s o m e cases b e c a u s e it a v o i d s u n c o m f o r t a b l e feelings of guilt. a law firm. G e t t i n g m o n e y to put in t h e e n v e l o p e w i t h o u t leaving a scent for a u d i t o r s r e q u i r e s i n g e n u i t y . If t h e s e c r e t a r y of a h o s p i t a l b o a r d o w n s an a r c h i t e c t u r a l firm. p e r h a p s e v e n get s o m e g e n u i n e s e r v i c e s from it. w h o . Since d e a l i n g i n t i m b e r w a s not p a r t of t h e c o m p a n y ' s n o r m a l b u s i n e s s t h e r e w a s little risk in not e n t e r i n g t h e m o n e y s o n t h e b o o k s . i n G u a t e m a l a t h e a t t i t u d e o f t h e military r e g i m e 35 . C e r t a i n l y i t w o u l d b e u n w i s e t o m e n t i o n that t h e r e w e r e s o m e p r o b l e m s . or o v e r i n v o i c i n g by t h e c o m p a n y so t h a t an e x c e s s can be put a s i d e for the recipient of t h e b r i b e h a v e b e e n t h e m o s t c o m m o n l y r e p o r t e d p r a c t i c e s i n the p h a r m a c e u t i c a l i n d u s t r y . T h e i n t e r a c t i o n i s m o r e subtle t h a n t h a t . Y o u can e v e n rent a p r o p e r t y from t h e p e r s o n concerned at an unusually remunerative rental. S E C d i s c l o s u r e s a r e rich with information w h i c h s h o w s t h e v a r i e t y of w a y s this can be d o n e . t h a t s o m e p e o p l e had d o u b t s a b o u t t h e safety o f t h e d r u g . e x e c u t i v e s can have their e x p e n s e a c c o u n t s i n c r e a s e d o n t h e u n d e r s t a n d i n g t h a t t h e s e m o n e y s will b e u s e d for b r i b e s . O n e e x e c u t i v e told me of a s c h e m e for g e t t i n g cash for a slush fund w h i c h w a s beautiful in its simplicity. w h i l e not a d m i t t i n g t h a t h e h i m s e l f had a c c e p t e d such p a y m e n t s . for e x a m p l e t o h e a l t h i n s p e c t o r s .Bribery c o m p a n y will be l o d g i n g a p e r m i t to m a r k e t a n e w drug next w e e k . I s p o k e to o n e former L a t i n A m e r i c a n h e a l t h m i n i s t e r . In G u a t e m a l a I w a s not told any s t o r i e s of g e n e r a l m a n a g e r s m e e t i n g with m i n i s t e r s t o get p r o d u c t s a p p r o v e d . T h e p h a r m a c e u t i c a l d i s c l o s u r e s s h o w t h a t p a y i n g o n a n invoice t o t h e c o m p a n y for s e r v i c e s not actually r e n d e r e d . or a p u b l i c r e l a t i o n s firm t h e n you can hire h i s / h e r firm. W h e n a m o u n t s are large i t has often b e e n f o u n d n e c e s s a r y to s u b s t i t u t e a n u m b e r e d Swiss b a n k a c c o u n t for the plain e n v e l o p e . c o n f i r m e d that the a b o v e d e s c r i p t i o n m a t c h e d his u n d e r s t a n d i n g o f h o w i t w a s d o n e . A c o n s i d e r a b l e q u a n t i t y of t i m b e r g r o w i n g on t h e c o m p a n y ' s p r o p e r t y w a s sold for cash w h i c h w e n t i n t o t h e secret a c c o u n t . but pay e x t r a v a g a n t l y for such s e r v i c e s . W i t h small p a y m e n t s ." T h e g e n e r a l m a n a g e r would not ask t h e m i n i s t e r to m a k e sure a n e w p r o d u c t w a s a p p r o v e d . The m i n i s t e r w o u l d r a t h e r not k n o w . I h o p e t h a t you will be able to see t h a t the a p p l i c a t i o n is considered speedily.

and t h e G u a t e m a l a n m i l i t a r y r u l e r s . b e i n g s u b j e c t e d to critical scrutiny by t h e g o v e r n m e n t ) . T h u s . finds its way into the h a n d s o f t h e a p p r o v i n g officer. t h e r e f o r e . C o m b i n e this with a n u n r e s t r a i n e d c a p a c i t y t o split i n c o m e a m o n g m a n y different h o l d i n g c o m p a n i e s . h o w e v e r . To s u g g e s t t h a t t h e plain e n v e l o p e is less a feature of G u a t e m a l a n t h a n M e x i c a n r e g u l a t o r y i n s t i t u t i o n s is not to say that dirty m o n e y n e v e r g e t s i n t o t h e h a n d s o f G u a t e m a l a n r e g u l a t o r s . ' P h a r m a c e u t i c a l c o m p a n i e s d o not h a v e to buy off p l a n t i n s p e c t o r s b e c a u s e t h e r e are no i n s p e c t i o n s . 36 . T h e a p p r o v a l p r o c e s s b e c o m e s less t h a n a u t o m a t i c o n l y w h e n t h e c o m p a n y a s k s for m o r e . nor could t h e y r e c a l l any o t h e r t r a n s n a t i o n a l h a v i n g a p r o d u c t r e g i s t r a t i o n r e j e c t e d .Bribery is r a t h e r ' w h a t ' s g o o d for foreign b u s i n e s s is good for G u a t e m a l a ' . O n e A m e r i c a n c o m p a n y told m e t h a t its o u t s i d e p h a r m a c i s t w a s on a m o n t h l y r e t a i n e r of U S S 3 0 0 to p e r f o r m p e r f u n c t o r y d u t i e s i n p u t t i n g his n a m e o n the r e g i s t r a t i o n d o c u m e n t and l o d g i n g it. w h e t h e r s o m e o f this U S S 3 0 0 . and the n e e d t o r e g a r d tax a s s e s s o r s a s a d v e r s a r i e s d i s a p p e a r s . D u r i n g its first five y e a r s of m a n u f a c t u r i n g in G u a t e m a l a a t r a n s n a t i o n a l d o e s not n e e d to pay tax a s s e s s o r s b e c a u s e t h e r e is no tax. t r a n s n a t i o n a l s g e n e r a l l y get w h a t t h e y w a n t w i t h o u t p a y i n g . W h e n e v e r a n e w m a c h i n e is p u r c h a s e d its total value is d e d u c t i b l e . t h e C I A . and t o c h a r g e w h a t e v e r transfer prices i t w i s h e s . N o n e of t h e c o m p a n i e s I i n t e r v i e w e d c o u l d recall a p r o d u c t of t h e i r s not b e i n g a p p r o v e d . Companies in G u a t e m a l a . and n e v e r . D u r i n g t h e s e c o n d five y e a r s half t h e n o r m a l c o m p a n y tax rate a p p l i e s . i n the r e c o l l e c t i o n of my i n f o r m a n t s . or e v e n a s k i n g for t h a t m a t t e r . T h e c o n t r a s t b e t w e e n M e x i c o and G u a t e m a l a i s also vivid o n the n e e d to pay social s e c u r i t y officials to e x p e d i t e price i n c r e a s e s . A b u r e a u c r a t w h o put t o o m a n y o b s t a c l e s in t h e way of an A m e r i c a n c o m p a n y might well b e c o m e a v i c t i m o f t h e h a p p y n e x u s a m o n g A m e r i c a n b u s i n e s s . P r e s u m a b l y b r i b e r y m i g h t t h e n b e c o m e a possibility. D r u g regist r a t i o n a p p l i c a t i o n s a r e m a d e t h r o u g h a g e n t s w h o m u s t b e regist e r e d G u a t e m a l a n p h a r m a c i s t s . can e x p e c t a l m o s t a u t o m a t i c i n c r e a s e s each y e a r to k e e p p r i c e s up to a 20 per cent e x c e s s o v e r p r o d u c t i o n costs ( w i t h p r o d u c t i o n c o s t s s u p p l i e d b y t h e c o m p a n i e s . At t h e end of a d e c a d e 200 p e r c e n t of t h e v a l u e o f t h e m a c h i n e has b e e n d e d u c t e d . O n e d o e s w o n d e r . In M e x i c o this form of b r i b e r y s e e m s to have involved t h e largest sums and attracted the greatest public o u t r a g e . a lot in a p o o r c o u n t r y . and in e a c h o f t h e s u c c e e d i n g 10 years a 10 p e r c e n t d e p r e c i a t i o n can be d e d u c t e d .

7 ) ! T h e a c c o u n t in t h i s s e c t i o n and in the f o r e g o i n g e x t r a c t s from d o c u m e n t s lodged with the SEC on how bribery is executed is u n d o u b t e d l y o v e r s i m p l i f i e d . S q u i b b . ' s u r r o u n d e d b y soldiers w i t h m a c h i n e g u n s ' . N o w get o u t b e f o r e I really get a n g r y . I've got a m i n d to kick you right a c r o s s P e n n s y l v a n i a A v e n u e . offered an o u t r i g h t p a y m e n t . i t m u s t b e p o i n t e d out that i t c a n n o t m a t c h s o m e o f t h e l e n g t h s t o r e d u c e tax liability o f o t h e r i n d u s t r i e s .L a m b e r t . S t e r l i n g . American Home Products. ' A Mexican crusade against bribery T h e early m o n t h s o f 1977 saw i n M e x i c o t h e m o s t d r a m a t i c c r u s a d e a g a i n s t c o r r u p t i o n i n t h e history o f t h e i n t e r n a t i o n a l p h a r m a c e u t i c a l i n d u s t r y . J o h n s o n and J o h n s o n . a s o n e i n f o r m a n t d r a m a t i c a l l y d e s c r i b e d it.W a l l a c e all t r e a t e d q u e s t i o n a b l e p a y m e n t s as d e d u c t i b l e expenses. ' Y o u n g m a n . Merck. s e e k i n g a f a v o u r . F i n d i n g the right p e r s o n t o give t h e p l a i n e n v e l o p e to is often not as simple as m a k i n g a d i n n e r a p p o i n t m e n t w i t h t h e m i n i s t e r . C y a n a m i d . 37 . H a v i n g u s e d t h e m o n e y i t t h e n r e p o r t e d t h e e x p r o p r i a t i o n o f t h e lease b y t h e L i b y a n g o v e r n m e n t and c l a i m e d a loss on its tax r e t u r n ( H e r l i h y a n d L e v i n e .d e c e a s e d US s e n a t o r w h o e x p l o d e d in fury w h e n a y o u n g m a n from his h o m e s t a t e . W a r n e r . h o w e v e r . Y o u k n o w . I o u g h t to kick you to . I o u g h t to kick you right out o f m y office. I o u g h t to kick y o u t h r o u g h t h e hall and right d o w n t h e stairs.Bribery O n e of the most interesting aspects of reading through the docum e n t s o n q u e s t i o n a b l e p a y m e n t s a t t h e S E C i s t h e length t o w h i c h s o m e c o m p a n i e s h a v e g o n e in o r d e r to s e c u r e tax d e d u c t i b i l i t y for their questionable payments.M a s s a c h u s e t t s A v e n u e and u p t o r o o m 4 0 6 .M y e r s . A m o n g t h o s e j a i l e d w a s t h e m o s t powerful i n d i v i d u a l i n t h e i n d u s t r y . R e i s m a n tells of a n o w . J u a n L o p e z S i l a n e s . O n e night m a n y of the m o s t powerful figures in the M e x i c a n p h a r m a c e u t i c a l i n d u s t r y c a m e h o m e t o find their h o m e s . B r i s t o l . w h e r e m y old law p a r t n e r w o r k s . O n e c o m p a n y . r e p o r t e d l y t h e subject o f a n I R S i n v e s t i g a t i o n . c a r r i e d its slush fund on its b o o k s as an i n v e s t m e n t in a L i b y a n l e a s e . In defence ofthe pharmaceutical i n d u s t r y . E i g h t w e r e a r r e s t e d and t h r o w n into jail while m a n y o t h e r s w h o w e r e t i p p e d off after t h e e a r l i e r a r r e s t s a v o i d e d c a p t u r e b y not r e t u r n i n g t o t h e i r h o m e s . 1976: 5 9 6 . T h i s p r o b l e m i s delightfully i l l u s t r a t e d b y R e i s m a n ( 1 9 7 9 : 140). W h a t a n e r v e . a n d C a r t e r .

T h e a r r e s t s w e r e t h e b e g i n n i n g s of a c r u s a d e by the newly e l e c t e d P o r t i l l o g o v e r n m e n t a g a i n s t c o r r u p t r e l a t i o n s h i p s b e t w e e n the p h a r m a c e u t i c a l i n d u s t r y and officers of its I n s t i t u t e of Social S e c u r i t y ( I M S S ) . or "fraud. A n u m b e r of s e n i o r officials with r e s p o n s i b i l i t y for a p p r o v i n g p r i c e i n c r e a s e s for p h a r m a c e u t i c a l sales t o t h e g o v e r n m e n t w e r e d i s m i s s e d by t h e n e w D i r e c t o r of Social Security amid a flurry of a l l e g a t i o n s t h a t they had b e e n a c c e p t i n g b r i b e s from the i n d u s t r y . the i m p r i s o n e d d e f e n d a n t s w e r e r e l e a s e d on bail. falsification o f d o c u m e n t s and a t t e m p t s a g a i n s t the p u b l i c e c o n o m y ' as t h e c h a r g e r e a d . A s t h e 1977 A n n u a l R e p o r t o f t h e C a m a r a a r g u e d : ' T h i s raid w a s i n r e a l i t y a i m e d at l a u n c h i n g a m o r a l i z i n g c a m p a i g n to t u r n into reality t h e a i m s set forth by t h e n e w G o v e r n m e n t of the R e p u b l i c at Inauguration Day. M e m b e r s h i p of t h e C a m a r a is o b l i g a t o r y in law for any c o m p a n y which wishes to undertake chemical or pharmaceutical p r o d u c t i o n in t h e c o u n t r y . Bail w a s set at t h e s t a g g e r i n g figure of a l m o s t o n e million p e s o s (SO. and t h e g o v e r n m e n t is r e q u i r e d to i n c l u d e it in c e r t a i n of its d e c i s i o n . w e e k s in a c o u p l e of c a s e s . T h e C a m a r a has a u n i q u e l y powerful role in t h e M e x i c a n political and e c o n o m i c s y s t e m .m a k i n g p r o c e s s e s . T h e C a m a r a held a m e e t i n g with P r e s i d e n t P o r t i l l o on 15 M a r c h 1977. and o t h e r industry e x e c u t i v e s t o w h o m I s p o k e . i n c l u d i n g the g e n e r a l m a n a g e r o f Lilly.' A n u n d e r s t a n d i n g o f t h e g o v e r n m e n t ' s p u r p o s e can b e g a i n e d from t h e a c c o u n t b y t h e g e n e r a l m a n a g e r o f o n e t r a n s n a t i o n a l c o n c e r n i n g w h a t h a p p e n e d w h e n h e and t h e g e n e r a l m a n a g e r s o f t h e o t h e r l a r g e c o r p o r a t i o n s . 1 T h e s e c r e t a r y o f t h e C a m a r a . P r o b a b l y they w e r e right.Bribery the P r e s i d e n t of the National Industrial C h a m b e r of Chemical a n d I n d u s t r i a l L a b o r a t o r i e s ( t h e C a m a r a ) . A n u m b e r of g e n e r a l m a n a g e r s o f large t r a n s n a t i o n a l p h a r m a c e u t i c a l c o m p a n i e s w e r e a l s o j a i l e d . and n e v e r i n t e n d e d to c o n s u m m a t e its legal t h r e a t s a g a i n s t such powerful f i g u r e s . A f t e r a m a t t e r of only d a y s . S o m e m o n t h s later t h e g o v e r n m e n t d r o p p e d t h e c h a r g e s a g a i n s t t h e eight d e f e n d a n t s .44 m i l l i o n ) e a c h . 38 . w e r e called t o g e t h e r b y t h e n e w D i r e c t o r o f Social S e c u r i t y . w e r e o f t h e view t h a t t h e g o v e r n m e n t n e v e r b e l i e v e d it had t h e e v i d e n c e to convict t h e d e f e n d a n t s of b r i b e r y . t h e only m a j o r U S c o m p a n y not t o disclose q u e s t i o n a b l e p a y m e n t s t o t h e SEC. in w h i c h it u p b r a i d e d t h e P r e s i d e n t t h a t "the d e n o u n c i n g and t h e o p i n i o n s a r o u n d i t had w i t h o u t r h y m e o r r e a s o n c a u s e d great h a r m t o t h e e n t i r e p h a r m a c e u t i c a l i n d u s t r y ' .

i n c a p a c i t a t i o n . t h a t if they could afford to pay 10 p e r c e n t to his officials on Social Security c o n t r a c t s . T h e s e p e o p l e k n o w their stuff. [ l a u g h t e r ] N o t r e a l l y . B u t not any m o r e . B u t w h a t h a p p e n e d w a s c e r t a i n l y b o u n d u p w i t h c r i m e p r e v e n t i o n . If t h e s t a t e a t t e m p t s to use law as a tool of j u s t i c e . and perhaps abhorrent. u n l i k e f o r m e r p r e s i d e n t s . A l s o b e c a u s e t h e y a r e not b r o u g h t up in t h e g o v e r n m e n t they have not l e a r n t so much corrupt ways. in so m a n y w o r d s .' A n o t h e r q u a l i t y a s s u r a n c e d i r e c t o r t h o u g h t t h a t t h e s i t u a t i o n had i m p r o v e d m a r g i n a l l y since P o r t i l l o c a m e t o p o w e r . T o this day we still pay t h e 10 p e r cent d e d u c t i o n . h o w e v e r . to Western reformers. I r r e s p e c t i v e of w h a t t h e effect on c r i m e of this M e x i c a n c r u s a d e w a s . W h e t h e r it w a s a successful a t t e m p t is difficult to say. ' It w a s an a t t e m p t to signal a new m o r a l i t y . did not h a v e a long h i s t o r y of g o v e r n m e n t office d u r i n g w h i c h he was c o r r u p t e d by the M e x i c a n system of patronage.Bribery He told t h e m . But t h i n g s are c h a n g i n g . O n l y s o m e o f t h e c o m p a n i e s still pay t h e b r i b e s . M a n y now go to t h e F D A for t r a i n i n g and c o m e b a c k w i t h a m o r e professional attitude. T h e y k n o w w h a t q u e s t i o n s t o ask. O n e M e x i c a n q u a l i t y a s s u r a n c e d i r e c t o r said: 'It used t o b e s t a n d a r d t o b r i b e t h e m [ i n s p e c t o r s ] . p o w e r and m o n e y 39 . . . especially b e c a u s e P o r t i l l o . r e t r i b u t i o n . r e h a b i l i t a t i o n . . T h e y are n o w getting s o m e p e o p l e [inspectors] w i t h 10 y e a r s or m o r e p h a r m a c e u t i c a l i n d u s t r y e x p e r i e n c e . P e o p l e b r o u g h t u p i n t h e g o v e r n m e n t are i n c o m p e t e n t and c o r r u p t . . t o a n n o u n c e w i t h a s m u c h d r a m a a s possible that what had b e e n a c c e p t e d in t h e past m i g h t no l o n g e r be a c c e p t a b l e in t h e future. a n d t h e y should s t o p p a y i n g b r i b e s . t h e n all c o n t r a c t s from t h e n on w o u l d be subject to a 10 per cent special d e d u c t i o n . N o w t h e y pay 20 p e r c e n t 10 p e r cent d e d u c t i o n and 10 p e r cent b r i b e . T h e t e n t a c l e s o f c o r r u p t i o n are s o d e e p l y e m b e d d e d i n M e x i c a n c u l t u r e t h a t any a t t e m p t t o root t h e m o u t i s b o u n d t o m e e t with m i x e d s u c c e s s . T h e y k n o w w h e r e t o look. o r any o t h e r r e c o g n i s e d a i m o f c r i m i n a l law. T h r o w i n g t h o s e powerful p e o p l e in jail w a s not for d e t e r r e n c e . This approach r e c o g n i s e s t h a t in t h e a p p l i c a t i o n of law to t h e i n t e r n a t i o n a l pharm a c e u t i c a l i n d u s t r y in a c o u n t r y like M e x i c o t h e r e is no j u s t i c e . T h e r e are s o m e small signs o f i m p r o v e m e n t . i t d o e s t h r o w u p a n a p p r o a c h t o t h e p r o b l e m unfamiliar.

and only r e a c h w r i t t e n a r r a n g e m e n t s w i t h c o n s u l t a n t s w h o must have a n e s t a b l i s h e d p l a c e o f b u s i n e s s and o t h e r clients o r c u s t o m e r s . t r a d e m a r k and t r a d i n g w i t h t h e e n e m y laws. t h e c o m p a n y . legal or illegal. Such e x t r a t e r r i t o r i a l a p p l i c a t i o n of US law is not e x t r a o r d i n a r y . a g r e e d to p u b l i s h t h e results of a d e t a i l e d i n v e s t i g a t i o n into its affairs by an audit c o m m i t t e e . but simply to jolt the b u s i n e s s c o m m u n i t y into a c c e p t i n g n e w . T h e p o i n t . is not to sustain t h e s h o c k . It's t h e perfect a c c o m m o d a t i o n . O t h e r c r i t i c s . inter alia. It led to t h e F o r e i g n C o r r u p t P r a c t i c e s A c t of 1977. 1 0 C r i t i c s o f t h e c r u s a d e a r g u e t h a t it has had the effect of h a m s t r i n g ing A m e r i c a n b u s i n e s s w h i l e G e r m a n c o m p e t i t o r s . a n d r e n d e r b o n a fide s e r v i c e s t o A H S C ' . I n t h e case o f t h e A m e r i c a n H o s p i t a l S u p p l y c o n s e n t d e c r e e discussed e a r l i e r . A n d it's all o n e big c h a r a d e . having p r e c e d e n t s in tax. 40 . [be] i n d e p e n d e n t o f t h e p r o s p e c t i v e A H S C c u s t o m e r and its m a n a g e m e n t p e r s o n n e l . m o r e l a w . But the s t a t e can effectively use the a p p a r a t u s of law e n f o r c e m e n t for d r a m a t i c g e s t u r e s . have a r g u e d t h a t t h e c r u s a d e has not c h a n g e d c o r r u p t b u s i n e s s p r a c t i c e s . h o w e v e r . T h e c o m p a n y n e i t h e r a d m i t s n o r d e n i e s a n y t h i n g . B e q u a i ( 1 9 7 6 ) tells u s that the S E C h a s b e e n firing b l a n k s : W h o g e t s hurt in c o n s e n t s e t t l e m e n t s ? T h e S E C gets a n o t c h in its g u n . A b o u t thirty c o n s e n t d e c r e e s h a v e also b e e n struck b e t w e e n the S E C and comp a n i e s d i s c l o s i n g q u e s t i o n a b l e p a y m e n t s . most n o t a b l y R e i s m a n ( 1 9 7 9 ) . which p r o h i b i t s U S c o m p a n i e s from p a y i n g b r i b e s e v e n w h e n t h e paym e n t s a r e m a d e o u t s i d e t h e U n i t e d S t a t e s . to refrain in future from any political c o n t r i b u t i o n s . c a n c o n t i n u e t o m a k e c o r r u p t p a y m e n t s and claim t h e m a s tax d e d u c t i b l e e v e n w h e r e t h e y violate foreign laws. Such g e s t u r e s c a n n o t b e s u s t a i n e d for long b e c a u s e o n c e the i n t e r n a t i o n a l b u s i n e s s c o m m u n i t y recoils from t h e s h o c k and r e g r o u p s . The US crusade against bribery T h e U S c r u s a d e a g a i n s t b r i b e r y b e g a n i n e a r n e s t with the L o c k h e e d s c a n d a l . a n t i t r u s t . t h e p u b l i c i s h a p p y b e c a u s e they r e a d ' f r a u d ' i n t h e n e w s p a p e r and t h i n k c r i m i n a l i t y right a w a y . T h e law firm gets m o n e y . it is a w o r t h y a d v e r s a r y t o t h e state i n i n s t i t u t i o n a l p o w e r .a b i d i n g r e l a t i o n s h i p s with government.Bribery will s u b v e r t t h e a t t e m p t . to d e l i v e r a s h o r t s h a r p s h o c k in w h i c h no o n e is d o n e t e r r i b l e h a r m . for e x a m p l e .

V a r i o u s p r o v i s i o n s o f t h i s sort i n t h e c o n s e n t o r d e r m a k e it a relatively s t r a i g h t f o r w a r d m a t t e r for the S E C to c o n v i c t t h e c o m p a n y on any future o c c a s i o n w h e n it has g r o u n d s to s u s p e c t t h a t a b r i b e has b e e n paid. t h e value of c o n s e n t d e c r e e s for i n c a p a c i t a t i n g t h e offending c o r p o r a t i o n should n o t be f o r g o t t e n . But t h e r e ' s a c h a n c e t h a t it w o n ' t be able to. P r o b a b l y he had no i n t e n t i o n of p a y i n g it b u t w a s l o o k i n g to be a b l e to b l a m e h e a d q u a r t e r s for not g e t t i n g t h e d r u g r e g i s t e r e d quick e n o u g h . 41 . I w a s p l e a s e d not to be in their s h o e s . I f he h a d any i n t e n t i o n to pay t h e b r i b e he n e v e r would have m e n t i o n e d it to me in t h e first p l a c e . a n y w h e r e in t h e w o r l d . B u t e v e r y o n e u n d e r s t a n d s that signing this d o c u m e n t i s o n e o f t h e r i s k s you t a k e . w h i l e t a k i n g a m o r e c h a r i t a b l e view of t h e p r o t e c t i o n s afforded t h e individual b y t h e c o m p a n y : "Subsidiary m a n a g e r s m u s t sign a d o c u m e n t saying no law v i o l a t i o n s o c c u r r e d to his k n o w l e d g e . T h e U S g o v e r n m e n t d o e s not have t o p r o v e that the c o n s u l t a n t did a n y t h i n g i m p r o p e r . W h e n I s p o k e to l a w y e r s at t h e A m e r i c a n H o s p i t a l S u p p l y C o r p o r a t i o n . A H S r e t a i n s a c o n s u l t a n t w h o is not "indep e n d e n t o f t h e p r o s p e c t i v e A H S C c u s t o m e r and its m a n a g e m e n t p e r s o n n e l ' t h e c o m p a n y can be c o n v i c t e d c r i m i n a l l y for b r e a c h of t h e d e c r e e . ' A p e r s o n to w h o m this A u s t r a l i a n a n s w e r s at US h e a d q u a r t e r s of the same company made a s i m i l a r c o m m e n t . I've only o n c e had o n e o f t h e s u b s i d i a r i e s c o m e to me with the q u e s t i o n of w h e t h e r a b r i b e should be paid to a g o v e r n m e n t official. He said to me t h a t it will t a k e 18 m o n t h s to get the d r u g r e g i s t e r e d if we d o n ' t pay t h e b r i b e and 6 m o n t h s i f w e d o . A u s t r a l i a n p h a r m a c e u t i c a l e x e c u t i v e s r e p e a t e d l y told me t h a t a c o m p a n y cannot do business in Indonesia without making corrupt payments. If. A n A u s t r a l i a n e x e c u t i v e o f a n A m e r i c a n c o m p a n y with respons i b i l i t i e s for this r e g i o n said: ' T h e y m a k e all of these rules which c a n ' t really be a d h e r e d to but if we b r e a k t h e m w e ' r e on o u r own a n d t h e y will c o m e d o w n u p o n u s . T h e c o r p o r a t i o n will try t o s t a n d b e h i n d y o u if it can.Bribery W h i l e B e q u a i ' s view is not w i t h o u t a grain of t r u t h .' Yet a n o t h e r senior h e a d q u a r t e r s executive of the corporation d i s p l a y s t h e g a m e o f cat a n d m o u s e t h a t i s p l a y e d b e t w e e n the U S a n d t h e p e r i p h e r y o n this q u e s t i o n . Of c o u r s e I had to a d v i s e him not to pay it. Of course corrupt practices continue among many A m e r i c a n c o r p o r a t i o n s w h i c h are not u n d e r c o n s e n t d e c r e e s .

We h o p e t h a t they will g r a n t us a p p r o v a l s b e c a u s e w e are friends.: Do you think that American companies are disadvantaged compared to local firms! N o . A M e x i c a n e x e c u t i v e of Lilly. W h e n w o r d w a s out that a n i n s p e c t o r w a s on his way to d e m a n d a p a y m e n t or t h e c l o s u r e of t h e p l a n t . i t i s local c o m p a n i e s which are d i s a d v a n t a g e d b e c a u s e they do n o t h a v e so m u c h m o n e y to pay b r i b e s . S o m e of t h e m they do ask for e x t r a m o n e y . . Y o u k e e p ringing t h e m u p a b o u t w h a t you w a n t d o n e . I w o r k e d in M e x i c o for y e a r s and I l e a r n e d that you d o n ' t have to pay t h e i n f a m o u s m o r d i t a . Y o u tell t h e m t h a t you w o n ' t pay t h e m a n d hold firm to that line a l w a y s . We t a k e t h e m to the very best r e s t a u r a n t s . J. 42 . . Y o u k e e p o n their b a c k s until t h e y ' r e so fed up t h a t t h e y a g r e e to get you out of their hair so that t h e y h a v e m o r e t i m e t o w o r k o n p e o p l e w h o will pay. with d e t e r m i n a t i o n . i n h i b i t i n g effect on t h e w i l l i n g n e s s of e m p l o y e e s to pass c o r r u p t p a y m e n t s . h o w e v e r . b e b o t h e r e d w i t h such d e t e r m i n a t i o n . we have s e e n . M a n y e x e c u t i v e s c a n n o t . Y o u m a k e t h e g r o u n d . T h e y k n o w w e a r e f o r b i d d e n t o pay b r i b e s .Bribery M o s t of the A m e r i c a n executives interviewed believed that the F o r e i g n C o r r u p t P r a c t i c e s A c t had s o m e . B u t s o m e t i m e s i f you w a n t a p r i c e i n c r e a s e it is n e c e s s a r y . t o resist c o r r u p t p a y m e n t s . O n e c o n t r a r y view on t h e l a t t e r w a s e x p r e s s e d by a m a n a g e r in the Mexican subsidiary of an American corporation: O u r c o m p a n y policy i s not t o pay b r i b e s . w h i c h . W i t h a large c o m p a n y it is e a s i e r to h a v e large a m o u n t s of m o n e y floating a r o u n d which is not r e c o r d e d in t h e b o o k s . and t h a t i t t h e r e f o r e d i s a d v a n t a g e d A m e r i c a n b u s i n e s s i n c o m p e t i t i o n with E u r o p e a n a n d i n d i g e n o u s c o m p a n i e s . e v e r y o n e w o u l d go h o m e for t h e a f t e r n o o n so that no o n e w a s t h e r e to t a l k to h i m . . T h i s is an unofficial p o s i t i o n . t h o u g h not necessarily a t o t a l . A n d good w i n e . B. I n s t e a d w e h a v e t o rely on f r i e n d s h i p with t h e m .r u l e s clear with t h e b u r e a u c r a t s from t h e b e g i n n i n g . E v e n in t h e m o s t c o r r u p t of e n v i r o n m e n t s it is p o s s i b l e . O n e executive explained an even more arduous alternative to c o r r u p t p a y m e n t s i n M e x i c o . b u t the p h a r m a c e u t i c a l i n d u s t r y has t o pay b r i b e s like e v e r y o n e e l s e . e x p l a i n e d a third a l t e r n a t i v e . d o e s s e e m t o h a v e m a n a g e d t o avoid c o r r u p t p a y m e n t s m o r e t h a n m o s t A m e r i c a n c o m p a n i e s .

w h o r e s i g n e d several m o n t h s a g o . h e i s a l l e g e d t o have a c c e p t e d b r i b e s in r e t u r n for limiting t h e r a n g e of d r u g s which d o c t o r s c o u l d p r e s c r i b e . t h e P h i l i p p i n e s . I n d e e d in s o m e c i r c u m s t a n c e s this has a l r e a d y h a p p e n e d . D r S h a i k o l E s l a m i z a d e h . e v e n p e r s o n a l e x p e n s e a c c o u n t s . P r i o r t o t h e r e v o l u t i o n . t o g e t h e r with his d e p u t y . In the 43 . G r e a t B r i t a i n and t h e U n i t e d S t a t e s .Bribery T h e r e is no q u e s t i o n t h a t in the five c o u n t r i e s w h e r e this study w a s c o n d u c t e d . m i n o r "facilit a t i n g p a y m e n t s ' m i g h t often be seen as t h e only way o f t u r n i n g the w h e e l s o f s o m e h o p e l e s s l y clogged b u r e a u c r a c i e s . M o r e s i m p l y . We often lose sight of the fact t h a t b u s i n e s s p e o p l e do not g e n e r a l l y like to pay b r i b e s . W h a t n e e d s to be o v e r c o m e is t h e sense of nihilism c o n v e y e d by w r i t e r s such a s R e i s m a n (1979) a b o u t t h e impossibility o f cont r o l l i n g c o r r u p t i o n . in t h e s a m e way as any cost of d o i n g b u s i n e s s . let us c o n s i d e r t h e s e c o s t s .c o r r u p t i o n can be successfully resisted. I r a n ' s former M i n i s t e r o f H e a l t h . M e x i c o . A u s t r a l i a . and s o m e may n e v e r get in. B u t a s well a s p r o d u c i n g c e r t a i n b e n e f i t s . S o m e p h a r m a c e u t i c a l c o m p a n i e s will find i t very m u c h h a r d e r t h a n o t h e r s t o r e s t a r t o p e r a t i o n s i n I r a n . w a s a r r e s t e d o n c h a r g e s o f c o r r u p t i o n . A c c o r d i n g t o n e w s p a p e r r e p o r t s . albeit a m i n o r o n e .m i n i s t e r and p e r s o n a l a s s i s t a n t . bribery e n t a i l s definite costs. First. T h e s e a r e m a t t e r s o f g r e a t m o m e n t t o the c o m p a n i e s . b r i b e s eat into profits. and p u b l i c i n d i g n a t i o n a t this alleged c o r r u p t i o n is r e p o r t e d to be o n e o f t h e c a u s e s o f t h e r e c e n t riots in T e h e r a n . T h e r e h a v e e v e n b e e n s u g g e s t i o n s t h a t c o r r u p t i o n i n the pharm a c e u t i c a l i n d u s t r y w a s a c o n t r i b u t i n g factor. C e r t a i n l y . R e i s m a n (1979) himself has c o n c e d e d t h a t c o n t r a c t s w o n b y b r i b e s are less secure t h a n t h o s e h o n e s t l y w o n b e c a u s e a n e w r e g i m e s w e p t to p o w e r in a c a m p a i g n a g a i n s t t h e c o r r u p t i o n of its p r e d e c e s s o r m i g h t feel justified in r e n e g i n g . Saudi A r a b i a . i s said t o h a v e h e l p e d c o n t r i b u t e t o t h e c o u n t r y ' s r e c e n t social d i s c o n t e n t b y his h a n d l i n g o f t h e n a t i o n a l h e a l t h i n s u r a n c e s c h e m e . T h e i n t e r n a t i o n a l p h a r m a c e u t i c a l industry n e w s h e e t S C R I P r e p o r t e d a t t h e t i m e (23 S e p t e m b e r 1978): T h e f o r m e r m i n i s t e r .G u a t e m a l a . I n m a n y c i r c u m s t a n c e s it is p o s s i b l e for p u b l i c policy i n t e r v e n t i o n s to m a r g i n a l l y i n c r e a s e t h e costs o f b r i b e r y t o the point w h e r e t h e s e c o s t s a r e no l o n g e r p e r c e i v e d as less t h a n the benefits. or a n u m b e r of o t h e r c o u n t r i e s i n f a m o u s for t h e i r c o r r u p t i o n is a m o r e difficult q u e s t i o n . W h e t h e r t h i s w o u l d be t r u e of I n d o n e s i a . to t h e r e v o l u t i o n i n I r a n .

t h e F o r e i g n C o r r u p t P r a c t i c e s A c t of 1977 p e r h a p s has i n s o m e m a r k e t s t i p p e d t h e b a l a n c e o f costs o v e r b e n e f i t s . P e r h a p s t h e risk o f t h i s i s s m a l l . O f c o u r s e m a n a g e r s can only afford this ' i r r a t i o n a l ' c h o i c e if t h e i r o w n sales p e r f o r m a n c e is h e a l t h y a n d not u n d e r q u e s t i o n b y h e a d q u a r t e r s . not j u s t in a small T h i r d . e v e n t h o u g h for t h e c o r p o r a t i o n the benefit d o e s not justify this risk. A s u b s i d i a r y m a n a g e r t h r e a t e n e d w i t h d i s m i s s a l . E v e r y e x e c u t i v e with w h o m I d i s c u s s e d this m a t t e r felt 12 1 2 44 . in the biggest m a r k e t o f t h e m all. a distasteful last r e s o r t . T h e y k n o w t h i s sets t h e m up as s c a p e g o a t s for t h e c o r p o r a t i o n . t h e s u b s i d i a r y m a n a g e r m i g h t well d e c i d e t h a t for him or her pers o n a l l y t h e b e n e f i t s d o not e x c e e d the c o s t s . b r i b e s can t a r n i s h the p u b l i c image of a c o r p o r a t i o n . but i n t e r n a t i o n a l l y . T h i s is not a trivial c o n s i d e r a t i o n c o n s i d e r i n g that tax is (or s h o u l d be) also paid on the a m o u n t . B u t e v e n in this l a t t e r situation t h e s t a t e m e n t to be s i g n e d is still likely to be s o m e d i s i n c e n t i v e against t a k i n g such a c o u r s e . b e c a u s e t h e y all s p e n d small f o r t u n e s on a t t e m p t s to e n h a n c e t h e m . W e see t h e e x t r e m e m a n i f e s t a t i o n o f t h i s with Lilly.Bribery p h a r m a c e u t i c a l i n d u s t r y we h a v e seen that b r i b e s can be as high as 20 p e r c e n t of t h e total price for a c o n t r a c t . N o c o r p o r a t i o n w a n t s t h e publicity o f a n early s h o w c a s e p r o s e c u t i o n u n d e r t h e A c t . loss of a p e r f o r m a n c e b o n u s . b r i b e r y is. so that e v e n w h e r e t h e benefits o f b r i b e r y for t h e c o r p o r a t i o n e x c e e d the c o s t s . 1977: 128-96) p u b l i s h e d an 'investability i n d e x ' for A s i a n c o u n t r i e s o n e o f t h e n e g a t i v e factors i n t h e index w a s a five-point scale e s t i m a t i n g d e g r e e of c o r r u p t i o n . w h i c h has s h u n n e d c e r t a i n c o r r u p t m a r k e t s i n the T h i r d W o r l d r a t h e r t h a n risk c o m p r o m i s i n g that r e p u t a t i o n for p r o p r i e t y and e x c e l l e n c e w h i c h i n m a n y y e a r s has m a d e i t n u m b e r o n e o r n u m b e r t w o i n p h a r m a c e u t i c a l sales within t h e U S . t h e U n i t e d S t a t e s . I t i s r i d i c u l o u s t o a r g u e that t r a n s n a t i o n a l c o r p o r a t i o n s are not c o n c e r n e d a b o u t their public i m a g e s .W o r l d m a r k e t w h e r e the bribe is p a i d . and most i m p o r t a n t l y . or m i s s i n g a p r o m o t i o n m i g h t d e c i d e t h a t a bribe is w o r t h the risk p e r s o n a l l y . for all o f t h e r e a s o n s c o n s i d e r e d a b o v e . Little w o n d e r that w h e n Fortune Magazine ( O c t . but i t still l o o m s large in t h e subjective cost-benefit c a l c u l a t i o n s of e x e c u t i v e s . If d i s c o v e r e d . " F o r t h e e x e c u t i v e w h o has b e e n t r a i n e d t o find t h e m o s t efficient. l e a s t risky w a y of a c h i e v i n g a g o a l . M o r e i m p o r t a n t has b e e n t h e i m p a c t o n i n d i v i d u a l s w h o h a v e b e e n r e n d e r e d v u l n e r a b l e by the r e q u i r e m e n t t h a t they sign a s t a t e m e n t e a c h y e a r t h a t n o p a y m e n t s have b e e n m a d e . B e c a u s e t h e c o s t s o f c o r r u p t i o n are s u b s t a n t i a l w h e n m e a s u r e d a g a i n s t its b e n e f i t s .

In c o n c l u s i o n . B u t I had t h r e e t o n s of [a c e r t a i n d r u g ] w h i c h w a s d u e for e x p i r y . P e o p l e in t h e i n t e r n a t i o n a l d i v i s i o n s of b o t h an A m e r i c a n and a E u r o p e a n c o m p a n y . In a s t a t e m e n t w h i c h w a s also i n t e r e s t i n g from an a n t i t r u s t viewp o i n t . Y o u see I w a s selling b e l o w cost for p r o m o t i o n . he w e n t on to a r g u e t h a t no m a t t e r h o w strongly in the i n t e r e s t s o f t h e c o m p a n i e s a uniform stand is. T h e g e n e r a l m a n a g e r o f o n e t r a n s n a t i o n a l i n M e x i c o e x p r e s s e d c y n i c i s m . O n e w o u l d have to go to t h e s e c o u n t r i e s and c h e c k t h e s i t u a t i o n o n t h e g r o u n d before a c c e p t i n g t h a t this really w a s h a p p e n i n g . I give y o u a n o t h e r e x a m p l e . T h e o t h e r c o m p a n i e s got very a n g r y with me for b r e a k i n g t h e r u l e s . h o w e v e r . P e o p l e will a l w a y s b r e a k r a n k s . I f t h e p a t i e n t feels t h e drug helps him to get b e t t e r he will ask for o u r t r a d e n a m e a g a i n from t h e p h a r m a c i s t or t a k e t h e b o t t l e to the p h a r m a c i s t . I w a s told t h a t w h e n s o m e A m e r i c a n c o m p a n i e s t o o k a stand against c e r t a i n p a y m e n t s . s o m e E u r o p e a n c o m p a n i e s followed suit. I sell [a c e r t a i n d r u g ] at b e l o w cost to t h e g o v e r n m e n t s o g o v e r n m e n t d o c t o r s will p r e s c r i b e o u r [ p r o d u c t ] for t h e i r p a t i e n t s . I w o u l d have had to destroy the three tons. told m e t h a t i n c e r t a i n m a r k e t s w h e n the E u r o p e a n c o m p a n i e s had seen t h e A m e r i c a n s begin to refuse to pay b r i b e s w i t h o u t d r a s t i c c o n s e q u e n c e s . t h e US c r u s a d e against b r i b e r y in the 1970s must be j u d g e d t o have had s o m e positive effects. t h e r e will a l w a y s be i n d i v i d u a l c o m p a n i e s w h o will have e v e n s t r o n g e r c o m m e r c i a l r e a s o n s for b r e a k i n g t h e a g r e e m e n t . T h a t s e e m s to be in e v e r y o n e ' s i n t e r e s t . even in M e x i c o . We all a g r e e d h e r e in M e x i c o not to sell to t h e g o v e r n m e n t at less t h a n cost. B u t w h a t could I d o .Bribery signing that piece of paper increased their personal vulnerability to some extent. they had struck a g r e e m e n t that for c e r t a i n t y p e s of p a y m e n t s all t h e t r a n s n a t i o n a l s w o u l d a d o p t a uniform s t a n d in refusing to pay b r i b e s . I had to u n l o a d it by selling b e l o w cost or d e s t r o y it. a b o u t o v e r t u r e s which had b e e n m a d e t o h i m c o n c e r n i n g t h e a d o p t i o n o f a n o r g a n i s e d front a g a i n s t bribery by the transnationals. w h o s e j o b i t i s t o k e e p i n t o u c h with such m a t t e r s . N e v e r t h e l e s s . such a s t o i n s p e c t o r s . T h e claims o f s o m e W a s h i n g t o n l o b b y i s t s t h a t t h e c r u s a d e has lost A m e r i c a n industry m a n y billions of dollars to overseas c o m p e t i t o r s is exaggerated because: 45 .

t h e r e h a v e b e e n m a n y c a s e s w h e r e A m e r i c a n and E u r o p e a n c o m p a n i e s have p o o l e d t h e i r b r i b e s to a c h i e v e s o m e collective p u r p o s e for the i n d u s t r y as a w h o l e . E u r o p e a n c o m p a n i e s have a t least i n s o m e m e a s u r e followed t h e i r lead. To t h e e x t e n t that efficiency r e p l a c e s c o r r u p t n e s s as t h e c r i t e r i o n of success in b o t h b u s i n e s s and g o v e r n m e n t a d m i n i s t r a t i o n . but not a s great as that. e c o n o m i c g r o w t h will result.Bribery ( a ) T h e d e t e r r e n t effects o f t h e c r u s a d e w e r e r e a l . (c) M a n y o t h e r p a y m e n t s w e r e not t o a t t r a c t b u s i n e s s from o n e c o m p a n y t o a n o t h e r but t o get g o v e r n m e n t a p p r o v a l s . T h i s influence has also b e e n w o r l d w i d e r a t h e r t h a n limited t o t h e U n i t e d S t a t e s . and t h a t m e a n s A m e r i c a n c o m p a n i e s m a i n l y . I n s o m e cases b r i b e s which w o u l d not have b e e n i n t h e l o n g . etc.'" T h e U S c r u s a d e a g a i n s t b r i b e r y has p r o m p t e d m o r e stringent s c r u t i n y of s t a n d a r d s of c o r p o r a t e p r o p r i e t y in a wide r a n g e of a r e a s b e y o n d j u s t b r i b e r y . h a v e a peculiar interest i n s t r e n g t h e n i n g t h e w h o l e w o r l d e c o n o m y . ( e ) T h e v a r i o u s costs o f b r i b e r y discussed i n this c h a p t e r m e a n t h a t in m a n y c a s e s b r i b e s c o n f e r only a m a r g i n a l benefit on t h e c o m p a n y . This may b e one r e a s o n w h y t h e m o s t c o r r u p t c o u n t r i e s o f t h e world r e m a i n a m o n g the most impoverished. I t t e n d s t o k e e p c o r r u p t b u r e a u c r a t s and p o l i t i c i a n s i n p o w e r a h e a d o f c o m p e t e n t o n e s . (b) A g r e a t p r o p o r t i o n o f t h e d o c u m e n t e d cases o f b r i b e r y i n v o l v e d b r i b e s b y o n e A m e r i c a n t r a n s n a t i o n a l t o take b u s i n e s s a w a y from a n o t h e r A m e r i c a n t r a n s n a t i o n a l . " I t confers b u s i n e s s a d v a n t a g e t o the c o m p a n y w h i c h pays t h e biggest b r i b e r a t h e r t h a n t o the c o m p a n y w h i c h is m o s t efficient. which I am sure you have 46 . r e d u c e t a x e s . " (d) To the extent that A m e r i c a n c o m p a n i e s have adopted new s t a n d a r d s . I n d e e d . B r i b e r y w e a k e n s econo m i e s . T h e s e t w o p o i n t s w e r e b o r n e o u t in t h e following c o m m u n i c a t i o n I r e c e i v e d from a s e n i o r m a n a g e r in one of A u s t r a l i a ' s largest c o m p a n i e s : T h e s t r o n g e s t s u p p o r t t h a t i n t e r n a l audit has r e c e i v e d i n r e c e n t t i m e s has b e e n t h e e n a c t m e n t i n the U S o f t h e F o r e i g n C o r r u p t P r a c t i c e s A c t of 1977. I t s h o u l d also b e p o i n t e d out that t r a n s n a t i o n a l c o m p a n i e s .t e r m i n t e r e s t o f t h e c o m p a n y may e v e n have b e e n d e t e r r e d . All c o m p a n i e s h a v e an i n t e r e s t in not h a v i n g to pay b r i b e s . T h i s A c t . bribe p o l i t i c i a n s .

c o n s u m e r p r o t e c t i o n and e n v i r o n mental protection (UN Commission on Transnational Corporations. 1978. 1979. m o s t U S c o m p a n i e s h a v e . h o w e v e r . A s a n t e . A crucial q u e s t i o n is w h e t h e r t h e s e i n t e r n a t i o n a l a g r e e m e n t s can d o m u c h m o r e t h a n d e p e n d o n i n d i v i d u a l n a t i o n s t o e n f o r c e the a g r e e m e n t . d e c i d e d to s t r e n g t h e n their internal a u d i t f u n c t i o n s and e n s u r e g r e a t e r c o . H e n c e w e have seen t h e c u r i o u s a l l i a n c e o f t h e T h i r d W o r l d . a n d o t h e r m e a s u r e s t o e n s u r e t h a t every act o f i n t e r n a t i o n a l b r i b e r y is p u n i s h a b l e u n d e r s o m e set of n a t i o n a l laws r a t h e r t h a n b e i n g a l l o w e d t o fall b e t w e e n t h e i n t e r s t i c e s a m o n g t h e m .1979). being s u p p o r t e d b y t h e U S a g a i n s t o p p o s i t i o n from E u r o p e a n n a t i o n s in its efforts to i n s t i t u t e a m e a n i n g f u l i n t e r n a t i o n a l A g r e e m e n t o n Illicit P a y m e n t s . w h o c o r r e c t l y see t h e m s e l v e s a s t h e m a j o r v i c t i m s o f c o r r u p t i o n . The UN crusade against bribery T h e U S and S w e d e n are e n t i t l e d t o feel s o m e r e s e n t m e n t t h a t they a p p l y t h e i r laws a g a i n s t c o r r u p t i o n e x t r a t e r r i t o r i a l l y while t h e rest o f t h e w o r l d d o e s n o t . t h e C o m m i s s i o n i s w o r k i n g o n a w i d e r ' C o d e o f C o n d u c t for T r a n s n a t i o n a l C o r p o r a t i o n s ' which will p r o b a b l y i n c l u d e p r o v i s i o n s on n o n . transfer p r i c i n g . M a n y h o p e . r e s t r i c t i v e b u s i n e s s p r a c t i c e s . on a c o s t / b e n e f i t b a s i s . requires a m o n g other things that companies maintain a s y s t e m o f i n t e r n a l c o n t r o l s and that t h e r e are m e c h a n i s m s i n place t o e n s u r e t h a t d i r e c t o r s are able t o a s s u r e t h e m s e l v e s t h a t r e g u l a t i o n s for w h i c h they a r e r e s p o n s i b l e a r e . T h e y c a n . W o r k o n t h e a g r e e m e n t has b e e n t h e r e s p o n s i b i l i t y o f t h e U n i t e d Nations Commission on Transnational Corporations ( E C O S O C . particularly with the broader Code of 47 . e x t r a d i t i o n . T o m e e t any o b l i g a t i o n s u n d e r this A c t . o f c o u r s e . being carried out. in fact.i n t e r f e r e n c e in internal p o l i t i c a l affairs. T h i s has m e a n t t h a t internal a u d i t o r o r g a n i s a t i o n s have had to look to i n c r e a s i n g their standards of professional practice.Bribery studied. foster m u t u a l assistance i n investig a t i o n . " T h e U n i t e d N a t i o n s r e s p o n s e has b e e n t o try to p r e v e n t t h e US from r e t r e a t i n g from its p o s i t i o n of l e a d e r s h i p a g a i n s t c o r r u p t i o n b y a t t e m p t i n g t o p u s h t h e s t a n d a r d s o f t h e rest o f t h e w o r l d u p t o t h o s e o f t h e U S . J o i n t l y with t h i s . 1979). a b s t e n t i o n from c o r r u p t p r a c t i c e s .o p e r a t i o n b e t w e e n t h e i n t e r n a l a u d i t and e x t e r n a l a u d i t o r s .

H A n a p p r o p r i a t e legal link w o u l d h a v e t o b e e s t a b l i s h e d b e t w e e n t h e d e c i s i o n at the i n t e r n a t i o n a l level and its e x e c u t i o n ( a d m i n i s t r a t i o n of s a n c t i o n s ) at t h e n a t i o n a l level. ) . An u n d e r t a k i n g on a n o n . I m a g i n e . t h a t p r o v i s i o n will be m a d e for a c t i o n by the i n t e r n a t i o n a l c o m m u n i t y as a w h o l e against a t r a n s n a t i o n a l c o r p o r a t i o n in violation o f t h e c o d e . t o tax and regulatory m e a s u r e s ' ( U N Commission on Transnational C o r p o r a t i o n s . I n m a n y s i t u a t i o n s s t a t e s a d o p t i n g t h e c o d e w o u l d i g n o r e nonb i n d i n g u n d e r t a k i n g s . U n d e r s t r o n g e r o p t i o n s n a t i o n a l a u t h o r i t i e s could b e asked b y the p a n e l t o i m p o s e s a n c t i o n s w h i c h w o u l d r a n g e from "penal s a n c t i o n s . T h e r e has b e e n significant s u p p o r t for t h e p r o p o s i t i o n that s t a t e s . U n d e r the w e a k e s t o p t i o n . T h e p a n e l could issue a call for the b l a c k l i s t i n g ' o f c e r t a i n activities o r p r o d u c t s o f t h e c o r p o r a t i o n b y m e m b e r states. D e c e m b e r 1978).5 million bribe to the H o n d u r a n Finance Minister. e t c . If it w e r e d e c i d e d that the t r a n s n a t i o n a l c o r p o r a t i o n had v i o l a t e d t h e c o d e . D e c e m b e r 1978: 2 3 ) . t h e panel w o u l d w i d e l y p u b l i c i s e this fact in t h e h o p e t h a t such a d v e r s e publicity w o u l d act as a d e t e r r e n t . t o w i t h d r a w a l o f g o v e r n m e n t p r i v i l e g e s ( n o c o n t r a c t i n g . c o n s u m e r g r o u p s and o t h e r b o d i e s should b e able t o b r i n g c o m p l a i n t s a g a i n s t a t r a n s n a t i o n a l c o r p o r a t i o n to a U n i t e d N a t i o n s p a n e l . i f U n i t e d B r a n d s had b e e n b r o u g h t b e f o r e a UN p a n e l in c o n n e c t i o n with its a g r e e m e n t to pay a S2.b i n d i n g b a s i s w o u l d p r o b a b l y be h o n o u r e d by S t a t e s in a large n u m b e r of c a s e s . P a r t i e s w h i c h r e n e g e d o n such c o n t r a c t s could t h e n p o s s i b l y be e x e m p t e d from liability. H o w e v e r . O n e w o u l d expect that a 48 . The purpose of t h i s c e l e b r a t e d c o r r u p t p a y m e n t w a s t o e n t i c e the F i n a n c e M i n i s t e r t o u n d e r c u t t h e tax r a t e o n b a n a n a s p r e v a i l i n g a m o n g the U n i o n d e P a i s e s E x p o r t a d o r e s d e B a n a n o ( U P E B ) . t h e panel w o u l d simply r e a c h a d e t e r m i n a t i o n on the c o m p l a i n t . A legally b i n d i n g u n d e r t a k i n g b y t h e S t a t e s a d o p t i n g t h e C o d e would b e t h e m o s t effective such link. the international trade union m o v e m e n t or the i n t e r n a t i o n a l c o n s u m e r m o v e m e n t . t r a d e u n i o n s . for e x a m p l e . b u t t h e c e r t a i n t y o f t h e link b e t w e e n decision and s a n c t i o n would diminish (UN Commission on Transnational C o r p o r a t i o n s .Bribery C o n d u c t . i t i s not u n r e a l i s t i c t o e x p e c t that p o l i t i c a l l y a s t u t e r e c o m m e n d a t i o n s for s a n c t i o n w o u l d be acted u p o n . A call could be issued for t h e d e n i a l of t h e validity of all c o n t r a c t s of a c e r t a i n form with the t r a n s n a t i o n a l .

It is of c o u r s e foolish to expect that such i n t e r n a t i o n a l i n s t i t u t i o n s o f c o u n t e r v a i l i n g p o w e r w o u l d significantly turn the course o f t h e world e c o n o m i c system. t h e O p i n i o n R e s e a r c h C o r p o r a t i o n found that 9 2 per cent o f t h e r e s p o n d e n t s did not b e l i e v e t h a t legislation w o u l d effectively stop b r i b e r y of foreign officials. ' S u r e l y it c a n n o t b e a c c e p t e d t h a t i n t e r n a t i o n a l initiatives against A p a r t h e i d or acts of a g g r e s s i o n are i n e v i t a b l y ineffective if they fall short of "a c o u r t w h o s e writ ran to all c o r n e r s of t h e w o r l d ' . C e r t a i n l y this i s t h e view o f b u s i n e s s p e o p l e t h e m s e l v e s . I n d e e d a c a s e can be s u s t a i n e d t h a t a d v e r s e publicity is a m o r e effective c o n s t r a i n t o n c o r p o r a t e a b u s e s than law (see F i s s e . R e i s m a n ( 1 9 7 9 : 157) reflects t h e cynicism a b o u t the U N c r u s a d e w h i c h i s w i d e s p r e a d a m o n g W e s t e r n i n t e l l e c t u a l s w h e n h e says: A n i n t e r n a t i o n a l p r o s e c u t o r and a n i n t e r n a t i o n a l court w h o s e writ ran t o all c o r n e r s o f t h e w o r l d could m a k e a n i n t e r n a t i o n a l a g r e e m e n t e f f e c t i v e . 1976). B r a i t h w a i t e .Bribery r e c o m m e n d a t i o n by a UN panel that the U P E B countries ( H o n d u r a s . C o s t a R i c a . N e v e r t h e l e s s . I n t e r n a t i o n a l affairs is such a c o m p l e x b u s i n e s s t h a t it is naive to limit the possib i l i t i e s for c o n s t r u c t i v e i n t e r v e n t i o n to w h o l e s a l e legal h e g e m o n y . A Harvard Business Review survey of r e a d e r s ( B r e n n e r and M o l a n d e r . P a n a m a . G u a t e m a l a . 1 9 7 1 . . A UN p a n e l c o n s t i t u t e d as a c o u n t e r v a i l i n g force against the o c c a s ional v i o l a t i o n s of a c o d e by t r a n s n a t i o n a l c o r p o r a t i o n s c o u l d . A UN p a n e l w h i c h had only t h e p o w e r of publicity w o u l d have v a l u e . b u t t h e r e w a s c o n s i d e r a b l e s u p p o r t for t h e p r e v e n t a t i v e e f f e c t i v e n e s s o f publicity ( O p i n i o n R e s e a r c h Corp o r a t i o n . 1979a). T h e n e e d for such a p a n e l is part of a w i d e r n e e d for an i n t e r n a t i o n a l i s a t i o n of t r a d e u n i o n i s m and an i n t e r n a t i o n a l i s a t i o n of c o n s u m e r i s m as c o u n t e r v a i l i n g forces against t h e intern a t i o n a l i s a t i o n of c a p i t a l . s u b t l e and small c o n t a i n m e n t s o f t h e a b u s e o f e c o n o m i c p o w e r might be achieved. and C o l o m b i a ) s a n c t i o n U n i t e d B r a n d s by all i n c r e a s i n g their b a n a n a tax by a c e r t a i n p e r c e n t a g e w o u l d have b e e n well r e c e i v e d b y t h o s e count r i e s . A l l e n . c o n s t r u c t i v e l y affect the c o u r s e of e v e n t s . . . S a n c t i o n s w h i c h m a k e m o n e y for g o v e r n m e n t s are b o u n d t o b e m o r e a t t r a c t i v e t h a n t r a d e b a n s w h i c h only hurt the victim further. 1977) found t h a t a m o n g r e s p o n d e n t s w h o t h o u g h t that e t h i c a l s t a n d a r d s in b u s i n e s s had i m p r o v e d o v e r the past fifteen 49 . but n e i t h e r exists n o r is likely to be c r e a t e d . In a s u r v e y of 531 t o p and m i d d l e US m a n a g e r s . 1975. if its m e m b e r s w e r e s o p h i s t i c a t e d d i p l o m a t s .

p r o f i t .m a x i m i s i n g b u s i n e s s m a n w o u l d be irrational to be o v e r l y w o r r i e d a b o u t t h e c o n s t r a i n t s i m p o s e d b y t h e law w h e n h e offered t h e a d v i c e . in order of importance: listed as c a u s i n g P e r c e n t a g e of respondents listing factor Public disclosure: publicity. W h a t the U n i t e d N a t i o n s C o m m i s s i o n o n T r a n s n a t i o n a l C o r p o r a t i o n s can realistically h o p e t o a c h i e v e i s p u t t i n g t r a n s n a t i o n a l c o r p o r a t e c r i m e o n world television. ' D o t h a t w h i c h you w o u l d feel c o m f o r t a b l e e x p l a i n i n g o n t e l e v i s i o n ' ( q u o t e d b y B y r o n . 1977). c o n s c i o u s n e s s . public a w a r e n e s s . and i n t e r v e n t i o n . societal p r e s s u r e s G o v e r n m e n t r e g u l a t i o n . media coverage. l e g i s l a t i o n . b e t t e r informed p u b l i c . and s c r u t i n y . 50 . Arjay M i l l e r o n c e a r g u e d that the calcul a t i n g .Bribery y e a r s . better communication Increased public c o n c e r n . federal c o u r t s 10 31 20 F o r m e r F o r d P r e s i d e n t . t h e t h r e e factors which w e r e most often higher standards were.

but t h e c o n s c i o u s w i t h h o l d i n g o f u n f a v o r a b l e a n i m a l clinical d a t a is not a grey m a t t e r . T h e great cost of t h i s e x p e r i m e n t a t i o n in suffering and m o n e y can only be justified if d a t a c o l l e c t i o n and i n t e r p r e t a t i o n a r e h o n e s t and o b j e c t i v e .3 Safety testing of drugs: from negligence to fraud SOME CASE STUDIES E a c h y e a r in t h e U n i t e d S t a t e s a q u a r t e r of a million p e o p l e and m a n y m i l l i o n s o f a n i m a l s a r e e x p e r i m e n t e d u p o n with new d r u g s ( S u b c o m m i t t e e on H e a l t h . I will a d m i t t h e r e are grey a r e a s i n t h e I N D s i t u a t i o n . 1969) o f o n e spot 51 . T h e d e l i b e r a t e c h o i c e o f clinical i n v e s t i g a t o r s k n o w n t o b e m o r e c o n c e r n e d a b o u t i n d u s t r y friendships t h a n i n d e v e l o p i n g good d a t a is not a grey a r e a m a t t e r . t h e r e i s t h e p r o b l e m o f d i s h o n e s t y i n the i n v e s t i g a t i o n a l n e w d r u g u s a g e . R e g r e t t a b l y . 1976: P a r t I I . G o d d a r d ' s i m m e d i a t e successor at the helm o f t h e F D A . All o f f o r m e r F D A C o m m i s s i o n e r G o d d a r d ' s s u c c e s s o r s have r e p e a t e d before C o n g r e s s i o n a l h e a r i n g s t h e c o n c e r n s o v e r r e s e a r c h e r d i s h o n e s t y first e x p r e s s e d b y G o d d a r d at a P h a r m a c e u t i c a l M a n u f a c t u r e r s A s s o c i a t i o n M e e t i n g in 1966 ( S u b c o m m i t t e e o n H e a l t h . r e s e a r c h e r s r e t a i n e d b y t h e p h a r m a c e u t i c a l industry have not a l w a y s m e t t h e s e s t a n d a r d s . 3 3 6 ) . 157). I h a v e b e e n s h o c k e d at t h e m a t e r i a l s that c o m e in. Dr Ley. told h e a r i n g s before t h e U S S e n a t e ( U S S e n a t e . 1976a: P a r t I I . T h e p l a n t i n g in j o u r n a l s of articles t h a t b e g i n to c o m m e r c i a l i z e w h a t is still an i n v e s t i g a t i o n a l n e w d r u g is not a grey m a t t e r a r e a . T h e s e a c t i o n s run c o u n t e r to the law a n d t h e efforts [sic] g o v e r n i n g d r u g i n d u s t r y . In a d d i t i o n to t h e p r o b l e m o f q u a l i t y .

t e s t i n g firm which had o s t e n s i b l y w o r k e d on 82 d r u g s for 28 s p o n s o r s was the subject of a n o t h e r audit. I t h o u g h t y o u w o u l d be i n t e r e s t e d in h e r very vivid and a r t i c u l a t e d e s c r i p t i o n o f t h e a d v e r s e s y m p t o m s she e n c o u n t e r e d with Indomethacin. also s e e m s to manifest a b i a s e d a t t i t u d e in his l e t t e r to M e r c k : 52 . P a t i e n t s w h o d i e d .f o u r d r u g s for nine different c o m p a n i e s . . T h e f o l l o w i n g d o c t o r .Safety testing of drugs: from negligence to fraud c h e c k w h i c h t u r n e d up the c a s e of an a s s i s t a n t professor of m e d i c i n e w h o had r e p u t e d l y t e s t e d t w e n t y . L e t t e r s from clinical i n v e s t i g a t o r s t o their s p o n s o r i n g drug c o m p a n i e s r e v e a l s o m e t h i n g o f t h e way c o m m e r c i a l factors i n t r u d e into w h a t s h o u l d b e i n d e p e n d e n t o b j e c t i v e r e s e a r c h . " P a t i e n t s w h o died while o n clinical trials w e r e not r e p o r t e d to the sponsor'. R e c o r d . N e e d l e s s to say. with his 'fingers c r o s s e d ' h o p i n g for results f a v o u r a b l e to t h e c o m p a n y . I am very grateful for all o f y o u r kind efforts in r e g a r d to my trip to J a p a n . P e o p l e r e p o r t e d as subjects of t e s t i n g w e r e not in t h e h o s p i t a l at t h e t i m e of t h e t e s t s . I'll look f o r w a r d to s e e i n g y o u on my r e t u r n . T h e following l e t t e r w a s sent by a d r u g . 1969: P a r t 8 .k e e p i n g . ' A c o m m e r c i a l d r u g . left t h e h o s p i t a l o r d r o p p e d out o f t h e study w e r e r e p l a c e d by o t h e r p a t i e n t s in t h e tests w i t h o u t notification in the records. . 'Dead people were listed as s u b j e c t s of t e s t i n g .t e s t i n g d o c t o r to Dr N e l s o n C a n t w e l l of Merck: Dear Nelson. Forty-one patients reported as participating in s t u d i e s w e r e d e a d or not in t h e h o s p i t a l d u r i n g the s t u d i e s . I w o u l d e m p h a s i z e t h a t t h e s e do not a l a r m me nor i n d i c a t e any e v i d e n c e of o r g a n i c d a m a g e but 1 am afraid t h e y will offer s o m e p r a c t i c a l p r o b l e m s i n m a r k e t i n g this d r u g . P a t i e n t c o n s e n t f o r m s b o r e d a t e s i n d i c a t i n g t h e y w e r e signed b y t h e subjects after t h e s u b j e c t s d i e d . B e s t r e g a r d s a l w a y s ( U S S e n a t e . s u p e r v i s i o n and o b s e r v a t i o n o f p a t i e n t s i n g e n e r a l w e r e grossly i n a d e q u a t e . T h e e n c l o s e d l e t t e r is from a very fine p a t i e n t . . 3453). I think we m u s t get t o g e t h e r and p l a n o n p u b l i s h i n g s o m e o f t h e d a t a which w e h a v e c o l l e c t e d . an audit revealed.

T h e m i n d l e s s v a n d a l s d u m p e d all t h e r e c o r d s r e l a t i n g to t h e s t u d i e s to be a u d i t e d into a w h i r l p o o l b a t h . A n F D A scientist s a y s . t o test a t least a d o z e n p s y c h o t r o p i c d r u g s . 1969: P a r t II. Dr J a m e s Scheiner. I n t h e t h r e e y e a r s 1977-80 t h e F D A c l a i m s t o h a v e d i s c o v e r e d a t least 6 2 d o c t o r s w h o had s u b m i t t e d m a n i p u l a t e d o r d o w n r i g h t falsified clinical d a t a . V i r g i n i a . A n d 53 of . In 1979. t o m o n i t o r t w o safety tests o n a n e w d r u g for i n f l a m m a t i o n o f t h e b l a d d e r . . J u s t before his n e x t s c h e d u l e d F D A audit Dr S c h e i n e r had a fire in his office. it was found that Dr J a c o b owned about $600. S o m e p h y s i c i a n s h a v e b e e n t h e subject o f t e r r i b l e m i s f o r t u n e s o n t h e e v e o f F D A i n v e s t i g a t i o n s into t h e q u a l i t y o f t h e d a t a they have c o l l e c t e d for s u b m i s s i o n to t h e a g e n c y in s u p p o r t of n e w d r u g a p p l i c a t i o n s . in t h e next few subjects we started t h e m o u t on 1 c a p s u l e twice a day i n c r e a s i n g 1 c a p s u l e daily until t h e y r e a c h e d t h e m a x i m u m 6 c a p s u l e s and b e l i e v e it or not we e n c o u n t e r e d no d i s t r e s s . This is t h e m e t h o d we will follow for t h e t i m e b e i n g . . a p s y c h i a t r i s t . A t least t h r e e o f t h e p a t i e n t s c o m p l a i n e d of s e v e r e e p i g a s t r i c d i s t r e s s within 30 m i n u t e s after t a k i n g t h e c a p s u l e . Since you w e r e h e r e we h a v e s t a r t e d a n u m b e r of n e w p a t i e n t s o n i n d o m e t h a c i n ( t h e L X c a p s u l e s ) . w h e n t h e F D A i n v e s t i g a t e d i r r e g u l a r i t i e s in t h e d a t a c o l l e c t e d in t h e s e s t u d i e s . 461). S m i t h . t h a t t h e way t h e d o c t o r got t h e pill c o u n t to c o m e out c o r r e c t w a s t o c o u n t t h e c o r r e c t n u m b e r o f pills the p a t i e n t should h a v e t a k e n and t h e n t o flush t h e m d o w n t h e t o i l e t ' ( M c T a g g a r t . An F D A c h e c k found t h a t only 3 or 4 out of 60 p a t i e n t s listed as h a v i n g b e e n t e s t e d by S m i t h had actually b e e n given t h e drugs. i n c l u d i n g S a n d o z . w h o had d o n e several e x p e r i m e n t s for J o h n s o n and J o h n s o n . 1980: 177). D r S t a n l e y W . ' W e l e a r n e d from a n office a s s i s t a n t . 1980: 176). w a s hired by six p h a r m a c e u t i c a l c o m p a n i e s b e t w e e n 1971 and 1978. an o r t h o p e d i c surgeon of Fairfax.000 w o r t h of R e s e a r c h I n d u s t r i e s stock ( M c T a g g a r t . had his office v a n d a l i z e d t h e n i g h t before an F D A audit of his r a w d a t a . J a c o b o f t h e U n i v e r s i t y o f O r e g o n M e d i c a l School w a s h i r e d b y R e s e a r c h I n d u s t r i e s I n c .Safety Dear Dr Cantwell: testing of drugs: from negligence to fraud I r e c e i v e d y o u r l e t t e r this m o r n i n g and w a n t to t h a n k you for s u g g e s t i n g a g r a n t for t h e r h e u m a t o l o g y s e c t i o n at t h e U n i v e r s i t y [a large s t a t e u n i v e r s i t y ] . Dr R o n a l d C. w i t h o u r f i n g e r s c r o s s e d (US S e n a t e . U p j o h n a n d C y a n a m i d . T h e r e f o r e .

suffered t h e m i s f o r t u n e o f a c c i d e n t a l l y d r o p p i n g his d a t a o v e r b o a r d w h i l e out in a r o w b o a t . 4 7 ) . a patient of Dr J e r o m e R o t s t e i n . t h a t s h o w e d ' e s s e n t i a l l y n o r m a l clinical s t u d i e s ' . no m a t t e r w h a t we did for h e r . 'In no w a y could she be s a v e d . B u t R o t s t e i n p o i n t e d t h e finger of b l a m e for h e r d e a t h at Pfizer C o m p a n y officials. he w a s s e n t e n c e d to five y e a r s ' p r o b a t i o n for felony fraud. i killed a p a t i e n t b e c a u s e I d i d n ' t k n o w t h e d r u g c a u s e d h e p a t i c toxicity. S t r a n g e l y . and millions of A m e r i c a n s could have b e e n e x p o s e d to h e r fate (Mother Jones.L a R o c h e and o t h e r l e a d i n g c o m p a n i e s . J u n e 1982. I f F r o m a n had n o t d i e d . 54 . r e c o r d e d u p t o several d a y s before her h o s p i t a l i z a t i o n . A n o t h e r d o c t o r . p u r p o r t e d l y from F r o m a n ' s c a s e . M o s t c a s e s which d o c o m e t o public a t t e n t i o n only d o so b e c a u s e of e x t r a o r d i n a r y c a r e l e s s n e s s by the criminal p h y s i c i a n . w h o had e a r n e d a f o r t u n e t e s t i n g e x p e r i m e n t a l d r u g s for H o f f m a n . After i n v e s t i g a t o r s e x a m i n e d t h e clinical s t u d i e s closely t h e y found t h a t R o t s t e i n had b e e n o u t o f t h e c o u n t r y and had n e v e r d o n e any o f t h e s t u d i e s . ' R o t s t e i n told F D A officials later. . R o t s t e i n went o n v a c a t i o n i n E u r o p e . her liver dissolved b y S u d o x i c a n . and w a s s u p p o s e d to r e p o r t any u n u s u a l r e a c t i o n s to federal officials. ' R o t s t e i n said.Safety testing of drugs: from negligence to fraud t h e n i g h t b e f o r e t h a t i n s p e c t i o n w a s r e s c h e d u l e d . F r o m a n had a l r e a d y b e e n a d m i t t e d t o t h e h o s p i t a l . h o w e v e r . T h e p r o b l e m is t h a t m o s t fraud in clinical trials is unlikely to e v e n b e d e t e c t e d . I was led d o w n a blind alley by p e o p l e w h o s h o u l d have k n o w n b e t t e r . R o t s t e i n w a s s u p p o s e d t o b e m o n i t o r i n g F r o m a n ' s use of S u d o x i c a n carefully in late J u n e and early J u l y . t h e s e r e p o r t s i n c l u d e d r e s u l t s . m a n u f a c t u r e d b y Pfizer C o m p a n y . D r S c h e i n e r was v i c i o u s l y m u g g e d by an a s s a i l a n t w h o w i e l d e d a p a p e r w e i g h t from his office. had b e e n t r e a t e d for a s e v e r e case of a r t h r i t i s with an e x p e r i m e n t a l d r u g called S u d o x i c a n . an a m b u l a n c e r u s h e d J u n e F r o m a n to a hospital in N e w York City. A l e r t e d by news of F r o m a n ' s d e a t h . F r o m a n . ' . c l a i m i n g t h e y hid t h e d r u g ' s s e r i o u s a d v e r s e side effects from him and t r i e d t o c o n v i n c e him not t o r e p o r t t h e d e a t h t o F e d e r a l a u t h o r i t i e s . B y t h e t i m e h e r e t u r n e d . . it is a killer d r u g . as in t h e following i l l u s t r a t i o n : In e a r l y July 1978. p. F D A investigators reviewed r e p o r t s t h a t Pfizer had s u b m i t t e d t o t h e F D A . A US court did n o t b e l i e v e h i m . F r a n c o i s S a v e r y . t h e F D A m i g h t well h a v e a c c e p t e d t h e falsified S u d o x i c a n t e s t s . I n s t e a d o f c o n d u c t i n g m o n i t o r i n g t e s t s .

1 9 7 7 : 2 9 . A s o n e B r i t i s h e x p e r t has n o t e d : T h e p r o b l e m of s u p p r e s s i o n of facts is w i d e s p r e a d . The charges of involuntary manslaughter against e x e c u t i v e s of G r u n e n t h a l in G e r m a n y concerning the s u p p r e s s i o n of d a n g e r o u s effects of t h a l i d o m i d e is o n e e x c e p t i o n to t h e p a t t e r n o f civil r a t h e r t h a n c r i m i n a l a c t i o n s . . A typical c a s e o c c u r s a l o n g t h e following l i n e s . A s e c o n d s t u d y is c o n d u c t e d and at t i m e s e v e n a t h i r d in w h i c h t h e d o s e levels are adjusted or the p r o t o c o l s modified in such a way that e v e n t u a l l y a result f a v o u r a b l e t o t h e a p p l i c a n t ' s p r o d u c t i s o b t a i n e d . a t o x i c o l o g i c a l study has b e e n c o n d u c t e d and gives an e q u i v o c a l r e s u l t . or a result u n f a v o u r a b l e to t h e p r o d u c t . . . Concealing unfavourable e v i d e n c e on t h e safety of a d r u g h a s rarely b e e n t h e subject of c r i m i n a l a c t i o n . t h o u g h in civil p r o d u c t liability m a t t e r s it often b e c o m e s a central issue. T h e b o u n d a r i e s b e t w e e n fraud. 2 There are many cases of drug companies concealing and 55 . ' This p a t t e r n w o u l d also h a v e c h a n g e d i n t h e U n i t e d S t a t e s i f C o n g r e s s m a n C o n y e r s and his S u b c o m m i t t e e on C r i m e had s u c c e e d e d in its bid to have failure to r e p o r t k n o w n d a n g e r o u s effects of c o n s u m e r p r o d u c t s a specific criminal offence. 3 1 ) . On one occasion where such a s i t u a t i o n has b e e n d e t e c t e d t h e a p p l i c a n t w i t h a dismissive g e s t u r e said ' t h a t i n v e s t i g a t o r gives t h e w r o n g r e s u l t s . O n l y the result f a v o u r a b l e t o t h e a p p l i c a n t ' s p r o d u c t i s s u b m i t t e d t o the r e g u l a t o r y a u t h o r i t y . M i c r o s c o p i c a l e x a m i n a t i o n s of h i s t o p a t h o l o g i c a l slides m a y b e m a d e b y m o r e t h a n o n e p a t h o l o g i s t e a c h o f w h o m m a y h a v e c o m e t o different c o n c l u s i o n s . w e will not use him a g a i n ' . [This a t t i t u d e r e v e a l s t h e c o m m e r c i a l p r e s s u r e t h a t can be b r o u g h t to b e a r on an i n v e s t i g a t o r by t h e t h r e a t of loss o f f u t u r e w o r k . . c r i m i n a l n e g l i g e n c e and civil negligence are obviously blurred. yet only the c o n c l u s i o n s f a v o u r a b l e t o t h e d r u g are submitted to the regulatory authority.Safety testing of drugs: from negligence to fraud T h e r e a r e an infinite v a r i e t y of w a y s s h o r t of o u t r i g h t falsification w h i c h can be used by an i n v e s t i g a t o r w h o is a c a p t i v e of industry i n t e r e s t s . ] . . A case can be cited w h e r e s o m e d r a m a t i c falls in h a e m o g l o b i n o f t h e o r d e r of 3-4 g/100 ml in t w o a n i m a l s w e r e a t t e m p t e d to be hidden by p r e s e n t i n g the haematological d a t a a s m e a n s and s t a n d a r d e r r o r s and c o m m e n t i n g i n the text t h a t o v e r a l l t h e m e a n h a e m o g l o b i n levels w e r e only slightly r e d u c e d w h e n b e f o r e a n d after t r e a t m e n t v a l u e s w e r e c o m p a r e d (Griffin.

i n c l u d i n g O p r e n . A c c o r d i n g to t h e i n v e s t i g a t o r . a n d n o t all o f t h e side effects m e n t i o n e d in its final s u b m i s s i o n had b e e n m e n t i o n e d i n t h e initial a p p l i c a t i o n . o n t h e m a r k e t d e s p i t e t h e s t r e n u o u s o b j e c t i o n s o f its own m e d i c a l d i r e c t o r .S a x o n c o u n t r i e s . T h e p r o b l e m i s not r e s t r i c t e d t o A n g l o .k i l l e r and a n t i . 27 F e b r u a r y 1983). I n November 1982.a r t h r i t i c d r u g a s s o c i a t e d with 7 4 d e a t h s i n B r i t a i n a l o n e . J o h n s o n and J o h n s o n ' s s u b s i d i a r y . W a l l a c e and T i e r n a n failed to s e n d to t h e F D A r e p o r t s of side-effects w h i c h i n c l u d e d nine c a s e s o f b o n e m a r r o w d i s e a s e and t h r e e d e a t h s from using the d r u g ( J o h n s o n . T h e good d o c t o r had a c c e p t e d 2. k n e w o f t h e d a n g e r s o f O p r e n . M o r e o v e r . w a s d e n o u n c e d b y the F D A for c o n c e a l i n g i n f o r m a t i o n on side-effects of Flexin which a c c o r d i n g t o J o h n s o n ( 1 9 7 6 ) i n c l u d e d the drug being a s s o c i a t e d w i t h 1 5 d e a t h s from liver d a m a g e . M o r e d i s t u r b i n g are similar 56 . The company submitted c o o k e d up data to the G o v e r n m e n t in the name of Dr H a r c i o S a m p e i . a n a n t i . 65 of 173 a d v e r s e r e a c t i o n s s u b m i t t e d to Lilly by d o c t o r s had not b e e n r e p o r t e d to F D A at all. 1 5 m o n t h s before t h e d r u g was w i t h d r a w n (Sunday Times. T h e y w e r e r i g h t . 1974: 9 7 ) . M c N e i l L a b o r a t o r i e s . T h e m o s t d r a m a t i c r e c e n t case has b e e n the d i s c l o s u r e s i n t h e B r i t i s h P a r l i a m e n t and U S C o n g r e s s t h a t Eli Lilly and C o . S u c h m o r e b l a t a n t cases are m e r e l y t h e tip of an i c e b e r g of selective m i s i n f o r m a t i o n . c h i e f o f plastic s u r g e r y a t N i p p o n U n i v e r s i t y .4 million Y e n in cash from the c o m p a n y in r e t u r n for p e r m i s s i o n t o use his n a m e . a l m o s t a year before t h e d r u g w a s w i t h d r a w n from t h e w o r l d m a r k e t . T h e alleged c o m b i n e d effect w a s t o h a v e e a c h d o c u m e n t grossly u n d e r s t a t i n g t h e p r o b l e m (Wall Street Journal.Safety testing of drugs: from negligence to fraud m i s r e p r e s e n t i n g d a n g e r o u s effects o f d r u g s n o t e d b y their own s c i e n t i s t s .000 ( S i l v e r m a n a n d L e e . O t h e r c o m p a n y e x p e r t s w a r n e d that D o r n w a l c o u l d c a u s e s e r i o u s a n d p o s s i b l y fatal b l o o d d a m a g e . a J a p a n e s e c o m p a n y . 4 A u g u s t 1982). O n e c o u l d list a n u m b e r of similar t y p e s of c a s e s . D o r n w a l . T h e c o m p a n y w a s f o u n d guilty on c r i m i n a l c h a r g e s and fined $40. 1976). a d m i t t e d to p r e s e n t i n g bogus data to the J a p a n e s e G o v e r n m e n t w i t h its a p p l i c a t i o n to m a r k e t a p a i n . In 1959 W a l l a c e and T i e r n a n put a n e w t r a n q u i l l i s e r .i n f l a m m a t i o n drug u n d e r the brand n a m e of N o r v e d a n . and not all o f t h e side effects m e n t i o n e d in a n initial a p p l i c a t i o n t o F D A w e r e m e n t i o n e d i n its f i n a l s u b m i s s i o n . N i p p o n C h e m i p h a r . a n i n v e s t i g a t o r with t h e F D A ' s Clinical I n v e s t i g a t i o n s office had r e c o m m e n d e d c r i m i n a l p r o s e c u t i o n of Lilly for failing to r e p o r t a d v e r s e r e a c t i o n s to four of its d r u g s .

Safety testing of drugs: from negligence to fraud allegations on a n o t h e r N i p p o n C h e m i p h a r product. Dr Kathleen E. 57 . t h a t 3 0 o f t h e 4 3 c h a r t s h e had s u b m i t t e d on 50 patients 'were fabricated'.s t u d y a p p r o a c h to fraud in drug t e s t i n g .p r e s c r i p t i o n ' r e d u c i n g pill' o n w h i c h A m e r i c a n s spent $16 million b e t w e e n 1957 and 1963. later r e v i s e d as By Prescription Only ( 1 9 6 7 ) . ' g r a p h i t i n g ' o r 'dry l a b e l l i n g ' i n t h e U n i t e d States.t h e p r a c t i c e is called ' m a k i n g ' in t h e J a p a n e s e i n d u s t r y . c h o s e to i g n o r e the r e p o r t (Japan Times. 2 3 . a d m i t t e d in his d e p o s i t i o n . D a t a f a b r i c a t i o n is so w i d e s p r e a d in t h e p h a r m a c e u t i c a l industry as to s u p p o r t an a r g o t . in his m o n o g r a p h The Therapeutic Nightmare. 'only t h e p a t i e n t s ' initials a n d s t a r t i n g w e i g h t s w e r e c o r r e c t ' ( M i n t z 1967: 3 2 6 ) . w a s t h e first to p r o v i d e a d e t a i l e d c a s e . R o b e r t s of San F r a n c i s c o a n d later T o l e d o . 2 4 . S l o g a n s such as i lost 25 p o u n d s in 30 days t a k i n g R e g i m e n T a b l e t s w i t h o u t d i e t i n g ' w e r e t h e basis o f these sales. The company d e n i e s c o o k i n g d a t a o n this s e c o n d p r o d u c t . Brown of Baltimore. In c o n n e c t i o n w i t h t h i s . Dr Ernest C. t h e a g e n c y told H u m p h r e y . The pioneering work of Morton Mintz M o r t o n M i n t z . But t h e w o r r y i n g a s p e c t o f t h e s e c o n d s c a n d a l is t h a t a f o r m e r c o m p a n y r e s e a r c h e r c l a i m s to h a v e s u b m i t t e d a w r i t t e n r e p o r t a l l e g i n g fraud in d r u g t e s t i n g by N i p p o n C h e m i p h a r t o t h e J a p a n e s e H e a l t h and W e l f a r e M i n i s t r y : M i n i s t r y officials. w h o w a s paid $ 4 0 0 0 . I n 1962 t h e F o o d and D r u g A d m i n i s t r a t i o n m a d e m u l t i p l e seizures of R e g i m e n Tablets on charges of misbranding. a c k n o w l e d g e d in h e r d e p o s i t i o n t h a t her r e p o r t w a s ' u n t r u e in its entirety'. a n o n . In J a n u a r y 1964 a B r o o k l y n g r a n d j u r y r e t u r n e d an i n d i c t m e n t a g a i n s t t h e R e g i m e n a d v e r t i s i n g a g e n c y for p r e p a r i n g false copy for a d r u g p r o d u c t at t h e d i r e c t i o n of a client. 2 5 N o v e m b e r 1982). whose fee w a s $ 1 0 0 0 . O f t h e r e m a i n d e r . Her charts on 57 of 75 patients 'were complete f a b r i c a t i o n s ' . F D A said in a l e t t e r t o S e n a t o r H u m p h r e y . t h e g o v e r n m e n t t o o k d e p o s i t i o n s from t w o p h y s i c i a n s w h o had b e e n e n g a g e d t o c o n d u c t clinical t e s t s with t h e d r u g ( p h e n y l p r o p a n o l a m i n e h y d r o c h l o r i d e ) . which i s n o longer on the m a r k e t . he a l l e g e s . T h e first c a s e s t u d y w a s of R e g i m e n t a b l e t s .

said the i n d i c t m e n t . had b e e n t a k i n g p r e s c r i p t i o n d r u g s u n d e r s u p e r v i s i o n of a physician ( M i n t z . H i l t o n . ' T i g a n ® effectively relieved the s y m p t o m s . A c t u a l l y .400 p a t i e n t s .L a R o c h e ' s T i g a n ( t r i m e t h o b e n z a m i d e ) . E n d o r s e r s o f t h e pills. 3 I n J u n e 1964 D r B e n n e t t A . T h e R o b i n c a s e study w a s s t a g g e r i n g b e c a u s e m a n y o f t h e most r e p u t a b l e c o m p a n i e s i n t h e p h a r m a c e u t i c a l industry had used him for clinical t r i a l s at s o m e s t a g e . E x p o s u r e of R o b i n c a n be t r a c e d to a statistical analysis of his p a p e r s by Dr J o h n N e s t o r . the U n i t e d S t a t e s C o u r t o f A p p e a l s i n N e w Y o r k City affirmed the c o n v i c t i o n s . p u r p o r t e d l y on a total of 6. w i t h i n an a v e r a g e of 80 m i n u t e s in 94 of % p a t i e n t s ' .(XK).a n d after m o d e l s w e r e on strict diets a n d . R o b i n h a d r e p o r t e d on a c o m p a r i s o n b e t w e e n Tigan and a p l a c e b o with r e s p e c t t o n a u s e a and v o m i t i n g . the R e g i m e n a d v e r t i s i n g a g e n c y .Safety testing of drugs: from negligence to fraud An u n n a m e d p h y s i c i a n w a s said in t h e i n d i c t m e n t to have b e e n i n d u c e d to ' c h a n g e t h e c o n c l u s i o n of a clinical test he had p e r f o r m e d w i t h t h e t a b l e t s ' . A n o t h e r c a s e w a s that o f D r L e o J . a n F D A scientist. 1966. R o b i n had ' t e s t e d ' 45 p r o d u c t s for 22 firms. his results a r e i m p o s s i b l e ' . w a s fined $ 5 0 . On 1 S e p t e m b e r . . C a s s . I n a n i n t e r n a l F D A c o m m u n i c a t i o n N e s t o r said t h a t his a n a l y s i s ' i n d i c a t e s t h a t . K a s t o r . 1967: 3 2 7 ) . T h e c o r p o r a t i o n itself was fined $53. I n the December 1960 issue of t h e Maryland State MedicalJournal. and t h a t he 'is a fraud'. sole stockh o l d e r in the D r u g R e s e a r c h C o r p o r a t i o n . marketer of R e g i m e n . d i r e c t o r o f t h e H a r v a r d 58 . 0 0 0 . Clifford and A t h e r t o n . 0 0 0 and s e n t e n c e d to e i g h t e e n m o n t h s in p r i s o n . . in g e n e r a l . A p e t i t i o n of r e v i e w w a s s u b s e q u e n t l y d e n i e d by the Supreme Court. One product which was released to t h e m a r k e t b y t h e F D A . w a s also fined $ 5 0 . T h i s led S e n a t o r H u m p h r e y to r a i s e a n u m b e r of q u e s t i o n s in t h e S e n a t e at t h e t i m e as to why the d r u g c o m p a n i e s had not also found t h e r e s u l t s ' i m p o s s i b l e ' . R o b i n w a s c o n v i c t e d o n five c o u n t s o f c a u s i n g p h a r m a c e u t i c a l firms t o s u b m i t e r r o n e o u s r e p o r t s o n new d r u g s b y s u p p l y i n g t h e m with f r a u d u l e n t clinical r e s u l t s . t h e b e f o r e . w a s H o f f m a n . w e r e s h o w n b e i n g w e i g h e d each w e e k . p a r t l y o n t h e basis o f e v i d e n c e from R o b i n . t h e i n d i c t m e n t a s s e r t e d . C h e s l e y . T h e g o v e r n m e n t successfully a r g u e d that R o b i n had n e v e r e x a m i n e d p a t i e n t s o n w h o m h e p u r p o r t e d l y w a s t e s t i n g the five p r o d u c t s m e n t i o n e d in the indictment. the scales r e g i s t e r i n g w e i g h t losses e a c h t i m e . he said. J o h n A n d r e .

M i n t z also relied o n t h e r e v e a l i n g c o n t e n t s o f c o n f i d e n t i a l d o c u m e n t s such a s t h e following internal F D A m e m o r a n d u m ( M i n t z . Y .Safety testing of drugs: from negligence to fraud L a w S c h o o l H e a l t h S e r v i c e . In C a m b r i d g e . 1967: 3 3 8 d ) . 'in fact w e r e not so t r e a t e d . M. t h e F D A initiated a c t i o n to halt the sale of N o r g e s i c . and t h e c o m b i n a t i o n is b a c k in t h e 'clinical s t u d y ' b u s i n e s s . 1966. T h e ' c e r t a i n d e f i c i e n c i e s ' w e r e spelled out l a t e r b y F D A i n t h e F e d e r a l R e g i s t e r w h e n i t acted t o t a k e M e a s u r i n a n d S t e n d i n off t h e m a r k e t . On M a y 6. H e had u n d e r t a k e n 84 r e s e a r c h p r o j e c t s for t e s t i n g i n v e s t i g a t i o n a l d r u g s and 25 p r o j e c t s for p r o d u c t m a r k e t i n g a p p l i c a t i o n s . T h e s e allies a r e : . 1967: 3 3 4 ) . i n c l u d i n g c l a i m s t h a t t r e a t e d p a t i e n t s had c e r t a i n m e d i c a l c o n d i t i o n s w h i c h i n v e s t i g a t i o n s h o w e d they did not h a v e ( M i n t z . . Brooklyn. . I n his p e r s u a s i v e d o c u m e n t a t i o n o f t h e w i d e s p r e a d fraud i n t h e clinical t e s t i n g o f d r u g s . N. ' F D A said C a s s R e s e a r c h also had s u p p l i e d i t with o t h e r ' u n t r u e s t a t e m e n t s ' . N .t e s t i n g b u s i n e s s .Y. Cass R e s e a r c h acknowledged 'certain deficiencies' in r e c o r d . t h e s e p e r s o n s w e r e d e c e a s e d or not h o s p i t a l i z e d at t h e i n s t i t u t i o n [ L o n g I s l a n d H o s p i t a l in B o s t o n ] w h e r e t h e i n v e s t i g a t i o n s w e r e a l l e g e d l y c o n d u c t e d .D. by i n v e n t i o n with a p e n c i l . and . For many years Dr ' c o l l a b o r a t e d ' with D o c t o r s and in 'clinical s t u d i e s ' w h i c h we s t r o n g l y suspect w e r e c o n d u c t e d by t h e " g r a p h i t e ' m e t h o d [that is. that has gained new a l l i e s . W i t h Dr 's d e a t h a y e a r or so a g o . N e w Y o r k C i t y . t h e agency said. blamed them on the observers [the c o m p a n y ] r e t a i n e d " . h o w e v e r . we had h o p e s that t h e c o m b i n a t i o n had b e e n d i s r u p t e d for g o o d . It t u r n e d out that C a s s R e s e a r c h had b e e n quick with t h e d e a d : A n u m b e r of p a t i e n t s r e p o r t e d to h a v e b e e n t r e a t e d in its s t u d i e s . F D A s u s p i c i o n s w e r e first a r o u s e d b y t h e e x t r a o r d i n a r i l y large n u m b e r o f i n v e s t i g a t i o n s ' that C a s s R e s e a r c h A s s o c i a t e s had m a d e 'in a short p e r i o d of t i m e ' . and said i t w a s n o w out o f t h e d r u g . M o s t of t h e m a j o r c o m p a n i e s had r e t a i n e d C a s s ' s c o m p a n y .D. 59 .M. r a t h e r t h a n b y actual t e s t i n g ] . We have learned recently.k e e p i n g . .

R. etc. The sponsoring c o m p a n y was William S. and s e r i o u s eye d a m a g e i n c l u d i n g the p r o d u c t i o n of c a t a r a c t s . C r u c i a l M E R / 2 9 t e s t i n g had b e e n d o n e o n m o n k e y s . T h i s led t o a n F D A i n s p e c t i o n w h i c h unc o v e r e d t h e s o r d i d d e t a i l o f t h e M E R / 2 9 affair. c h a n g e s i n the r e p r o d u c t i v e o r g a n s a n d t h e b l o o d . I j u s t w a n t to be s u r e t h a t t h e m a n u s c r i p t will c o m e as close to w h a t y o u w a n t as p o s s i b l e ( M i n t z . w h e r e she had w o r k e d a s a l a b o r a t o r y t e c h n i c i a n o n t h e safety t e s t i n g o f M E R / 2 9 . t h e p u b l i c a t i o n o f t h e r e s u l t s b o t h e r s him. B R A N D E N B U R G A n o t h e r f a s c i n a t i n g c o m m u n i c a t i o n is from a p h y s i c i a n to a m a n u f a c t u r e r . Soon after r e l e a s e t o t h e m a r k e t r e p o r t s b e g a n flooding i n a b o u t side-effects w h i c h i n c l u d e d b a l d n e s s . W h e n i n early 1962 t h e d a n g e r s o f M e r r e l l ' s a n t i c h o l e s t e r o l drug was in the n e w s p a p e r s . s t u d i e s . a subsidiary o f t h e Richardson-Merrell transnational. d a t a . 1976: 9 1 ) . skin d a m a g e . Mrs J o r d a n ' s husband m e n t i o n e d h e r d o u b t s t o a m e m b e r o f his car pool w h o h a p p e n e d t o b e a n F D A i n s p e c t o r . C. He c a n ' t s e e m to figure o u t h o w he can write such a p a p e r w i t h o u t a p p e a r i n g r i d i c u l o u s . M r s B e u l a h J o r d a n had quit M e r r e l l . I had a talk w i t h Dr [ n a m e of clinical i n v e s t i g a t o r ] . M r s J o r d a n ' s a t t e n t i o n w a s d r a w n t o t h e d e t e r i o r a t i n g c o n d i t i o n o f her 60 . I am not a s k i n g you to do my w o r k . and w h i l e he g a v e m e t h e i m p r e s s i o n t h a t h e had a l r e a d y d o n e e n o u g h w o r k o n t h e n e w s u b j e c t to i n d i c a t e t h a t t h e study w o u l d be f a v o r a b l e . from t h e s e m e n should r e c e i v e extremely careful c o n s i d e r a t i o n and s c r u t i n y . On 12 A p r i l t h e d r u g was w i t h d r a w n from t h e m a r k e t . B u t t h a t w a s only t h e b e g i n n i n g o f t h e M E R / 2 9 story. MER/29 T h e m o s t s h o c k i n g c a s e of fraud in t h e safety testing of d r u g s w a s w i t h M E R / 2 9 ( t r i p a r a n o l ) .Safely testing of drugs: from negligence to fraud I n q u i r i e s . 1967: 3 3 6 ) . a n a g e n t i n t e n d e d t o r e d u c e blood c h o l e s t e r o l levels. after b e i n g dissatisfied a t t h e i n t e g r i t y o f t h e scientific w o r k u n d e r t a k e n b y t h e c o m p a n y . T h e p h y s i c i a n s e e m s t o b e h a p p y t o have t h e d r u g c o m p a n y w r i t e his p a p e r for him w i t h o u t so m u c h as seeing t h e d a t a . Merrell. D o you h a v e i d e a s o n it? I f s o . An e s t i m a t e d 3 0 0 . why d o n ' t you w r i t e a p a p e r t h a t w o u l d fit t h e c o n c e p t and let me go on from t h e r e . 0 0 0 A m e r i c a n s used M E R / 2 9 d u r i n g its first twelve m o n t h s on t h e m a r k e t in 1960-61 ( S i l v e r m a n .

She w a s told t h a t this w a s t h e w a y t h e C o m p a n y w a n t e d it and to forget it. this m o n k e y w a s sick d u e to a r e a c t i o n from this d r u g . . 1972: 9 0 ) . . and it c o u l d n ' t see well e n o u g h t o hit t h e pan . ' D r ' W i l l i a m King (it w a s later d i s c o v e r e d t h a t he had not yet b e e n a w a r d e d his m e d i c a l d e g r e e ) . . a l t h o u g h they w e r e listed i n t h e s u b m i s s i o n s to t h e F D A as h a v i n g t a k e n t h e d r u g for a full c o u r s e of 1 6 m o n t h s a n d d o n e well.to ' s m o o t h o u t d a t a ' as this r e v i s i o n p r o c e s s w a s called at Merrell. i n o u r o p i n i o n . . 61 . H e n c e . A f t e r this d e c i s i o n . M r s J o r d a n r e s e n t e d b e i n g a s k e d to . I n t o t a l M r s J o r d a n w a s told t o c h a n g e t h e f i g u r e s o n eight m o n k e y s . no c o m p a n y directors b e c a m e aware of the fraud. S o m e o f t h e test m o n k e y s had b e e n o n M E R / 2 9 for only eight m o n t h s . w h o i n t u r n informed M e r r e l l ' s d i r e c t o r o f biological s c i e n c e s . it w a s u n a b l e to j u m p o n t o the w e i g h i n g p a n .u p s ' w a n t e d ( R i c e . t h e r e w a s a loss of w e i g h t . then d e c i d e d t o t h r o w o u t t h e sick male drug m o n k e y m e n t i o n e d a b o v e from the e x p e r i m e n t a n d s u b s t i t u t e a n o t h e r c o n t r o l m o n k e y i n his p l a c e w h i c h had n e v e r b e e n o n M E R / 2 9 . D r E v e r t van M a a n e n : D r van M a a n e n . 1969). . w i t h t h e c o n c u r r e n c e o f D r K i n g . A f t e r a few m o n t h s on M E R / 2 9 . I t w a s also r e v e a l e d t h a t o t h e r e m p l o y e e s had b e e n i n s t r u c t e d t o r e v i s e c h a r t s w h i c h did not i n d i c a t e t h e d e s i r e d r e s u l t s . Dr K i n g o r d e r e d h e r t o n e v e r m e n t i o n t h e s u b s t i t u t i o n . n o n e w e r e o b s e r v e d i n t h e c o n t r o l m o n k e y s . . D r van M a a n e n called M r s J o r d a n into his office a n d i n s t r u c t e d her to m a k e this s u b s t i t u t i o n in w o r k i n g up t h e w e i g h t c h a r t s . ' M r s J o r d a n r e p o r t e d this t o h e r s u p e r v i s o r . and refused to sign her c h a r t s .Safety testing of drugs: from negligence to fraud •pet' l a b o r a t o r y m o n k e y . ' M e r r e l l had tried t o c h a n g e t h e r e c o r d s s o t h a t i t a p p e a r e d t h a t all m o n k e y s w e r e s u p p o s e d t o have had t h e s e a n o m a l i e s ' ( F u l l e r . She w a s told t h a t t h i s o r d e r had c o m e from h i g h e r u p and t h e r e w a s n o t h i n g she c o u l d do a b o u t it but obey t h e o r d e r and do as t h e ' h i g h e r . A c c o r d i n g t o M r s J o r d a n . a simple trick all t h e m o n k e y s had b e e n t r a i n e d t o p e r f o r m . Invoking the authority of a n o n y m o u s 'higher-ups' made it difficult for M r s J o r d a n to go o v e r K i n g ' s head to r e p o r t the fraud up the line. . t h e m o n k e y 'got very m e a n . V a r i o u s b l o o d d y s c r a s i a s w e r e n o t e d i n b l o o d s m e a r s t a k e n from m o n k e y s t h a t had b e e n t e s t e d o n M E R / 2 9 . r e n d e r a false r e p o r t .

' a l t h o u g h in fact for t h e first 6 m o n t h s . M c M a s t e r [ A s s o c i a t e D i r e c t o r o f Clinical R e s e a r c h ] had r e s p o n d e d to a d o c t o r in O m a h a w h o had c o m p l a i n e d t h a t his 62 . D a t a s u b m i t t e d on t h e i r w e i g h t and b l o o d v a l u e s w e r e totally fabricated. T h e s e a n d o t h e r eye i n f e c t i o n s led o n e p a t h o l o g i s t t o c o m m e n t in his r e p o r t t h a t he had ' n e v e r seen such an i n v o l v e m e n t o f t h e l e n s ' ( F u l l e r . M o n k e y 3 5 . C o u n t t h r e e . but w h a t the F D A i n s p e c t o r s u n c o v e r e d was t h a t t h e h i g h e r d o s e o f M E R 2 9 had n e v e r b e e n a d m i n i s t e r e d t o m o n k e y 5 1 and t h e lower d o s e had b e e n a d m i n i s t e r e d for a s h o r t e r t i m e t h a n c l a i m e d . 1979: 6 7 ) . and t h a t a m o n k e y had suffered no liver or gall b l a d d e r d a m a g e w h e n in fact it had ( K n i g h t l e y et a l . M e r r e l l . ' A m o n g b e a g l e d o g s . In toto.Safety testing of drugs: from negligence to fraud T h e l e n g t h s t o w h i c h R i c h a r d s o n had b e e n p r e p a r e d t o g o t o get t h e d r u g o n t h e m a r k e t are r e v e a l e d i n the c h a r g e s . T h e c o m p a n y had r e p o r t e d that m o n k e y N o . w h e n in fact they had all died. had b e e n d e s i g n a t e d a c o n t r o l for t h e '16 m o n t h s t u d y . o n the o t h e r h a n d . 1972: 9 0 ) . I n s o m e cases the lenses o f t h e e y e s w e r e c l o u d e d s o m u c h t h a t t h e retina could not b e o b s e r v e d . B o t h M e r c k and U p j o h n r e p o r t e d t o M e r r e l l t h a t t h e d r u g had c a u s e d eye d a m a g e t o its e x p e r i m e n t a l a n i m a l s . 1972: 9 0 ) . . d e a l t w i t h R i c h a r d s o n . a n i m a l s which d i e d w e r e r e p l a c e d with t h r e e a d d i t i o n a l d o g s t o i m p r o v e the f i g u r e s . foolishly a s i t t u r n e d o u t . T h e s e findings w e r e not p a s s e d o n t o the F D A b y M e r r e l l . U n g a r ( 1 9 7 3 : 101-2) has d o c u m e n t e d the c a l c u l a t e d nature ofthis deceit. In a dog s t u d y . 35 had b e e n g i v e n a d r u g similar to M e r 29 and had not b e e n used as a c o n t r o l a t all. T h e c o m p a n y ' s a p p l i c a t i o n t o t h e F D A c l a i m e d that m o n k e y s had not lost b o d y w e i g h t w h e n in fact t h e y h a d .u p of i r r e p a r a b l e eye d a m a g e t o the lab a n i m a l s .u p on h u m a n t e s t i n g . N o . had e n c o u r a g e d o t h e r c o m p a n i e s t o d o c o m p a r a t i v e s t u d i e s o n M E R / 2 9 . 51 w a s given M e r 29 at o n e d o s e level for six m o n t h s a n d at a l o w e r d o s e level for a further ten m o n t h s . for e x a m p l e . T h e r e w a s also a c o v e r . M e r r e l l c o v e r e d u p the fact that p o r t i o n s o f t h e g o n a d s had u n d e r g o n e " m a r k e d t u b u l a r and interstitial a t r o p h y " ' ( F u l l e r .u p on a n i m a l t e s t i n g w a s followed by a c o v e r . T h e c o v e r .M e r r e l l ' s r e p o r t s of a c h r o n i c t o x i c i t y s t u d y i n m o n k e y s . M e r r e l l s t a t e d t h a t all t h e female rats i n v o l v e d in o n e e x p e r i m e n t had s u r v i v e d . t h e e x p e r i m e n t had lasted for 7 m o n t h s and 26 days and not t h e 16 m o n t h s s t a t e d i n t h e a p p l i c a t i o n t o t h e F D A . T h e r e w e r e a b u s e s in o t h e r s t u d i e s .

'we m a y find t h a t we are m o n e y a h e a d to k e e p Dr E n g e l b e r g busy at it for a w h i l e l o n g e r r a t h e r than to take a c h a n c e on his r e p o r t i n g n e g a t i v e l y on so few p a t i e n t s . .a i d be a p p r o v e d only to k e e p Dr E n g e l b e r g o c c u p i e d for a while l o n g e r . ' A M e r r e l l i n t e r d e p a r t m e n t a l m e m o r a n d u m noted t h a t a p a p e r s i g n e d by a N e w J e r s e y p h y s i c i a n . ' M c M a s t e r w r o t e to a c o l l e a g u e at M e r r e l l . . A n o t h e r internal m e m o r a n d u m r e c o m m e n d e d continued p a y m e n t of a p e r s o n a l c o n s u l t a t i o n fee to a p h y s i c i a n . . ' P e r h a p s ' . c h a n c e s a r e e q u a l l y g o o d t h e s a m e side effect is b e i n g c a u s e d by a s e c o n d d r u g ! Y o u let y o u r d r u g t a k e t h e b l a m e w h e n you c o u n t e r with a defensive a n s w e r . . M c M a s t e r learned of a California doctor whose r e s u l t s with M E R / 2 9 .a l t h o u g h still w r i t i n g o t h e r w i s e to d o c t o r s w h o c o m p l a i n e d . .had b e e n a c c e p t e d by t h e Journal of the Medical Society of New Jersey. a n d s o u g h t M e r r e l l ' s financial s u p p o r t for an e x t e n s i o n of his s t u d i e s t o o t h e r p a t i e n t s . h o w e v e r . O n e m e m o r a n d u m issued to t h e m a d v i s e d : "When a d o c t o r says y o u r d r u g c a u s e s a side effect. 1969: P a r t 1 0 3 9 7 2 ) . 1969: P a r t 1 0 .Safety testing of drugs: from negligence to fraud p a t i e n t s o n M E R / 2 9 suffered from eye d i s c h a r g e and swelling: ' M o s t o f t h e side effects you h a v e r e p o r t e d have b e e n u n u s u a l o n e s i n t h a t t h e y h a v e not b e e n r e p o r t e d b y o t h e r i n v e s t i g a t o r s . 3 9 7 1 ) . B y M a r c h o f l 9 6 1. ' O n t h e very day t h a t D r T a l b o t o f t h e F D A issued his a p p r o v a l of M E R / 2 9 . t h e i m m e d i a t e reply is: " D o c t o r . i s h o u l d n ' t r e g a r d this a s b l a c k m a i l ' (US S e n a t e . I s i t p o s s i b l e t h a t [ t h e y ] could have b e e n c o i n c i d e n t a l with t h e a d m i n i s t r a t i o n o f d r u g s o t h e r t h a n M E R / 2 9 c o n c u r r e n t l y ? ' T h i s same line o f r e b u t t a l w a s n o w r e c o m m e n d e d t o M e r r e l l ' s e n t h u s i a s t i c d r u g s a l e s m e n a s well. .i n .c o n c l u d e d p r i v a t e l y t h a t ' t h e r e can b e n o d o u b t o f t h e a s s o c i a t i o n o f M E R / 2 9 t h e r a p y with [hair] 63 .m a r k e t i n g softening prior t o t h e i n t r o d u c t i o n o f t h e p r o d u c t ' ( U S S e n a t e . A n early a p p r o a c h t o military h o s p i t a l s w a s justified as follows: ' W e w e r e not t h i n k i n g h e r e so m u c h of h o n e s t clinical w o r k as we w e r e of a p r e . w h a t o t h e r d r u g i s t h e p a t i e n t t a k i n g ? " E v e n i f you k n o w y o u r drug can c a u s e t h e side effect m e n t i o n e d . ' A l t h o u g h i t b e g i n s t o a p p e a r that any r e p o r t from this s t u d y m a y be a n e g a t i v e o n e . it w a s o p t i m i s t i c a l l y noted by a M e r r e l l e m p l o y e e .' p r e p a r e d for t h e most part by u s ' . ' T h e C a l i f o r n i a n w a s not r e a d y t o give u p . My p e r s o n a l r e c o m m e n d a t i o n is t h a t t h e [S500] g r a n t . mainly on the g r o u n d s t h a t t h e c o m p a n y could not afford t o risk a l i e n a t i o n o f t h e d o c t o r at t h a t t i m e . w e r e ' r a t h e r e q u i v o c a l i f not c o m p l e t e l y n e g a t i v e . M c M a s t e r .

. T h e u p s h o t o f t h e i n v e s t i g a t i o n w a s t h a t M e r r e l l . T h i s has b e e n a s e v e r e b u r d e n . ' D r ' K i n g . citing ' c h a n g e s i n c o l o r .000 and $20. 1973: 103). profitm a x i m i s i n g c r e a t u r e s . t h e civil suits did follow. S t o r m o n t . I h o p e .M e r r e l l is believed to h a v e paid out a b o u t $200 m i l l i o n in d a m a g e s mostly settled out of c o u r t . w h o v e t o e d the l a n g u a g e .' "After a l l . I n t h e w o r d s o f M a t t h e w F . e v e n for a F o r t u n e 500 c o m p a n y . ' t h e y told M c M a s t e r j o k i n g l y ( U n g a r . t e x t u r e o r a m o u n t ' o f hair as p o s s i b l e side effects. F i n e s of $60. R e g a r d l e s s .000 w o u l d have to be r e g a r d e d as a j u s t i f i a b l e risk given t h a t R i c h a r d s o n .25 billion a year ( K n i g h t l e y et a l . t h e n Chief J u d g e o f t h e U S D i s t r i c t C o u r t for t h e District o f C o l u m b i a . however. as 'rather frightening. t h e d o c t o r s a t M a y o w r o t e b a c k a s k i n g for a t least t h r e e m o r e .e s t i m a t e d u s . T h a t w o r d i n g w a s v e t o e d on its way t h r o u g h the c o r p o r a t e power s t r u c t u r e . 1979: 6 5 ) . a total fine of $80.M e r r e l l . ' o b j e c t e d D r R o b e r t T . ' n o n e o f t h o s e c a s e s d e v e l o p e d g r e e n . The three individual defendants were each sentenced t o m e r e l y six m o n t h s ' p r o b a t i o n . t h e p l e a s w e r e ' t a n t a m o u n t to a plea of g u i l t y ' .M e r r e l l estim a t e d t h e p o t e n t i a l m a r k e t for M E R / 2 9 as $4. M c G u i r e . T h e m a i n r e a s o n for t h e n o .c o n t e s t p l e a s w a s t h a t M e r r e l l w a s w o r r i e d t h a t t h e trial r e c o r d c o u l d be used to a d v a n t a g e by victims of M E R / 2 9 in civil s u i t s . M c M a s t e r sent a l o n g only t w o .M e r r e l l respectively. ' T h e w a r n i n g w a s e d i t e d t o say simply ' t h i n n i n g o f t h e hair' ( U n g a r . ' Y o u have u n d e r . the p a r e n t R i c h a r d s o n . C o n s i d e r t w o perfectly legal acts o f social i r r e s p o n s i b i l i t y u n c o v e r e d b y t h e M E R / 2 9 i n v e s t i g a t i o n s . 64 . A s discussed earlier i t i s t h e m o r e s u b t l e a b u s e s w h i c h are p r o b a b l y m o r e w i d e s p r e a d and c o n s e q u e n t l y d o m o r e h a r m .000 were levied against M e r r e l l and R i c h a r d s o n .Safety testing of drugs: from negligence to fraud c h a n g e s . W h e n d o c t o r s a t t h e M a y o C l i n i c i n M i n n e s o t a a s k e d for t h e n e c e s s a r y f o r m s to r e p o r t to C i n c i n n a t i a b o u t side effects. 1973: 103). ' He drafted a p r o p o s e d a d d i t i o n to t h e w a r n i n g on the d r u g p a c k a g e . a l m o s t 500 of t h e m . B e f o r e leaving t h e M E R / 2 9 case study it is w o r t h m e n t i o n i n g s o m e o f t h e m o r e trivial a b u s e s w h i c h t e n d t o b e forgotten w h e n c o m p a r e d w i t h t h e s e r i o u s c r i m e s m e n t i o n e d a b o v e . R i c h a r d s o n . I f c o r p o r a t i o n s are r a t i o n a l . D r V a n M a a n e n and M e r r e l l vicep r e s i d e n t W e r n e r all p l e a d e d 'no c o n t e s t ' to a variety of c r i m i n a l fraud c o u n t s . pink o r l a v e n d e r hair.

O n e h u s b a n d told his wife: i f you bring t h a t m o n s t e r h o m e . At about the same t i m e . T h e M e r r e l l official w h o left t h e n a m e off said he did so b e c a u s e t h e i n f o r m a t i o n ' m i g h t be a little d i s c o u r a g i n g ' to t h e sales s u p e r v i s o r ( U n g a r . and he left h e r . T h e d o c t o r w a s crying and said my baby w o u l d n ' t live. the name o f t h e man who supervised M e r r e l l ' s s a l e s m e n in t h e field b e g a n to be d e l e t e d from t h e list of p e o p l e r e c e i v i n g interoffice c o r r e s p o n d e n c e a l l u d i n g t o t h e p o s s i b l e harmful c o n s e q u e n c e s o f M E R / 2 9 . w h o s e son L i a m is blind and has no a r m s . j u s t flippers from t h e s h o u l d e r s . T h e l e s s o n s from t h a l i d o m i d e a r e m a n y . I l e a v e . He w a s my o w n flesh and b l o o d and had to be c a r e d for. ' She d i d . j u s t a h e a d and a b o d y . b u t inside I s c r e a m e d .' says F l o r e n c e E v a n s . 1 9 7 3 : 104). h a n g i n g a p a r t like on a b u t c h e r ' s s l a b . " W h e n t h e y gave him to m e . ' T h e y d i d n ' t a l l o w me to see h i m .Safety testing of drugs: from negligence to fraud G i v e n w h a t is k n o w n a b o u t h o w easy it is to d i s c o u r a g e d o c t o r s from m a k i n g a d v e r s e d r u g r e a c t i o n r e p o r t s . M o t h e r s in p a r t i c u l a r w e r e tragic v i c t i m s . I n t h e early 1960s w h e n t h e a d v e r s e effects of t h a l i d o m i d e w e r e b e i n g discussed. Thalidomide A b o u t 8000 t h a l i d o m i d e c h i l d r e n are alive t o d a y i n 4 6 c o u n t r i e s a r o u n d t h e w o r l d . . b e c a u s e they said I w a s t o o ill. and on its own trivial. his face w a s split. o t h e r s are w i t h o u t legs as well l i m b l e s s t r u n k s . 1979: 114). E v e n e v e r left t h e h o u s e on my own from t h a t day s i n c e ' ( K n i g h t l e y et a l . abuse. S o m e o f t h e t h a l i d o m i d e c h i l d r e n h a v e n o a r m s . T h e physical h o r r o r of t h a l i d o m i d e was in some ways matched by horrible impacts on the social fabric of so m a n y families. T h e m o s t i m p o r t a n t o f all c o n c e r n s t h e n e e d for i n t e r n a t i o n a l e x c h a n g e of i n f o r m a t i o n on a d v e r s e r e a c t i o n and t h e a b o l i t i o n o f t r a d e n a m e s for d r u g s . T h e same c o u l d be said o f t h e following perfectly legal. like m a n y o t h e r thalid o m i d e fathers. I d i d n ' t cry o u t w a r d l y . B u t h e d i d . * this m i n o r act of social i r r e s p o n s i b i l i t y c a n be a small part of a p a t t e r n of neglect. and t w o w e e k s later t h e y sent him h o m e w i t h his face s t i t c h e d u p . so i n a d e q u a t e was the international c o m m u n i c a t i o n 65 . P e r h a p s twice t h a t n u m b e r died at birth as a result o f t h e d r u g .

b e c a u s e h e h a d s u d d e n l y b e c o m e a w a r e o f n u m b e r s o f limbless n e w b o r n s . In a b o o k p u b l i s h e d in July 1976 T e f f a n d M u n r o r e p o r t e d that as r e c e n t l y as M a r c h 1976 thirty t h a l i d o m i d e t a b l e t s had t u r n e d up in a West Sussex c a m p a i g n to return unused medicines. 66 .Safety testing of drugs: from negligence to fraud a m o n g d r u g r e g u l a t o r y a g e n c i e s t h a t c o m p a n i e s could for s o m e t i m e i s o l a t e bad n e w s a b o u t a d r u g to t h e c o u n t r y w h e r e t h e u n t o w a r d r e s e a r c h a p p e a r e d . T h e S w e d i s h m a n u f a c t u r e r of t h a l i d o m i d e a l l o w e d t h e p r o d u c t to be sold in A r g e n t i n a for t h r e e m o n t h s after it had b e e n w i t h d r a w n in S w e d e n . T h e m o r e t h a n fifty different t r a d e n a m e s u n d e r w h i c h thalid o m i d e w a s m a r k e t e d i n different c o u n t r i e s w a s the single most i m p o r t a n t factor in d e l a y i n g an i m m e d i a t e halt to sales ( T a u s s i g . 1965: At t h e e n d o f N o v e m b e r 1961 s o m e of my c o l l e a g u e s at t h e A c a d e m i c H o s p i t a l ( U p p s a l a ) w e r e sitting r e a d i n g a small notice in a S t o c k h o l m n e w s p a p e r c o n c e r n i n g a G e r m a n drug called C o n t e r g a n . Sao P a u l o . T h a l i d o m i d e . We n a t u r a l l y w a n t e d to k n o w if this w a s s o m e t h i n g to r e m e m b e r and if t h e d r u g in q u e s t i o n existed in S w e d e n . t h e a u t h o r i t i e s did not w a r n m o t h e r s a g a i n s t using pills a l r e a d y r e l e a s e d . Dr P e r O l a v L u n d b e r g w r o t e in an article in t h e Swedish Medical Journal. w h i c h had b e e n m a r k e t e d a s C o n t e r g a n i n G e r m a n y . U n f o r t u n a t e l y . A t e l e p h o n e call to a c h e m i s t r e s u l t i n g in an i n t e n s i v e s t u d y o f t h e l i t e r a t u r e gave u s t h e a n s w e r : n e i t h e r C o n t e r g a n nor any s i m i l a r d r u g s e e m e d t o exist i n o u r c o u n t r y . 1972: 132). H e n c e several h u n d r e d t h a l i d o m i d e b a b i e s w e r e b o r n in J a p a n d u r i n g t h e p e r i o d of o v e r a y e a r w h e n sales c o n t i n u e d t h e r e after t h e p r o d u c t had b e e n w i t h d r a w n from t h e m a r k e t i n E u r o p e . A n a l e r t B r a z i l i a n r e p o r t e r had a s u s p i c i o n t h a t t h a l i d o m i d e w a s b e i n g sold in p h a r m a c i e s in his o w n large city. I n Italy t h a l i d o m i d e r e m a i n e d o n the m a r k e t for ten m o n t h s after w i t h d r a w a l in t h e rest of E u r o p e . this w a s not t r u e ( S j o s t r o m and N i l s s o n . W h e n t h a l i d o m i d e w a s w i t h d r a w n i n S w e d e n . 1963). w h i c h at a r e c e n t c o n g r e s s had b e e n r e p o r t e d to have a p o s s i b l e t e r a t o g e n i c a c t i o n . C o n s e q u e n t l y a t least five b a b i e s w e r e b o r n n e e d l e s s l y c r i p p l e d . and in C a n a d a for t h r e e m o n t h s . w a s sold i n S w e d e n a s N e u r o s e d y n and N o x i d y n . Investigative j o u r n a l i s t s p l a y e d a m o r e i m p o r t a n t role t h a n h e a l t h r e g u l a t o r y a u t h o r i t i e s in m a n y p a r t s of the w o r l d in saving c h i l d r e n from thalidomide.

O n d a s i l ® . t h e y had r e v e a l e d t o him t h a t after t a k i n g t h a l i d o m i d e their d e s i r e t o m a s t u r b a t e had d e c r e a s e d . t h e i r m o r a l t e n s i o n had e v a p o r a t e d . constipation. C o u n t l e s s c h i l d r e n and t h e i r p a r e n t s m u s t a l w a y s be grateful to that i n q u i s i t i v e r e p o r t e r ( B u r a c k . T h e d r u g w a s d i s c o v e r e d i n t h e 1950s b y t h e G e r m a n c o m p a n y . He p e r s i s t e d in his q u e s t i o n i n g . said D r J u n g . a n d d i s c o v e r e d that t h a l i d o m i d e w a s i n d e e d b e i n g w i d e l y sold b u t t h a t it w a s k n o w n to t h e p u b l i c and t h e ' a u t h o r i t i e s ' only b y its b r a n d n a m e s : Slip®. C h e m i e G r u n e n t h a l . 1979:26). In a clinic in C o l o g n e . In spite of t h i s . S e d i n ® . Y e t . and t h e y felt m u c h b e t t e r .Safety testing of drugs: from negligence to fraud U p o n i n q u i r y . a n d S e r a l i s ® . nausea. I n s t e a d i t s e e m s t h a t t h e c o m p a n y relied o n w h a t w e r e i m p r e s s i o n istic t e s t i m o n i a l s from clinicians such as Dr J u n g : Dr J u n g w a s on a r e t a i n e r of a b o u t DM 2 0 0 a m o n t h ( t h e n a b o u t $ 6 0 ) from G r u n e n t h a l . V e r d i l ® . e v e n b e f o r e t h e d r u g w a s p l a c e d o n t h e m a r k e t . Dr J u n g r e p o r t e d t o G r u n e n t h a l a t t h e b e g i n n i n g o f J u n e 1955 t h a t he c o n s i d e r e d t h a l i d o m i d e ready to be m a r k e t e d (Knightley et al. A l s o . On t h e basis of his t r i a l s . o f side-effects which included giddiness. t h a l i d o m i d e had cured p r e m a t u r e ejaculation in a n u m b e r of married patients w h o s e wives were reported to have expressed g r e a t s a t i s f a c t i o n w i t h t h e r e s u l t s . as G r u n e n t h a l g a t h e r e d its g l o w i n g t e s t i m o n i a l s from s u b s e r v i e n t d o c t o r s . L e t u s r e t u r n t o t h e b e g i n n i n g o f t h e t h a l i d o m i d e story. 2. E a r l y clinical trials w e r e u n s a t i s factory a n d t h e r e w e r e n o d o u b l e blind t e s t s ( w h e r e n e i t h e r d o c t o r nor p a t i e n t k n o w s w h a t d r u g t r e a t m e n t t h e p a t i e n t i s r e c e i v i n g ) .. used it on four y o u t h s w h o w e r e suffering from m o r a l t e n s i o n as t h e result of m a s t u r b a t i o n . Yet his a d m i r a t i o n for t h e d r u g a p p e a r e d o v e r w h e l m i n g . h o w e v e r . a 'hangover'. he had given t h a l i d o m i d e to t w e n t y p a t i e n t s . He h a d . h e w a s told b y a u t h o r i t i e s t h a t t h a l i d o m i d e w a s n o t b e i n g sold in Sao P a u l o . T h a l i d o m i d e w a s basically t o b e used a s a n h y p n o t i c ( s l e e p i n g pill) a n d t r a n q u i l l i s e r . In confidential c h a t s . G r u n e n t h a l l a u n c h e d t h a l i d o m i d e with a n a d v e r t i s i n g c a m p a i g n a i m e d a t selling 67 .1 ) . o t h e r p h y s i c i a n s w e r e informing t h e c o m p a n y . for e x a m p l e . w a k e f u l n e s s a n d an allergic r e a c t i o n .5 million t a b l e t s c o n t a i n i n g t h a l i d o m i d e i n p h a r m a c i e s and p h a r m a c e u t i c a l factories in Sao P a u l o w e r e confiscated by officials. 1976: 7 0 . for only four w e e k s . W h e n this w a s m a d e k n o w n .

safe . . had n e v e r p r e v i o u s l y t e s t e d a d r u g before it c a m e on t h e m a r k e t but 68 . T h e c o m p a n y s p e l l e d o u t its policy on trials in a letter to t h e P o r t u g u e s e l i c e n s e e . It w a s G r i i n e n t h a l ' s claim to h a v e m a d e a scientific b r e a k t h r o u g h in p r o d u c i n g a ' c o m p l e t e l y safe* s e d a t i v e w h i c h p r o d u c e d s t a g g e r i n g s a l e s . r e g u l a r t e s t s on p a t i e n t s of t h a l i d o m i d e are s u p e r f l u o u s . . . . . ' T h e e x p e r i e n c e o f t h e d o c t o r i n c a r r y i n g out clinical trials s e e m e d t o m a t t e r little. N o s e d a t i v e had e v e r b e e n called ' c o m p l e t e l y safe'.' a n d e v e n that it c o u l d be t a k e n in h i g h e r d o s e s t h a n r e c o m m e n d e d w i t h o u t any d a n g e r ( K n i g h t l e y e t a l . C o m p a n y s a l e s staff w e r e i n s t r u c t e d to use lines such as in h o s p i t a l s . F i r m a P a r a c e l s i a . . F r o m t h i s . fully h a r m l e s s . 1 9 7 9 : 2 8 .Safety testing of drugs: from negligence to fraud it over the c o u n t e r in p h a r m a c i e s rather than by prescription. O n e . w h a t G r i i n e n t h a l w a n t e d a b o v e all w a s quick r e s u l t s . ' H o w e v e r . . T o D r G u s t a v S c h m a l t z i n D e c e m b e r 1958 the c o m p a n y r e p l i e d . . is m o r e i m p o r t a n t to us t h a n a b r o a d l y b a s e d .. . you can see w h a t kind of t e s t e r s we h a v e in m i n d . .p o i s o n o u s . G n i n e n t h a l scientists lied in t h e i r r e p l i e s t o p h y s i c i a n s w h o w r o t e i n with r e p o r t s o f p e r i p h e r a l n e u r i t i s .' O n M a r c h 3 0 . n o n . . ' .t o x i c . ' W e feel o b l i g e d to say that this is t h e first t i m e such side effects h a v e b e e n r e p o r t e d to us. A n i n t e r n a l m e m o r a n d u m w a r n e d : ' S o o n e r or l a t e r we will not be able to stop p u b l i c a t i o n of t h e side effects of C o n t e r g a n . 5 By e a r l y 1960 t h e v o l u m e of c o m p l a i n t s from p h y s i c i a n s and sales r e p r e s e n t a t i v e s in t h e field w a s such t h a t G r i i n e n t h a l w a s c o m i n g to g r i p s w i t h t h e fact t h a t the a d v e r s e effects w o u l d have to be r e s p o n d e d t o i n a m o r e formal w a y . . D r K o n r a d L a n g . . ' H a p p i l y we can tell you t h a t such d i s a d v a n t a g e o u s effects h a v e n o t b e e n b r o u g h t t o our n o t i c e ' ( K n i g h t l e y e t al. . a s t o n i s h i n g l y safe . with the r e p o r t s of fifteen t o t w e n t y successful c a s e s w h o h a v e t o l e r a t e d the d r u g w e l l . o f O p o r t o : ' T o b e quite clear a b o u t it: a q u i c k p u b l i c a t i o n . 1960. since t h e I r a n i a n d o c t o r is very m a t e r i a l i s t i c in his o u t l o o k . a G r i i n e n t h a l r e p r e s e n t a t i v e r e p o r t e d that initial a p p r o a c h e s to a d o c t o r in I r a n had b e e n unsuccessful. 1 9 7 9 : 2 8 ) . We are t h e r e f o r e a n x i o u s to get as many positive pieces ofwork as possible. c o n c r e t e r e s u l t s should b e f o r t h c o m i n g s o o n .p e r i p h e r a l n e u r i t i s . . . ' T o Dr Ralf V o s s in O c t o b e r 1959. P r o m o t i o n a l m a t e r i a l p o i n t e d out t h a t t h a l i d o m i d e w a s "completely n o n . large w o r k t h a t will not a p p e a r for eight t o t w e l v e m o n t h s . ' B e t w e e n 1958 and 1960 d o c t o r s b e g a n r e p o r t i n g a m u c h m o r e s e r i o u s side-effect of t h a l i d o m i d e .3 0 ) . p e r h a p s in t h r e e m o n t h s .

V e r y different t r e a t m e n t a w a i t e d d o c t o r s w h o p l a n n e d t o publish unfavourable reports about thalidomide. O n e sales e x e c u t i v e .a c t i n g s e d a t i v e p a r t i c u l a r l y suited for use with c h i l d r e n ' ( K n i g h t l e y e t a l . P a t o n . and r e p o r t e d t o t h e c o m p a n y : in g e n e r a l t e r m s C o n t e r g a n could be d e s c r i b e d as a r a p i d . J . The company began to consider p u t t i n g 'a little m 6 r e e m p h a s i s ' on t h e risk of p e r i p h e r a l n e u r i t i s 'in t h e h o p e t h a t t h e n u m b e r o f cases will d i m i n i s h i f d o c t o r s are a w a r e o f t h e p o s s i b i l i t y ' . . D i s t i l l e r s ' sales p e o p l e w e r e not a l t o g e t h e r e n t h u s i a s t i c a b o u t this idea. D i s t i l l e r s b o u g h t t h e licence t o m a r k e t t h a l i d o m i d e i n G r e a t B r i t a i n . it w a s s u p p r e s s e d . 1972: 6 9 ) .Safety testing of drugs: from negligence to fraud u n d e r t o o k to try t h a l i d o m i d e on c h i l d r e n at t h e U n i v e r s i t y C l i n i c . o n e child died from a c o n g e n i t a l h e a r t d e f e c t . F o r t y c h i l d r e n . B u t w h e n a n a w a r e n e s s did b e g i n .o l d b a b y w i t h c o n v u l s i v e d i s o r d e r s lost her vision t e m p o r a r i l y . j u s t as in t h e c a s e of G r u n e n t h a l . G r i i n e n t h a l hired a p r i v a t e d e t e c t i v e to r e p o r t on hostile physicians.5 ) .m o n t h . and a t h r e e . m o s t o f w h o m had brain d a m a g e . ' W h e n t h e possibility o f legal c o n s e q u e n c e s from t h e p r o m o t i o n o f t h e i r ' c o m p l e t e l y safe' d r u g b e c a m e c l e a r . The detective m a d e notes on the p r i v a t e lives a n d family c i r c u m s t a n c e s o f c e r t a i n p h y s i c i a n s . t h e 69 . D r L a n g c o n s i d e r e d i t very q u e s t i o n a b l e t h a t any o f t h e s e r e a c t i o n s w a s c o n n e c t e d with t h a l i d o m i d e .c o m m u n i s t and n o w a d a y s a m e m b e r o f S E D ' ( S j o s t r o m and N i l s s o n . w r o t e : it is not o u r j o b to e d u c a t e t h e m e d i c a l p r o f e s s i o n how to look out for v a r i o u s c o n d i t i o n s .o l d baby died from h e a r t failure. 1979: 3 4 . The doses w e r e ten to twenty times higher than Griinenthal's r e c o m m e n d e d d o s e for a d u l t s . By F e b r u a r y 1961 d o z e n s o f c a s e s o f p e r i p h e r a l n e u r i t i s had b e e n b r o u g h t to Distillers' attention. One company memora n d u m s h o w e d h o w a r e p o r t o n p e r i p h e r a l n e u r i t i s from t h a l i d o m i d e s u b m i t t e d b y o n e d o c t o r w a s held u p : ' T h e friendly c o n n e c t i o n w i t h [ t h e e d i t o r o f t h e j o u r n a l ] c o n t r i b u t e d t o t h e delay i n t r e a t m e n t o f t h e s u b m i t t e d m a n u s c r i p t . w e r e g i v e n t h e d r u g u n d e r Dr L a n g ' s s u p e r v i s i o n for p e r i o d s of up to n i n e w e e k s without the permission or knowledge of their parents. F r o m a sales p r o m o t i o n point of v i e w . O n e child had a c i r c u l a t o r y c o l l a p s e . t h e g a m e o f h a r a s s i n g clinicians w h o p r o d u c e d u n f a v o u r a b l e r e p o r t s b e g a n in e a r n e s t .m o n t h . a t w e n t y o n e . i s a n e x . T h e c o m p a n y w a s p r i m a r i l y a h u g e spirits and liquor m a n u f a c t u r e r . B o n n . O n e r e p o r t says: ' T h e father o f D r B . K n o w l e d g e o f side-effects from t h a l i d o m i d e c a m e later t o D i s t i l l e r s ' a t t e n t i o n t h a n with G r i i n e n t h a l .

In spite o f t h i s kind of p e r s o n a l i n t e r e s t .Safety testing of drugs: from negligence to fraud m o r e we w r i t e on this side effect. F l a w n also had given his p r e g n a n t wife t h a l i d o m i d e t o h e l p h e r s l e e p . Yet no word ofthis reached the L o n d o n h e a d office o f D i s t i l l e r s until 2 1 N o v e m b e r . t u r n i n g i n w a r d s a c r o s s t h e b o d y . By July 1961 at least t w o and possibly six A u s t r a l i a n Distillers' e m p l o y e e s knew that Dr M c B r i d e suspected thalidomide of causing deformed births. A m o n t h l a t e r B i s h o p ' s child w a s b o r n w i t h six digits on o n e h a n d . . N o r w a s B i s h o p t a k i n g t h e m a t t e r lightly. t h e r e c i p i e n t o f t h e bad n e w s a t h e a d q u a r t e r s w a s a n e x p o r t m a n a g e r for A u s t r a l i a . ' B i s h o p recalls t h a t his s u p e r i o r ' w a s clearly w o r r i e d . I n t e r e s t i n g l y . . . m o r e t h a n four m o n t h s l a t e r . B i s h o p m a d e t h e link b e t w e e n t h a l i d o m i d e a n d t h e d e f o r m i t i e s w h e n h e r e c a l l e d t h e earlier c o n v e r s a t i o n w i t h his s u p e r i o r . o n e o f t h e six A u s t r a l i a n D i s t i l l e r s ' e m p l o y e e s w h o k n e w a b o u t t h e M c B r i d e findings w a s J o h n B i s h o p . H e w a s not t a k i n g the m a t t e r l i g h t l y ' ( K n i g h t l e y e t a l . He had a d e f o r m e d and s h o r t e n e d a r m w i t h a h a n d w i t h o u t a t h u m b . B y early 1961 a y o u n g S y d n e y o b s t e t r i c i a n . H i s p a l a t e had a g a p i n g hole in it. Dr W i l l i a m M c B r i d e .' It w a s in t h e A u s t r a l i a n subsidiary of D i s t i l l e r s t h a t the g r e a t e s t o p p o r t u n i t y t o curtail t h e t h a l i d o m i d e d i s a s t e r w a s m i s s e d . but t h e r e is no need to a l a r m t h e m e d i c a l p r o f e s s i o n or d i s c u s s t h e m a t t e r unless it is raised. h e a d q u a r t e r s w a s not i n f o r m e d for four m o n t h s . . the m o r e it is likely to get out of p e r s p e c t i v e . J o h n F l a w n . 1962.d a m a g e d t h a l i d o m i d e c h i l d r e n in B r i t a i n . B i s h o p had b e e n told by o n e of his s u p e r i o r s in m i d . T h e child later b e c a m e a r e c i p i e n t of c o m p e n s a tion from D i s t i l l e r s . B o t h h a n d s w e r e a t a n u n e v e n angle a t t h e wrist j o i n t . w a s conv i n c e d of a c o n n e c t i o n b e t w e e n t h a l i d o m i d e and bizarre birth d e f e c t s .1 9 6 1 t h a t ' W e ' v e had a r e p o r t from a d o c t o r in S y d n e y a b o u t D i s t a v a l a b n o r m a l i t i e s i n t h e f o e t u s . O n e ear w a s c o m p l e t e l y 70 . T h e o t h e r h a n d had o n e e x t r a finger. ' S o t h e sales r e p r e s e n t a t i v e s w e r e i n s t r u c t e d : ' [ T h e ] p o s s i b l e o c c u r r e n c e of p e r i p h e r a l n e u r i t i s is a r e m o t e o n e and in no way d e t r a c t s from t h e m a i n selling p o i n t of D i s t a v a l . It has a t o x i c effect of w h i c h you s h o u l d be a w a r e . H i s face w a s p a r a l y s e d o n o n e side. a sales r e p r e s e n t a t i v e in S o u t h A u s t r a l i a . A l e x a n d e r F l a w n . W h e n w o r d o f t h e M c B r i d e f i n d i n g s finally did g o t o L o n d o n i n N o v e m b e r 1 9 6 1 . b e c a u s e h e had given t h a l i d o m i d e t o calm the n e r v e s of his p r e g n a n t wife. 1979: 9 0 ) . b o r n o n J a n u a r y 9 . . w a s o n e o f t h e w o r s t . .

.A L A R M I N G SUSPICION OF PHYSICIAN'S GLOBALLY DISTRIBUTED DRUG. ) 'A c o v e r i n g l e t t e r d a t e d July 13 and s i g n e d b y t h e a s s i s t a n t e d i t o r said t h a t a l t h o u g h M c B r i d e ' s t h e o r y about t h a l i d o m i d e was interesting.Safety testing of drugs: from negligence to fraud m i s s i n g . The Lancet. T h i s w a s a t e r r i b l e m i s t a k e b e c a u s e I d i d n ' t c o m e alive a g a i n for s e v e n y e a r s ' ( K n i g h t l e y et a l . . 1979: 112). w h o w a s h o n o u r e d b y P r e s i d e n t K e n n e d y for saving t h e n a t i o n from t h e d i s a s t e r . I was frightfully b r a v e .' T h a l i d o m i d e w a s n e v e r a p p r o v e d for m a r k e t i n g i n t h e U n i t e d S t a t e s t h a n k s t o t h e c a u t i o n o f F D A scientist D r F r a n c e s K e l s e y . a s part o f a n o t h e r . O n 2 6 N o v e m b e r 1961 t h e m a s s c i r c u l a t i o n n e w s p a p e r Welt am Sonntag t o o k u p L e n z ' s f i n d i n g s with t h e h e a d l i n e : M A L F O R M A T I O N S F R O M T A B L E T S . P r o f e s s o r L e n z o f H a m b u r g U n i v e r s i t y had r e a c h e d t h e s a m e c o n c l u s i o n s a s M c B r i d e . w h i c h t h e y w o u l d in no way c h o o s e to p a r t i c i p a t e in w e r e that whole apparent to them.l i k e f o r c e . he v o m i t e d his food a c r o s s t h e r o o m with p r o j e c t i l e . 1979: 91). T h e m a n y h u n d r e d s o f f o e t u s e s d a m a g e d d u r i n g the second half of 1961 m i g h t h a v e b e e n saved w e r e it not for a n o t h e r u n f o r t u n a t e c i r c u m s t a n c e . . i n 1963 in t h e Medical]ournal ofAustralia. That certain organisational actors in the events which delayed the w i t h d r a w a l of t h a l i d o m i d e were personal victims o f t h e tragedy is i n s t r u c t i v e . O n t h e o t h e r side o f t h e w o r l d . i cut off all my feelings. ' W h e n A l e x w a s b o r n . t h a t he w a s d e a f and d u m b . F o r t h e first e i g h t e e n m o n t h s of his life. . ( M c B r i d e ' s p a p e r w a s e v e n t u a l l y p u b l i s h e d . pressure to publish important p a p e r s w a s such t h a t t h e r e w a s no s p a c e for this c o n t r i b u t i o n . and had p o o r vision in his left e y e .X ( K n i g h t l e y et a l . M c B r i d e ' s crucial p a p e r o n t h a l i d o m i d e and birth d e f o r m i t i e s had b e e n s u b m i t t e d t o t h e p r e s t i g i o u s British j o u r n a l . ' said J u d i t h F l a w n . yet w i t h d r e w t h a l i d o m i d e from t h e G e r m a n m a r k e t ' B e c a u s e press r e p o r t s h a v e u n d e r m i n e d t h e basis of scientific d i s c u s s i o n . It soon b e c a m e c l e a r that his brain w a s d a m a g e d . 71 . C a u t i o u s r e g u l a t o r s in F r a n c e and Israel also refused to a p p r o v e the drug. I n d i v i d u a l s in t h e i r o r g a n i s a t i o n a l r o l e s can be part of a w h o l e . Grunenthal a t t a c k e d L e n z a n d t h e Welt am Sonntag article as s e n s a t i o n a l i s t . . In S e p t e m b e r t h e p a p e r w a s r e t u r n e d .by surface mail! (a discourtesy A u s t r a l i a n academics frequently have to tolerate from i n t e r n a t i o n a l j o u r n a l s . . t h e o t h e r grossly d e f o r m e d . .

had b e g u n to catch up w i t h G r u n e n t h a l . T h e y k n e w that a drug like thalid o m i d e c o u l d c r o s s the p l a c e n t a l b a r r i e r . "Yet k n o w i n g that thalid o m i d e might affect t h e f o e t u s . t h e A m e r i c a n c o m p a n y w h i c h w a s licensed b y G r i i n e n t h a l Richardson-Merrell of M E R / 2 9 fame.267 d o c t o r s . t h e law. w a s in fact w r i t t e n by t h e m e d i c a l d i r e c t o r of R i c h a r d s o n . only to p r o v i d e t h e m if t h e d o c t o r r e q u e s t e d t h e m . D r R a y O. t o d e t e r m i n e w h e t h e r c r i m i n a l c h a r g e s should be laid. A l t h o u g h t h e m e d i c a l d e p a r t m e n t had t h e right o f v e t o . T h e public p r o s e c u t o r ' s office i n A a c h e n .Safety testing of drugs: from negligence to fraud In spite of t h e fact t h a t t h a l i d o m i d e was not a p p r o v e d in the U n i t e d S t a t e s .M e r r e l l did no a n i m a l r e p r o d u c t i o n t e s t s o r c o n t r o l l e d clinical trials o n m o t h e r s d u r i n g t h e s e n s i t i v e p e r i o d of p r e g n a n c y to see w h e t h e r in fact it did' ( K n i g h t l e y et a l . T h e r e w e r e sins of c o m m i s s i o n as well. By D e c e m b e r 1 9 6 1 . P r e d i c t a b l y . T h e s t r a t e g y w a s t o flatter key d o c t o r s b y telling t h e m that t h e y had b e e n specially selected to pilot the m i r a c l e new p r o d u c t . The m o r e sophisticated Richardson-Merrell pharmacologists were guilty of m a n y sins of o m i s s i o n . T h e full bill of i n d i c t m e n t t o o k a n o t h e r two years to compile. N u l s e n of O h i o . so it s e e m e d . W h a t this a d d s u p t o i s t h a t R i c h a r d s o n M e r r e l l w a s not i n t e r e s t e d in g e n u i n e clinical t e s t i n g but in softening up t h e m a r k e t by i n t e r e s t i n g influential p h y s i c i a n s in t h e p r o d u c t . R i c h a r d s o n . A t least t e n t h a l i d o m i d e c h i l d r e n w e r e b o r n i n the U n i t e d S t a t e s . T h e y w e r e told t h a t it really did not m a t t e r very m u c h if they did not k e e p r e c o r d s o f t h e i r clinical trials. S a l e s m e n w e r e told not to offer p l a c e b o s . G e r m a n y . it w a s also able to p r o d u c e a string of e x p e r t w i t n e s s e s 72 . distributed two a n d a half million t a b l e t s to 1. T h i s w a s s u p p o s e d l y all part of R i c h a r d s o n M e r r e l l ' s clinical t e s t i n g p r o g r a m m e i n t h e U n i t e d S t a t e s .M e r r e l l . w h o gave t h e m to s o m e 20. . On 27 M a y 1968 t h e trial b e g a n w i t h G r u n e n t h a l d e f e n d i n g its e x e c u t i v e s b y a r g u i n g t h a t u n d e r G e r m a n law a n u n b o r n baby had no legal p r o t e c t i o n e x c e p t in c o n n e c t i o n with c r i m i n a l a b o r t i o n .(MX) p a t i e n t s . On 2 S e p t e m b e r 1965 t h e p r o s e c u t o r d r e w up a p r e l i m i n a r y bill of i n d i c t m e n t c h a r g i n g n i n e G r u n e n t h a l e x e c u t i v e s with i n t e n t t o c o m m i t bodily h a r m and i n v o l u n t a r y m a n s l a u g h t e r . 1979: 7 2 ) . b e g a n a n i n v e s t i g a t i o n w h i c h lasted four y e a r s . T h e clinical d a t a w h i c h w e r e p r e s e n t e d to F D A in its s u b m i s s i o n for a p p r o v a l of t h a l i d o m i d e w e r e m i s l e a d i n g and c o n c o c t e d in a variety o f w a y s . O n e crucial p a p e r w r i t t e n b y i n d e p e n d e n t p h y s i c i a n . t h e d o c t o r s t o b e offered t h a l i d o m i d e w e r e c h o s e n b y t h e sales r e p r e s e n t a t i v e s .

out-of-court s e t t l e m e n t has b e e n p r u d e n t . T h e p u r p o s e o f such a c o n d i t i o n w a s to k e e p o t h e r victims in the dark about what was possible. On 26 M a y 1970 t h e p r o s e c u t i o n c o m p l a i n e d t o t h e c o u r t t h a t five j o u r n a l i s t s had b e e n t h r e a t e n e d w i t h ' r e p r i s a l s ' b y G r u n e n t h a l for w r i t i n g stories w h i c h did not m e e t with the c o m p a n y ' s a p p r o v a l . It would seem that the c o m p a n i e s ' strategy of quiet.i n j u r y c a s e s i n Q u e b e c had e x p i r e d . T h e i r t a c t i c w a s t o s u g g e s t ( c o r r e c t l y ) that the p r o t r a c t e d criminal proceedings were holding up out-of-court settlement of compensation c l a i m s for t h e t h a l i d o m i d e families. In Q u e b e c R i c h a r d s o n . s u s p e n d e d t h e c r i m i n a l h e a r i n g and G r u n e n t h a l a g r e e d to pay $31 million in c o m p e n s a t i o n to the G e r m a n thalid o m i d e c h i l d r e n . w i t h t h e explicit a g r e e m e n t o f t h e p r o s e c u t i o n . of c o u r s e .Safety testing of drugs: from negligence to fraud w h o a r g u e d t h a t t h e r e w a s n o c o n c l u s i v e p r o o f that t h a l i d o m i d e c a u s e d birth deformities. T h e trial a n d its a t t e n d a n t publicity w a s bitter. I n t h e only t h a l i d o m i d e case e v e r t o 73 . " A m i d a t t a c k s from t h e p r e s s o f ' j u s t i c e for sale". t w o y e a r s a n d s e v e n m o n t h s after t h e trial had b e g u n . n o t h i n g a n y w h e r e i n t h e w o r l d w a s e v e r .o f .c o u r t s e t t l e m e n t s . No o n e could put a figure o n t h e m a n y h u n d r e d s o f millions o f d o l l a r s w h i c h h a v e b e e n p a i d a r o u n d t h e w o r l d i n o u t . s o m e i n t e r n a t i o n a l legal m a n o e u v r e s by a lawyer r e p r e s e n t i n g t h e s e c l i e n t s e n t i c e d R i c h a r d s o n . T h e c o m p a n y and its officers had b e e n n e i t h e r a c q u i t t e d nor found guilty. on 18 D e c e m b e r 1970. T h e p a r e n t s o f 2 6 t h a l i d o m i d e victims i n Q u e b e c did n o t b e c o m e a w a r e of t h e possibility of civil action against the c o m p a n y until after t h e t w e l v e m o n t h s ' s t a t u t e o f l i m i t a t i o n s o n p e r s o n a l . T h i s suited G r u n e n t h a l . we shall still be sitting here in ten y e a r s ' t i m e a n d t h e c h i l d r e n will h a v e n o t h i n g . will diminish the r e s o u r c e s a v a i l a b l e for any p a y m e n t b y t h e c o m p a n y . I f w e are forced t o . In spite of all t h e w r o n g d o i n g a s s o c i a t e d with t h e t h a l i d o m i d e affair. F o r t u n a t e l y . G r u n e n t h a l d e c l a r e d : i f w e w a i t to see w h e r e t h e trial gets us. h o w e v e r . s e t t l e d in a c o u r t of c r i m i n a l or civil j u r i s d i c t i o n . O n e r e a s o n for t h i s i s t h a t p h a r m a c e u t i c a l c o m p a n i e s often i m p o s e d the c o n d i t i o n t h a t t h e s e t t l e m e n t r e m a i n s e c r e t . t o this w r i t e r ' s k n o w l e d g e . I t b e g a n t o a p p e a r t h a t t h e trial w o u l d go on for ever. we shall fight to t h e e n d . T h e G e r m a n s e t t l e m e n t set t h e p a t t e r n for t h e rest o f t h e w o r l d . T h e c o u r t .M e r r e l l t o settle with them. a b a r g a i n w a s s t r u c k . and t h a t .M e r r e l l s e e m e d t o have a c h i e v e d a great v i c t o r y t h r o u g h its i m p o s i t i o n of a s e c r e t i v e n e s s c o n d i t i o n u p o n all s e t t l e m e n t s .

but she will soon b e s i x t e e n . She b o a r d s at a special school for t h e deaf. Y o u n e v e r k n o w what will h a p p e n . deaf. and ultimately t h i s c a s e w a s also r e s e t t l e d o u t . d i s t u r b i n g p r e s e n c e d i s r u p t s all family life and d e m a n d s g r e a t e n d u r a n c e from her p a r e n t s . fifty miles from w h e r e she lives in S t i r l i n g s h i r e . D u r i n g 1962 t h e c o m p a n y ' s stock prices w e r e m o r e t h a n h a l v e d (from $98 in F e b r u a r y and M a r c h to $44 in S e p t e m b e r and O c t o b e r ) . silent m i n d . Distillers pulled out o f t h e p h a r m a c e u t i c a l b u s i n e s s in 1962. and her m o t h e r has not b e e n able to find a p l a c e w i l l i n g t o a c c e p t her. M r s M c C a l l u m s a y s ." R i c h a r d s o n . She is b l i n d .o f . T h e c o m p a n i e s i n v o l v e d h a v e suffered significant s e t b a c k s as a r e s u l t o f t h e i r i n v o l v e m e n t with t h a l i d o m i d e .Safety testing of drugs: from negligence to fraud go to a j u r y d e c i s i o n . M o r a g w a s b o r n as a n o n . 0 0 0 m o r e t h a n her lawyers had a s k e d for. O n e side o f h e r b o d y is p a r a l y s e d so t h a t she c a n n o t smile. R i c h a r d s o n . T h e story o f M o r a g M c C a l l u m i l l u s t r a t e s t h a t w h a t e v e r the t h a l i d o m i d e s e t t l e m e n t s could b e c o n s t r u e d a s c o n s t i t u t i n g . C h e m i e G r u n e n t h a l has n e v e r r e c o v e r e d t h e i m p o r t a n t p o s i t i o n i t had i n the G e r m a n p h a r m a c e u t i c a l i n d u s t r y p r i o r t o t h e t r a g e d y .M e r r e l l s t o c k s did not r e t u r n to the prices of e a r l y 1962 until m o m e n t a r i l y in S e p t e m b e r 1967 and p e r m a n e n t l y in O c t o b e r 1968. and t h e r e i s little h o p e o f b r e a k i n g t h r o u g h t o her d a r k .M e r r e l l s t o c k s p l u m m e t e d o n the N e w Y o r k stock e x c h a n g e a t t h e t i m e o f t h e M E R / 2 9 and t h a l i d o m i d e c r i s e s .M e r r e l l w a s found negligent and t h e j u r y a w a r d e d t h e plaintiff $ 5 5 0 . She is severely r e t a r d e d . " S o m e b o d y has to be w i t h h e r all t h e t i m e . T h e r e is no c o m m u n i c a t i o n with her at all.M e r r e l l the s e t b a c k did last for a n u m b e r of y e a r s .M e r r e l l set in train an a p p e a l . T h e n t h e e d u c a t i o n a l a u t h o r i t i e s will n o l o n g e r b e r e s p o n s i b l e for h e r . R i c h a r d s o n . But from 1965 o n w a r d s it e x p e r i e n c e d t h e steady rise in profitability w h i c h it had e n j o y e d p r i o r to t h e crisis. S h e ' s j u s t a wild a n i m a l .c o u r t for an u n d i s c l o s e d s u m . selling its a s s e t s to Eli Lilly. F o r a F o r t u n e 500 c o m p a n y p e r h a p s any legal s e t b a c k is likely to be o v e r c o m e in t h e long t e r m . b r o t h e r . and two s i s t e r s . ' F o r t h e first t h r e e y e a r s n o o n e c a m e t o 74 . B u t for R i c h a r d s o n . F o r M o r a g M c C a l l u m n o sum o f m o n e y could give h e r t h e world she will n e v e r k n o w .i d e n t i c a l twin (her b r o t h e r suffered n o d a m a g e ) . i t w o u l d not b e called j u s t i c e . and d u m b . R i c h a r d s o n . and b e t w e e n 1961 and 1964 its profit levels r e m a i n e d on a p l a t e a u .' M o r a g ' s s a v a g e . S c o t l a n d .

o l d t h a l i d o m i d e d a u g h t e r . this had not b e e n d o n e .d a y .1 9 7 0 s i n v o l v i n g t h e G.l o n g trial. o n e o f t h e largest A m e r i c a n p h a r m a c e u t i c a l c o m p a n i e s w a s s u b j e c t e d to a b a r r a g e of a l l e g a t i o n s before S e n a t o r E d w a r d K e n n e d y ' s S u b . w e would h a v e w i t n e s s e d o n e of the m o r e t e r r i b l e ironies in t h e history of criminal justice. T h e y w e r e c h a r g e d with m u r d e r . H a d they b e e n c o n v i c t e d w h i l e s o m a n y c u l p a b l e c o m p a n y e x e c u t i v e s r o a m e d free.c o m m i t t e e on Health of the Senate Judiciary C o m m i t t e e b e t w e e n 1975 and 1977. 0 0 0 m o r e ' ( K n i g h t l e y et a l . D. he b e c a m e a p s y c h i a t r i c o u t p a t i e n t and n o w . D. but a c q u i t t e d to t h e wild a c c l a i m of a t h o u s a n d p e o p l e w h o had c r u s h e d i n t o t h e c o u r t r o o m for t h e w e e k . 0 0 0 and yet a boy with s h o r t a r m s but n o r m a l i n t e l l i g e n c e and likely to be able to e a r n his living got £ 2 . G. O n e c o u p l e from L i e g e . K e n n e d y and t h e F D A w e r e c o n v i n c e d t h a t b o t h fraud and i n c o m p e t e n c e w e r e w i d e s p r e a d i n t h e S e a r l e safety t e s t i n g p r o g r a m m e . B e l g i u m . . he had a p i e c e of p a p e r w h i c h I could sign to put M o r a g a w a y into a m e n t a l h o s p i t a l ." says M r s M c C a l l u m . is an invalid and never likely to w o r k again. after further health p r o b l e m s . w e 75 . S e a r l e . I n t h e c o u r s e o f o u r r e v i e w o f t h e 7 8 . A l d a c t o n e . T h i s r e p o r t clearly i n d i c a t e d a d o s e .Safety testing of drugs: from negligence to fraud h e l p us. p o i s o n e d t h e i r e i g h t . T h e M c C a l l u m s are b o t h angry for having a g r e e d to t h e low s e t t l e m e n t in 1968.r e l a t e d i n c r e a s e in the f r e q u e n c y o f liver and t e s t i c u l a r t u m o r s and r e c o m m e n d e d that t h e s e findings be a n a l y z e d for statistical significance. ' T h e n w h e n a d o c t o r did c o m e . Although F D A regulations require 'alarming findings'to be s u b m i t t e d t o t h e A g e n c y p r o m p t l y . a n a c c i d e n t . A n o t h e r fiasco in t h e m i d ." A l e x a n d e r M c C a l l u m . has b e e n e v e n m o r e upset by his d a u g h t e r ' s fate. 1979: 2 1 9 ) . A f t e r her b i r t h .r e p a i r m e c h a n i c for b u s e s . Searle corp o r a t i o n p r o d u c e d d r a m a t i c r e g u l a t o r y c h a n g e i n t h e m o r e specific a r e a o f t h e safety t e s t i n g o f d r u g s . F D A h e a d S c h m i d t testified t o p a r t i c u l a r c o n c e r n o v e r t h e testing o f w h a t w a s t o b e c o m e S e a r l e ' s top-selling line. 1 refused. ' M o r a g got only £ 1 6 . Searle T h e t h a l i d o m i d e d i s a s t e r r e s u l t e d in a g e n e r a l t i g h t e n i n g of drug r e g u l a t o r y laws i n m o s t d e v e l o p e d c o u n t r i e s a r o u n d t h e g l o b e .w e e k study o n r a t s .

had its t e s t i n g d a t a s u b j e c t e d to stinging criticism by C o m m i s s i o n e r S c h m i d t . w e r e not s o e x a m i n e d . A n o t h e r t o p seller. w e a r e c o n t i n u i n g t o d i s c o v e r e r r o r s t h a t c o m p l i c a t e review o f this study. after t h r e e s e p a r a t e r e v i e w s b y S e a r l e p e r s o n n e l o f t h e s a m e d a t a from the 7 8 . R a t h e r t h a n s u b m i t t i n g b o t h r e p o r t s . A m o n g a d d i t i o n a l m a j o r findings o f t h e i n v e s t i g a t i o n o f this study a r e : (1) F o r s e v e r a l o f t h e a n i m a l s . a n d t h e a n i m a l s w e r e a l l o w e d t o c o n t i n u e i n the s t u d y . 76 . most r e c o r d s of o b s e r v a t i o n s of m i c r o s c o p i c f i n d i n g s w e r e not d a t e d or signed. 1976a: Part I I . F l a g y l . F o r e x a m p l e . or having a third p a t h o l o g i s t r e v i e w slides o n w h i c h t h e first two d i s a g r e e d . s o m e a n i m a l s with gross lesions w h i c h . T w o o f t h e s e t u m o r s w e r e m a l i g n a n t and w e r e not r e p o r t e d t o F D A ( S u b c o m m i t t e e o n H e a l t h . I n a d d i t i o n . Searle s u b m i t t e d only t h e s e c o n d p a t h o l o g i s t ' s r e p o r t . e d i t e d and verified p r i o r to t h e i n c l u s i o n in t h e r e p o r t of this s t u d y .1 4 ) . 1976a: P a r t I I . R e v i e w of a 104-week rat study on A l d a c t o n e c o n d u c t e d at H a z l e t o n L a b o r a t o r i e s [ a c o n t r a c t l a b o r a t o r y ] also r e v e a l e d p r o b l e m s . a c c o r d i n g to the study protocol. It is d i s c o n c e r t i n g t h a t e v e n t o d a y . O n l y 7 0 p e r c e n t o f t h e t i s s u e s s c h e d u l e d for h i s t o p a t h o l o g i c a l e x a m i n a t i o n i n t h e p r o t o c o l w e r e actually e x a m i n e d . required histopathological e x a m i n a t i o n .w e e k rat s t u d y . 1 3 . 9 ) . Aspartame.Safety testing of drugs: from negligence to fraud h a v e found a variety of o t h e r p r o b l e m s and q u e s t i o n a b l e practices. O n e c r i t i c i s m i l l u s t r a t e s nicely h o w a c o m p a n y can use s e l e c t i v i t y of scientific i n f o r m a t i o n to a d v a n t a g e . i t w a s noted that the m i c r o s c o p i c e x a m i n a t i o n of tissue slides had b e e n c o n d u c t e d by t w o different p a t h o l o g i s t s a t S e a r l e w h o r e p o r t e d different findings. which had b e e n t h e subject of a c o n c e r t e d c a m p a i g n b y N a d e r ' s H e a l t h R e s e a r c h G r o u p for withd r a w a l from t h e m a r k e t o n g r o u n d s o f alleged c a r c i n o g e n i c i t y . S i m i l a r a l l e g a t i o n s w e r e m a d e by S c h m i d t with r e s p e c t to the sweetening ingredient. tissue m a s s e s w e r e e x c i s e d from t h r e e live a n i m a l s d u r i n g t h e s t u d y . T h e y w e r e a l s o u n a b l e t o a c c o u n t for t h e differences i n r a w d a t a a n d t h e final r e p o r t s s u b m i t t e d t o F D A ( S u b c o m m i t t e e o n H e a l t h . which i n our view a p p e a r s s u b s t a n t i a l l y m o r e f a v o r a b l e t o t h e d r u g : and (2) S e a r l e e m p l o y e e s w e r e u n a b l e t o explain m a n y o f t h e p r o c e d u r e s b y w h i c h m i c r o s c o p i c f i n d i n g s w e r e r e c o r d e d .

was equally s t r o n g l y o f t h e view t h a t a c r i m i n a l c a s e should not p r o c e e d . A 4 6 . 3 9 ) . 15). A n o t h e r bad m o m e n t for S e a r l e w a s w h e n its f o r m e r p r i n c i p a l p a t h o l o g i s t . o v e r his o b j e c t i o n s . J o h n W . t h e J u s t i c e D e p a r t m e n t w a s o f t h e view that S e a r l e ' s a l l e g e d m i s d e e d s w e r e not i n t h e n a t u r e o f clearly definable 77 . 1976a: P a r t I I . 3 5 ) . 1976a: P a r t I I . t h e S e a r l e case study gives an i n d i c a t i o n o f t h e p o s s i b i l i t i e s for c o m p l e t e l y rejecting a study for r e a s o n s w h i c h m i g h t or m i g h t not be l e g i t i m a t e . In fact s o m e rats listed a s d e a d l a t e r w e r e r e c o r d e d a s a l i v e .w e e k h a m s t e r s t u d y o n A s p a r t a m e w a s ' d i s c o n t i n u e d b e c a u s e o f "wet t a i l " .g. O n e c o u l d g o o n and o n listing t h e m y r i a d o f F D A a l l e g a t i o n s s p r e a d o v e r t h o u s a n d s o f p a g e s o f t e s t i m o n y b e f o r e the S e n a t e . Justice was averse to a r e s u l t w h i c h m i g h t lay all b l a m e at t h e d o o r of a c o u p l e of j u n i o r s c a p e g o a t s . 1976a: P a r t I I .C o u n s e l ' s office w a s o f t h e view that Searle should be p r o s e c u t e d c r i m i n a l l y for its p a t t e r n of c o n d u c t with r e s p e c t to drug testing. F D A G e n e r a l .Safety testing of drugs: from negligence to fraud O n e final e x a m p l e with r e g a r d t o A s p a r t a m e : O u r i n v e s t i g a t o r s found t h a t a p a t h o l o g i s t ' s s u m m a r y w a s e d i t e d in such a m a n n e r as to a l t e r . guilt on t h e p a r t of s e n i o r e x e c u t i v e s could not be d e m o n s t r a t e d beyond reasonable doubt. The Justice D e p a r t m e n t . a n i m a l s r e p o r t e d i n good c o n d i t i o n w e r e a c t u a l l y d e a d . on t h e q u e s t i o n of s e l e c t i v i t y . M o r e o v e r . testified t h a t in 1968 and 1969. b e f o r e he j o i n e d t h e firm in M a y 1968. 1976a: P a r t I I . t i s s u e m a s s e s c o m e and g o and a n i m a l s die m o r e t h a n o n c e ' ( S u b c o m m i t t e e on H e a l t h . T h e i r v i e w w a s t h a t t h e scientific c o m p l e x i t y of t h e case w o u l d be an e x c e s s i v e b u r d e n o n limited g o v e r n m e n t p r o s e c u t o r i a l r e s o u r c e s . T h e original r e p o r t w a s not s u b m i t t e d ( S u b c o m m i t t e e o n H e a l t h . s o m e o f t h e p a t h o l o g i s t ' s s u m m a r i z e d f i n d i n g s .m o r t e m s o f rats w h i c h d i e d in 1967. S a r g a t z . T h e m o s t s e r i o u s t y p e o f p r o b l e m w h i c h t h e F D A c l a i m e d w a s c o m m o n t o m a n y Searle studies was: 'Because ofthe perfunctory nature ofthe observations. he had b e e n i n s t r u c t e d t o w r i t e r e a s s u r i n g c o m m e n t s o n p o s t . t h a t w h i l e it m i g h t be p o s s i b l e to c o n v i c t a few low-level c o m p a n y o p e r a t i v e s . however. t h e n d e a d . g e n e r a l l y in a f a v o r a b l e d i r e c t i o n . t h e n r e s u r r e c t e d o n c e o r e v e n twice m o r e . F u r t h e r . I n a 52-rat study of N o r p a c e there were alleged to be ' i n a d e q u a t e antem o r t e m o b s e r v a t i o n s : e. 4 1 ) . i n a d e q u a t e r e p o r t i n g o f tissue m a s s e s ' ( S u b c o m m i t t e e o n H e a l t h . ( a d i s e a s e o f h a m s t e r s ) but n o n e o f t h e s y m p t o m s o f t h e d i s e a s e are reflected i n daily o b s e r v a t i o n r e c o r d s ' ( S u b c o m m i t t e e o n H e a l t h .

Safety testing of drugs: from negligence to fraud specific a c t s .E a s t A s i a n Region complained to me: 7S . A s S e a r l e ' s G r o u p M a n a g i n g D i r e c t o r for the S o u t h . T h e P r e s i d e n t w a s replaced by Donald Rumsfeld. or i n c o n s i s t e n c y in any given s t u d y m a y not be significant in and of itself. S e v e r a l S e a r l e e x e c u t i v e s with w h o m I s p o k e said t h a t c o m p a n y m o r a l e . the a d v e r s e publicity from t h e K e n n e d y h e a r i n g s had i m p o r t a n t c o n s e q u e n c e s for S e a r l e . a n d h e n c e p r o d u c t i v i t y . a n d i n c u m b e n t of o t h e r s e n i o r p o s i t i o n s in the a d m i n i s t r a t i o n s o f N i x o n and F o r d . H a m i l l ' s key a p p o i n t m e n t s i n t h e c o m p l i a n c e g r o u p w e r e also from o u t s i d e S e a r l e . White H o u s e C h i e f of Staff. T h e c o m p a n y felt v i n d i c a t e d a n d w a s a b l e to c l a i m .' I n spite o f t h e d r o p p i n g o f criminal c h a r g e s . w a s at a d e p r e s s e d level d u r i n g t h e i n v e s t i g a t i o n s . one-time Defence Secretary. S e a r l e also g a v e a b l a n k c h e q u e to R i c h a r d H a m i l l from B a x t e r T r a v e n o l to set up a s o p h i s t i c a t e d c o r p o r a t e c o m p l i a n c e g r o u p w h i c h w o u l d t r a v e l t h e w o r l d d o i n g c o m p l i a n c e a u d i t s t o e n s u r e that all s u b s i d i a r i e s in all a r e a s of t h e c o r p o r a t i o n ' s o p e r a t i o n s w e r e m e e t i n g b o t h c o m p a n y and legal s t a n d a r d s . In p a r t i c u l a r . 1976a: Part I I I . W h i l e a single d i s c r e p a n c y . S e a r l e r e s e a r c h g r o u n d to a halt b e c a u s e s e n i o r e x e c u t i v e s w e r e d o i n g little else but r e s p o n d t o the o n g o i n g d e m a n d s of t h e i n v e s t i g a t i o n s into their affairs. basically it w a s a p r o b l e m o f i n c o m p e t e n c e and p o o r r e c o r d k e e p i n g a m o n g o u r r e s e a r c h staff. A total r e o r g a n i s a t i o n o f t h e c o m p a n y was t h e u p s h o t . L a t e r in this b o o k we will r e t u r n to the t h e m e that o n e of the d e f i c i e n c i e s of e x i s t i n g c r i m i n a l ( a n d civil) law for d e a l i n g with c o r p o r a t e m i s c o n d u c t is t h a t it is g e a r e d to d e a l i n g w i t h a specific act p e r p e t r a t e d at o n e p o i n t of t i m e r a t h e r t h a n with a p a t t e r n of b e h a v i o u r a c r o s s t i m e w h i c h u l t i m a t e l y h a s anti-social effects. It w a s t h e J u s t i c e D e p a r t m e n t ' s v i e w which held sway in a r e p u t e d l y c l o s e G r a n d J u r y d e c i s i o n not t o r e t u r n a n i n d i c t m e n t a g a i n s t S e a r l e or any of its e x e c u t i v e s . but r a t h e r a c u m u l a t i v e p a t t e r n o f c o n d u c t . T h e F D A itself had a d m i t t e d t h a t this w a s t h e case t h r o u g h t h e w o r d s of its t a s k force t o i n v e s t i g a t e t h e c o n d u c t o f S e a r l e ' s a n i m a l s t u d i e s . 4). e r r o r . the cumulative f i n d i n g s o f p r o b l e m s w i t h i n and a c r o s s t h e s t u d i e s w e i n v e s t i g a t e d r e v e a l a p a t t e r n of c o n d u c t which c o m p r o m i s e s t h e scientific i n t e g r i t y o f t h e s t u d i e s ( S u b c o m m i t t e e o n H e a l t h . as o n e S e a r l e e x e c u t i v e put it to m e : ' W h i l e t h e r e m i g h t h a v e b e e n a little d i s h o n e s t y h e r e and t h e r e .

T h e F D A set a b o u t d r a w i n g u p a d e t a i l e d c o d e o f G o o d L a b o r a t o r y P r a c t i c e s ( G L P s ) for drug t e s t e r s . like the local C o r p o r a t e Affairs C o m m i s s i o n . t h e r e c a n b e little d o u b t t h a t t h e r e w a s s o m e effect. Searlc p l a y e d a c o n s t r u c t i v e role in d r a w i n g up a draft set of G L P regulat i o n s . E v e n m o r e interesting w a s t h e fact t h a t S e a r l e d i s s o c i a t e d itself from all of the o t h e r c o r p o r a t i o n s w h o t h r o u g h the P h a r m a c e u t i c a l Manufacturers A s s o c i a t i o n a r g u e d t h a t t h e G L P s should b e g u i d e l i n e s r a t h e r t h a n s a n c t i o n a b l e r u l e s . ' M o s t o b s e r v e r s s e e m t o a g r e e that the publicity p r o b l e m with which the c o m p a n y was confronted during this period was c o m p o u n d e d by poor m a n a g e m e n t . It would therefore be foolish to a s s u m e t h a t t h e K e n n e d y h e a r i n g s had a d r a m a t i c effect o n t h e c o r p o r a t i o n ' s f i n a n c i a l p e r f o r m a n c e . N e v e r t h e l e s s .Safety testing of drugs: from negligence to fraud W e h a v e t h r e e b o s s e s t o w o r k for n o w . 79 . w h e r e a s local c o m p a n i e s h a v e only o n e . S e a r l e s h a r e v a l u e s w e r e e n j o y i n g c o n s i s t e n t l y rising v a l u e s d u r i n g t h e first four years o f t h e 1970s. W i t h t h r e e different k i n d s o f c h e c k s on our b e h a v i o u r t h e r e is far less c h a n c e t h a t a n A m e r i c a n m u l t i n a t i o n a l c o m p a n y will b r e a k the law c o m p a r e d with an A u s t r a l i a n c o m p a n y . h o w e v e r . S e a r l e profitability b e g a n t o d e c l i n e i n 1973 and s h o w e d a d e c r e a s e e v e r y y e a r until 1977. m u c h o f w h i c h w a s t a k e n u p b y t h e F D A . I n t e r e s t i n g l y . S e c o n d l y . violat i o n of w h i c h could c o n s t i t u t e a c r i m i n a l offence. T h e F D A also set up a large B i o r e s e a r c h M o n i t o r i n g b u r e a u c r a c y o f i n s p e c t o r s t o e n s u r e c o m p l i a n c e with the G L P s .1 9 7 0 s (the p e r i o d of t h e crisis) and a p l a t e a u at t h e s e l o w e r s h a r e v a l u e s for the r e m a i n d e r o f t h e d e c a d e . F i r s t l y . w e r e t h e c o n s e q u e n c e s for the r e g u l a t o r y a p p a r a t u s . A n d t h i r d l y . in which the c o r p o r a t i o n r e c o r d e d a l o s s . w e have got t o have t h e S e c u r i t i e s and E x c h a n g e C o m m i s s i o n a s a boss. It w o u l d n o w be m u c h e a s i e r t o c o n v i c t a c o m p a n y guilty o f t h e k i n d s o f m i s d e e d s a l l e g e d t o h a v e b e e n p e r p e t r a t e d b y S e a r l e . M o s t d r a m a t i c o f all. It is difficult to a s s e s s t h e e x t e n t o f t h e financial i m p a c t o f t h e bad p u b l i c i t y from t h e K e n n e d y h e a r i n g s . S e a r l e insisted t h a t v i o l a t i o n o f G L P s s h o u l d b e a c r i m i n a l m a t t e r . we m u s t follow local l a w s . w e h a v e t o h a v e t h e i n t e r n a l c o r p o r a t i o n c o n t r o l s which o u r c o m p a n y has set u p since t h e K e n n e d y h e a r i n g s . H a z l e t o n L a b o r a t o r i e s also claim t h a t being n a m e d i n the K e n n e d y h e a r i n g as h a v i n g d o n e w o r k on c o n t r a c t for Searle (work which was q u e s t i o n e d ) cost t h e small c o m p a n y o v e r a million dollars in business. T h i s w a s followed by d e c l i n e in t h e m i d .

. C a n p h a r m a c e u t i c a l c o m p a n i e s use their c o m m e r c i a l p o w e r to i m p o s e a set of e x p e c t a t i o n s on c o n t r a c t l a b o r a t o r i e s w h e r e b y u n f a v o u r a b l e r e s u l t s c a u s e t h e l a b o r a t o r y t o b e l i e v e that i t will be u n l i k e l y to get future c o n t r a c t s ? C a n a c o m p a n y w h i c h w a n t s to p u s h t h r o u g h a q u i c k and dirty s t u d y . a s m a n y d e v e l o p e d c o u n t r i e s are n o w e n a c t i n g G L P s similar to those o f t h e United States. L a t e i n 1979 t w o f o r m e r v i c e . p l e a d e d guilty to c h a r g e s of c o n s p i r i n g to falsify r e p o r t s of a n i m a l tests on certain drug products in order to show them harmless when SO . A b r o g a t i o n o f r e s p o n s i b i l i t y i n o n e case ( B i o m e t r i c T e s t i n g I n c . 13). . 1976a: P a r t I I I . .Safety testing of drugs: from negligence to fraud T h e i m p a c t o f t h e K e n n e d y S e a r l e h e a r i n g s has b e e n intern a t i o n a l . and Industrial Bio-Test Laboratories O n e o f t h e issues r a i s e d b y t h e S e a r l e i n v e s t i g a t i o n s w a s t h e relat i o n s h i p b e t w e e n c o n t r a c t l a b o r a t o r i e s and large p h a r m a c e u t i c a l c o m p a n i e s . W h a t d o e s this m e a n . S o m e o f t h e l a b o r a t o r y d e t e r m i n a t i o n s alleged t o have b e e n c a r r i e d o u t w e r e found b y t h e F D A i n v e s t i g a t o r s not t o have b e e n c a r r i e d o u t at all. ( S u b c o m m i t t e e o n H e a l t h . Biometric Testing Inc. D R S C H M I D T . t h a t n o n e x i s t e n t experiments were reported? D R S C H M I D T . S E N A T O R K E N N E D Y . I n this c o n n e c t i o n . get a c o n t r a c t lab to do s h o d d y w o r k for it? T h e o p i n i o n of F D A officers I s p o k e w i t h w a s t h a t c e r t a i n c o n t r a c t labs have f l o u r i s h e d b y u n d e r c u t t i n g r e s p o n sible l a b o r a t o r i e s on price and m a k i n g a profit by fabricating d a t a a n d c u t t i n g c o r n e r s o n scientific r i g o u r . sir. i t c a m e t o o u r a t t e n t i o n last w e e k t h a t former e m p l o y e e s o f o n e o f t h e s e s u b c o n t r a c t o r s h a v e c h a r g e d t h a t t h e y w e r e i n s t r u c t e d to falsify d a t a by t h e i r e m p l o y e r . m o n i t o r i n g o f t h e p e r f o r m a n c e o f t h e s e s u b c o n t r a c t o r s . H e r e t h e c o n t r a c t l a b o r a t o r y had widely used s u b contractors.l a b e l i n g ' b y some. Y e s . ) d i s c u s s e d i n t h e K e n n e d y h e a r i n g s w a s t w o steps r e m o v e d from the m a n u f a c t u r e r . i t i s c o m m o n l y called ' d r y . yet which w a n t s to m a i n t a i n its o w n s t a n d a r d s for r e s e a r c h e x c e l l e n c e . M a n y o f t h e laboratory d e t e r m i n a t i o n s are s u b c o n t r a c t e d with l i t t l e . i f a n y .p r e s i d e n t s o f B i o m e t r i c T e s t i n g Inc.

. F D A h a v e a c c e p t e d a s u b s e q u e n t S y n t e x i n . A C h i c a g o g r a n d j u r y h a s r e t u r n e d c r i m i n a l i n d i c t m e n t s against four f o r m e r I B T e m p l o y e e s .r a y s and E K G ' s . o n e o f t h e largest. 1977: P a r t I V . u s u a l l y with different v e r s i o n s o f gross post m o r t e m findings. this w a s d o n e . e v e n t h o u g h all a n i m a l s w e r e r e p o r t e d t o have r e c e i v e d s t a n d a r d care and d r u g a d m i n i s t r a t i o n ( S u b c o m m i t t e e o n H e a l t h . s e v e r a l a n i m a l s w e r e r e c o r d e d a s having died o n m o r e t h a n o n e d a t e . t h e I B T fiasco is still s o m e t h i n g of a legal m u d d l e .h o u s e r e p l i c a t i o n for N a p r o s y n a s d e m o n s t r a t i n g t h e safety o f t h e p r o d u c t . t h e largest selling p r o d u c t o f the S y n t e x corp o r a t i o n . F D A officers w e r e a n g e r e d by t h e fact that I B T s h r e d d e d a n u m b e r o f d o c u m e n t s r e q u i r e d for their i n v e s t i g a t i o n . A t t h e t i m e o f w r i t i n g . and s o m e l o o s e d a t a i n f o l d e r s . S h r e d d e d d o c u m e n t s i n c l u d e d ' X . a c t u a l l y d o w n r i g h t false i n f o r m a t i o n of an e n o r m o u s e x t e n t w a s s u b s t i t u t e d for it. In t h e w a k e o f t h e i n c i d e n t the c o m p a n y is now bankrupt. from t h e m a r k e t . A g a i n t h e forum for t h e laying of a l l e g a t i o n s a g a i n s t I B T w a s the K e n n e d y h e a r i n g s . A s a result o f t h e i r i n v e s t i g a t i o n s the F D A i n s t i t u t e d p r o c e e d i n g s t o r e m o v e N a p r o s y n . A m o n g t h e a l l e g a t i o n s o n the I B T testing o f N a p r o s y n were: . A s s o c i a t e D i r e c t o r for N e w D r u g E v a l u a t i o n . The most c e l e b r a t e d discussion c o n c e r n i n g a contract testing l a b o r a t o r y c e n t r e d o n I n d u s t r i a l B i o t e s t ( I B T ) . 1977: P a r t I V . e x t r e m e variations in body weight were noted b o t h d u r i n g s u c c e s s i v e w e i g h i n g s o f t h e s a m e a n i m a l s and within a n y g r o u p o f a n i m a l s w e i g h e d a t t h e s a m e t i m e . a n u m b e r o f b o o k s o f d a t a . 177). 144). t o a s s u r e t h e d e l i b e r a t e d e c e p t i o n p r o c e s s i n which I B T a n d / o r its a g e n t s e n g a g e d ( S u b c o m m i t t e e o n H e a l t h . i n m y view. ' D r M a r i o n F i n k e l . . T h e most s e r i o u s a l l e g a t i o n m a d e b y the F D A w a s t h a t I B T had p r o v i d e d false i n f o r m a t i o n to t h e m by failing to r e p o r t i n s t a n c e s o f test a n i m a l s w h i c h had d e v e l o p e d t u m o u r s and g e n e r a l l y u n d e r s t a t i n g t h e n u m b e r o f a n i m a l s with t u m o u r s . w r o t e in a r e p o r t on I B T of 14 J a n u a r y 1977: 1 I t t u r n s o u t t h a t n o t only w a s highly m a t e r i a l i n f o r m a t i o n shielded from o u r k n o w l e d g e .Safety testing of drugs: from negligence to fraud in fact t h e t e s t s had not b e e n c a r r i e d o u t . m a n y a n i m a l w e i g h t s w e r e r e c o r d e d as having b e e n c o l l e c t e d w h i l e t h e a n i m a l s w e r e alive o n d a t e s s u b s e q u e n t t o their d a t e s o f d e a t h . S e c u r i t i e s class action suits have b e e n filed a g a i n s t S y n t e x to t h e benefit of all p e r s o n s w h o b o u g h t Syntex 81 .

t h e study of c o r p o r a t e c r i m e is still at t h e c a s e study s t a g e . O n e m u s t b e e x t r e m e l y c a u t i o u s a b o u t this f i n d i n g s i n c e t h e r e w e r e only five u n i v e r s i t y l a b o r a t o r i e s i n the study.Safety testing of drugs: from negligence to fraud c o m m o n stock or o p t i o n s b e t w e e n 13 O c t o b e r 1975 and 6 A u g u s t 1976. 0 0 0 t o w a r d s a s e t t l e m e n t fund for t h e class a c t i o n suits. 1977. O u t o f c o u r t I B T h a v e a g r e e d t o pay $ 1 . and h u m a n and a n i m a l d r u g s . c o n t r a c t labs w e r e found to h a v e a w o r s e r e c o r d of G L P v i o l a t i o n s t h a n s p o n s o r l a b s . formerly t h e largest c o n t r a c t l a b o r a t o r y in t h e U n i t e d S t a t e s . ' T h e w o r s t a r e a s of c o m p l i a n c e (all with c o m p l i a n c e rate overall) were: 82 less t h a n 50 per cent . A s o n e w o u l d p r e d i c t from t h e f o r e g o i n g d i s c u s s i o n of h o w c o n t r a c t labs can be used by s p o n s o r s t o a b r o g a t e r e s p o n s i b i l i t y for quality r e s e a r c h . I B T . In t h e first study ( B l o z a n . In t h e a r e a o f G o o d L a b o r a t o r y P r a c t i c e s t w o limited surveys o f levels o f c o m p l i a n c e h a v e b e e n c o n d u c t e d b y t h e F D A ( B l o z a n . with t h e i r s u p p o s e d d e t a c h m e n t from the profit m o t i v e . C o o k . 1977) t h e level of c o m p l i a n c e with different G L P r e g u l a t i o n s v a r i e d from 32 per cent to 98 per cent a m o n g t h e 3 9 l a b o r a t o r i e s i n t h e s t u d y . a r e u n l i k e l y t o cut c o r n e r s o n r e s e a r c h s t a n d a r d s . is facing b a n k r u p t c y . food and c o l o u r a d d i t i v e s . w a s with university l a b o r a t o r i e s . Surveys of safety testing violations As p o i n t e d out in C h a p t e r 1. T h e suits a l l e g e t h a t S y n t e x k n e w o r should h a v e k n o w n o f t h e d e f i c i e n c i e s i n t h e 1BT r e s e a r c h and d r a w n t h e c o n t r a c t l a b o r a t o r y ' s a t t e n t i o n t o t h e m . F D A d i s c o n t e n t w i t h I B T w o r k led the a g e n c y t o write t o m o s t o f t h e m a j o r d r u g c o m p a n i e s informing t h e m that any d a t a collected by I B T w o u l d in future be s u b j e c t e d to p e c u l i a r l y careful F D A c h e c k i n g . N e v e r t h e l e s s . A t t h e t i m e o f w r i t i n g . i t m u s t u n d e r m i n e any a u t o m a t i c a s s u m p t i o n that u n i v e r s i t y r e s e a r c h e r s . 1979). a n d rarely can w e have r e c o u r s e t o statistical i n f o r m a t i o n on t h e f r e q u e n c y of v i o l a t i o n s of a p a r t i c u l a r t y p e . T h e w o r s t r e c o r d o f all. T h i s b e i n g a n extra b u r d e n which most c o m p a n i e s w e r e not willing t o b e a r . T h e s u r v e y s w e r e o f G L P v i o l a t i o n s u n c o v e r e d b y B i o r e s e a r c h M o n i t o r i n g Staff i n s p e c t o r s i n l a b o r a t o r i e s c o n d u c t i n g safety t e s t i n g o n h u m a n biological p r o d u c t s . T h e c o n s e q u e n c e s of the affair for I B T have b e e n c a t a s t r o p h i c . h o w e v e r . In effect t h e F D A has d e l i v e r e d it a c o r p o r a t e d e a t h s e n t e n c e w i t h o u t going to court. 8 0 0 . I B T s t o p p e d g e t t i n g b u s i n e s s from major d r u g c o m p a n i e s .

1979: viii). * RECORD RETENTION M a n y l a b o r a t o r i e s had r e c o r d s w h i c h w e r e s o i n a d e q u a t e t h a t f i n d i n g o u t e x a c t l y w h a t w a s g o i n g o n and d e m o n s t r a t i n g guilt in any c r i m i n a l p r o c e e d i n g a g a i n s t t h e m w o u l d be difficult. T h e C o o k ( 1 9 7 9 ) study o f 2 8 l a b o r a t o r i e s c o n c l u d e d that i n t h e t w o y e a r s b e t w e e n t h e s t u d i e s . a p e r i o d d u r i n g which t h e B i o r e s e a r c h M o n i t o r i n g Staff s w u n g into effective o p e r a t i o n . c a l i b r a t i o n . * F i n a l l y . M o s t did not have o n e .c a r r i e r mix for r a t e o f r e l e a s e and h o m o g e n e i t y o f mix w e r e the most p r e v a l e n t problems. three i m p r o v e m e n t s s e e m e d q u i t e clear. b u t t h e y do add up to a d i s t u r b i n g p a t t e r n of n e g l i g e n c e . i n the a f t e r m a t h o f t h e Searle and I B T fiascos. O n e lab in t h e 1979 study had as m a n y as 42 G L P v i o l a t i o n s . problems r e m a i n e d .r e g u l a t o r y c h e c k t h a t s t a n d a r d s are b e i n g m a i n t a i n e d w i t h i n the l a b . t h e a v e r a g e lab had 48 p e r c e n t of r e q u i r e d S O P ' s in 1977 c o m p a r e d to 78 p e r c e n t in 1979 ( C o o k . t h e a v e r a g e c o m p l i a n c e rate over the 86 G L P s c o m m o n to both studies i m p r o v e d from 6 0 p e r cent t o 8 7 p e r c e n t . we find in b o t h s t u d i e s a r e l a t i v e l y low level of c o m p l i a n c e with regulations c o n c e r n i n g the 'handling of d e a d / m o r i b u n d 83 . m a i n t e n a n c e and r e p a i r functions w a s the main problem. * TEST SUBSTANCE CONTROL L a c k of t e s t i n g for e a c h b a t c h of test s u b s t a n c e . In spite of t h e s e i m p r o v e m e n t s w h i c h might r e a s o n a b l y be a t t r i b u t e d to the Bioresearch M o n i t o r i n g P r o g r a m . * EQUIPMENT L a c k o f w r i t t e n s t a n d a r d o p e r a t i n g p r o c e d u r e s ( S O P s ) for the c l e a n i n g . * T h e p e r c e n t of labs h a v i n g an o p e r a t i o n a l Q A U [Quality Assurance Unit] i n c r e a s e d from 32 to 79 p e r c e n t o v e r the t w o year period. A m a z i n g l y . * T h e p e r c e n t of labs i n c o m p l i a n c e w i t h t h e r e q u i r e m e n t for a r c h i v a l s t o r a g e o f d a t a with a d e q u a t e i n d e x i n g i n c r e a s e d from 58 to 82 p e r c e n t . A d m i t t e d l y .Safety testing of drugs: from negligence to fraud * QUALITY A S S U R A N C E UNIT G L P r e g u l a t i o n s r e q u i r e that l a b o r a t o r i e s had a quality a s s u r a n c e unit as a s e l f . E v e n t h o u g h t h e r e w e r e p r o b l e m s of comparability b e t w e e n the two studies. m a n y o f t h e s e w e r e relatively trivial m a t t e r s in t h e m s e l v e s .

1979: 19). most o b s e r v e r s w o u l d a g r e e w i t h t h e view o f Griffin (1977: 29) that: ' F a b r i c a t i o n of r e s u l t s is not as c o m m o n in toxicity studies [with a n i m a l s ] as it is at t h e clinical trial [with h u m a n s ] s t a g e . most t r a n s n a t i o n a l s ( S u b c o m m i t t e e o n H e a l t h .f o u r p e r c e n t (115) failed to c o m p l y with o n e or m o r e of t h e r e q u i r e m e n t s of t h e law for clinical i n v e s t i g a t o r s . as Mr G r e g o r y A h a r t o f t h e G e n e r a l A c c o u n t i n g Office testified before the Senate. t h e r e w e r e a n u m b e r o f s e r i o u s deficiencies: * O n e lab i n c o r r e c t l y i n d i c a t e d t h a t clinical o b s e r v a t i o n s w e r e m a d e daily. a fourth lab did not r e p o r t clinically significant o b s e r v a t i o n s ( e x c e s s i v e salivation of d o g s ) in its final study r e p o r t ( C o o k . * T h e s a m e lab i n a c c u r a t e l y r e p o r t e d t h e c o m p o s i t i o n o f t h e control substance. I n s o m e c a s e s t h e deficiencies w e r e relatively m i n o r (for e x a m p l e . 84 .Safety testing of drugs: from negligence to fraud a n i m a l s ' . S e v e n t y . 1975). Fifty p e r cent failed to k e e p a c c u r a t e r e c o r d s o f t h e a m o u n t o f d r u g s r e c e i v e d from t h e s p o n s o r a n d d i s t r i b u t e d to test s u b j e c t s . I n spite o f t h e w i d e s p r e a d p r o b l e m s w i t h a n i m a l d a t a . E v e n m o r e d i s t u r b i n g . the 1979 s t u d y r e v e a l e d 9 i n s t a n c e s from 5 d i f f e r e n t l a b o r a t o r i e s o f i n a c c u r a t e l y r e p o r t e d study r e s u l t s . I f t h e i n v e s t i g a t o r d o e s not k e e p t r a c k o f t h e d r u g s . T h i s is a s e r i o u s m a t t e r . a n a r e a o f a b u s e w h i c h will be d i s c u s s e d in t h e next s e c t i o n . T h i r t y . ' B e t w e e n 1972 a n d 1974 t h e F D A did a survey of c o m p l i a n c e a m o n g 155 clinical i n v e s t i g a t o r s w o r k i n g for 15 s p o n s o r s . H o w e v e r . * A n o t h e r lab did not p o i n t out readily a p p a r e n t and statistically significant d i f f e r e n c e s in test and c o n t r o l a n i m a l s . o n e l a b o r a t o r y r e p o r t e d i n c o r r e c t l y the n u m b e r o f a n i m a l s h o u s e d p e r c a g e ) . * F i n a l l y . T h e c o m p l i a n c e r a t e w a s 68 per cent in 1977 and 78 per c e n t in 1979.f i v e p e r cent o f t h e clinicians in t h e s a m p l e failed to o b t a i n p r o p e r c o n s e n t from t h e i r p a t i e n t s . i t i s p o s s i b l e h e has g i v e n t h e m t o p e o p l e w h o a r e not t r a i n e d clinical i n v e s t i g a t o r s o r t h a t h e h a s given t h e m t o p a t i e n t s o u t s i d e t h e control study. which w e r e in fact not m a d e . * A n o t h e r lab r e p o r t e d t h a t histological e x a m i n a t i o n s (with p r e s u m a b l y negative findings) were m a d e on specimens.

e i g h t p e r cent o f t h e s a m p l e o f c l i n i c i a n s failed t o a d h e r e t o s t u d y p r o t o c o l s . T h e F D A w a s r e q u e s t e d b y t h e G e n e r a l A c c o u n t i n g Office t o d o f u r t h e r s u r v e y s to a s s e s s the levels of c o m p l i a n c e in t h e s e a r e a s .e i g h t of t h e 48 clinical i n v e s t i g a t o r s i n s p e c t e d satisfied all F D A regulations. and s o on. all 35 failed to c o m p l y with o n e or m o r e of the F D A r e g u l a t i o n s ( S u b c o m m i t t e e o n H e a l t h .h o u s c b y the s p o n s o r . a c a s e had recently a p p e a r e d of a clinical i n v e s t i g a t o r w i t h a forged m e d i c a l l i c e n s u r e c e r t i f i c a t e . 3 4 2 ) . d a t a c o l l e c t e d on o n e p r o d u c t w a s b e i n g s u b m i t t e d for a n o t h e r . ifa d r u g is toxic to t h e liver. O b v i o u s l y .h o u s e by the s p o n s o r and s t u d i e s r e g u l a t e d b y t h e F D A ' s B u r e a u o f B i o l o g i e s .t h r e e p e r c e n t failed t o m a i n t a i n r e c o r d s w h i c h a c c u r a t e l y reflect t h e c o n d i t i o n s o f the p a t i e n t b e f o r e . A m o n g 3 5 clinical i n v e s t i g a t i o n s c o n d u c t e d i n . I n t h e 1978 h e a r i n g s before the K e n n e d y S u b c o m m i t t e e t h e f r a u d u l e n t p r a c t i c e s w h i c h had raised such a f u r o r e y e a r s b e f o r e w e r e still a p p a r e n t . 1976a: Part I I . C o m m i s s i o n e r D o n a l d K e n n e d y c a t a l o g u e d a long list of a b u s e s w h i c h r e m a i n e d of major concern. ineffective. T h e p r o b l e m c o n t i n u e s . * C a s e r e p o r t s c o n t a i n i n g t h e r e s u l t s of clinical l a b o r a t o r y w o r k w h i c h w a s not a c t u a l l y p e r f o r m e d . and t h e r e is any a d v e r s e r e a c t i o n from t h e d r u g . 85 .for e x a m p l e .Safety testing of drugs: from negligence to fraud If he d o e s not k e e p r e c o r d s of w h e r e t h e y w e n t . d e p e n d e n c e o n such s p u r i o u s d a t a m i g h t result i n e x p a n d e d t e s t i n g o f a d r u g or in t h e p o s s i b l e a p p r o v a l of a drug for use in a c o n d i t i o n w h e r e it w a s . and on subjects w h o w e r e n e v e r a d m i n i s t e r e d the i n v e s t i g a t i o n a l d r u g . T w e n t y . you c a n n o t t r a c e t h e d r u g t o t h e p a t i e n t s that w e r e s u b j e c t e d to t h e d r u g and give t h e m follow up c a r e ( S u b c o m m i t t e e o n H e a l t h . T h e p u r p o s e o f such l a b o r a t o r y w o r k is to assess t h e safety o f t h e drug in h u m a n s u b j e c t s . and 22 p e r c e n t did not retain case r e c o r d s as required. T h e r e c o r d for s t u d i e s s u b m i t t e d t o t h e B u r e a u o f B i o l o g i e s w a s b e t t e r . t h e n t h e drug might not be w i t h d r a w n i n t i m e t o p r e v e n t p e r m a n e n t liver d a m a g e o r d e a t h . T w e n t y . 1976a: P a r t I I . or you n e e d to follow up with p a t i e n t s t h a t r e c e i v e d it so t h e y get p r o p e r m e d i c a l care and m o n i t o r i n g . and t e s t s of liver function a r e not p e r f o r m e d . 3 3 9 ) . T h i s survey did not i n c l u d e s t u d i e s c o n d u c t e d i n . Clinical d a t a w e r e still being ' g r a p h i t e d ' . T w e n t y . in fact. * C a s e r e p o r t s on f i c t i t i o u s s u b j e c t s . d u r i n g a n d after t h e s t u d y .

86 . D r u g d o s e s g i v e n . since p r o t o c o l s often specify d o s e s at the u p p e r limit of w h a t has b e e n j u d g e d to be safe. L a c k i n g n e c e s s a r y i n f o r m a t i o n . H e r e t h e i n f o r m a t i o n o b t a i n e d is v a l u e l e s s . or if a study o f t h e t y p e d o n e s h o u l d not h a v e b e e n d o n e i n t h e i n s t i t u t i o n i n q u e s t i o n . Of p a r t i c u l a r i m p o r t a n c e is t h e a d m i n i s t r a t i o n of d r u g s t o p r e g n a n t w o m e n w h e r e fetal a b n o r m a l i t i e s might b e caused. This could be d a n g e r o u s . a n d the subject has b e e n put at n e e d l e s s risk. lack of f o l l o w u p . I n a d e q u a t e m e d i c a l a t t e n t i o n t o the test p o p u l a t i o n t h r o u g h e x c e s s i v e d e l e g a t i o n of a u t h o r i t y . t h e subject m i g h t e n t e r a s t u d y w h i c h he w o u l d not have e n t e r e d if he had b e e n i n f o r m e d o f t h e d a n g e r s as well as the possible benefits. O b v i o u s l y . T h e i n v e s t i g a t o r m a y profit h u g e l y by his "exclusive franchise' e s t a b l i s h e d by his being an i n v e s t i g a t o r of a p r o d u c t not a v a i l a b l e to all p h y s i c i a n s ( S u b c o m m i t t e e on H e a l t h . In this situation the s u b j e c t c a n n o t h a v e b e e n i n f o r m e d o f t h e n a t u r e o f t h e drug a n d is s o m e t i m e s i n a p p r o p r i a t e l y c h a r g e d for it. t h e n any r e p o r t of efficacy o f t h a t drug is obviously spurious. far e x c e e d p r o t o c o l l i m i t a t i o n s . e t c . If a p a t i e n t d o e s not have t h e d i s e a s e to be t r e a t e d with t h e i n v e s t i g a t i o n a l d r u g . 1978: Part V. C o n s e n t o f t h e clinical subject not o b t a i n e d . and his best i n t e r e s t m i g h t not be s e r v e d . this i s d a n g e r o u s t o t h e s u b j e c t . D r u g s g i v e n t o i n a p p r o p r i a t e s u b j e c t s .Safety testing of drugs: from negligence to fraud False representation of Institutional Review Board approval of a s t u d y . T h i s could b e d a n g e r o u s if d r u g s a i m e d at t h e g e n e r a l l y h e a l t h y a d u l t p o p u l a t i o n are g i v e n to c h i l d r e n or t h e aged w h e r e their m e t a b o l i s m might be different. T h i s m a k e s t h e subject n o t h i n g but a g u i n e a p i g . C o n s e n t m e a n s informed c o n s e n t . Serial use of i n v e s t i g a t i o n a l d r u g s to t h e e x c l u s i o n of a c c e p t e d t h e r a p y . 76-9). M i s r e p r e s e n t a t i o n o f p a t i e n t d i a g n o s i s and d e m o g r a p h i c data. A d m i n i s t r a t i o n to s u b j e c t s of t w o or m o r e i n v e s t i g a t i o n a l d r u g s a t t h e s a m e t i m e a n d t h e a d m i n i s t r a t i o n o f o t h e r significant and p e r h a p s i n t e r f e r i n g d r u g s with t h e i n v e s t i g a t i o n a l d r u g . R e p r e s e n t a t i o n of investigational drugs as marketed p r o d u c t s a n d / o r t h e sale of such d r u g s . A layer of subject p r o t e c t i o n is r e m o v e d if u n i n f o r m a t i v e c o n s e n t forms w e r e u s e d .

Every biomedical r e s e a r c h project involving h u m a n subjects should be preceded by careful a s s e s s m e n t of p r e d i c t a b l e risks in c o m p a r i s o n with fores e e a b l e b e n e f i t s to t h e subject or to o t h e r s . . T h e i r suffering is not always n e c e s s a r y .k n i t p r e s s u r e g r o u p a n d such d e c l a r a t i o n s a r e r h e t o r i c yet t o b e t r a n s l a t e d into r e a l i t y . In F r a n c e t h e r e is a r e l u c t a n c e to find j u s t i f i a b l e t h e t r e a t m e n t of any p a t i e n t w h o has a g e n u i n e h e a l t h p r o b l e m w i t h a p l a c e b o (an inert p i l l ) . a c o m p a n y which sets o u t to get a slice of a good m a r k e t b y a n a p p a r e n t l y i n c o n s e q u e n t i a l m a n i p u l a t i o n o f the m o l e c u l a r structure of an existing product can occasionally produce a result w h i c h d o e s h a v e s o m e t h e r a p e u t i c a d v a n t a g e s over its parent. and fewer t h a n 1 per c e n t of d r u g s tested on h u m a n s p r o v i d e d i m p o r t a n t t h e r a p e u t i c g a i n . . Is it not a r e a s o n a b l e p r i n c i p l e to subject p e o p l e to risk only w h e n t h e goal is explicitly to p r o d u c e s o m e t h i n g b e t t e r for p e o p l e ? T h i s is t h e p o s i t i o n i m p l i e d in C l a u s e 5 o f t h e D e c l a r a t i o n of Helsinki on ethics in biomedical research: ' 5 . " O n e can accept t h e use of p l a c e b o s for t h e a d v a n c e m e n t of m e d i c a l s c i e n c e . The rights of subjects M a n y o f t h e p a t i e n t s w h o are e x p e r i m e n t e d o n with u n t r i e d d r u g s suffer t e r r i b l e a d v e r s e r e a c t i o n s . " T h e q u e s t i o n is w h e t h e r it is t o l e r a b l e to subject p a t i e n t s to risk w h e n t h e goal i s m e r e l y t o r e p l i c a t e s o m e t h i n g a l r e a d y a v a i l a b l e . e v e n t h o u g h o n o c c a s i o n s s o m e t h i n g s u p e r i o r t o existing t h e r a p i e s m i g h t r e s u l t .Safety testing of drugs: from negligence to fraud In spite o f t h e fact t h a t such a b u s e s are w i d e s p r e a d .4 per cent w e r e classified b y F D A a s offering " i m p o r t a n t t h e r a p e u t i c g a i n s ' . A d m i t t e d l y . in the entire h i s t o r y o f t h e F D A only 3 5 clinical i n v e s t i g a t o r s have b e e n disqualified from d o i n g further testing for s u b m i s s i o n s to t h e a g e n c y . M o s t new p r o d u c t s a r e m i n o r m o l e c u l a r m a n i p u l a t i o n s o f existing p a t e n t e d d r u g s w h i c h e n a b l e a m a n u f a c t u r e r to have its o w n p a t e n t in a lucrative m a r k e t w i t h o u t offering p a t i e n t s a d v a n t a g e s o v e r existing t h e r a p i e s . . T h e issues are difficult. Wolfe and G o r d o n ( 1 9 7 8 ) p o i n t e d out that of 171 n e w p r o d u c t s marketed b e t w e e n O c t o b e r 1975 and D e c e m b e r 1977 only 6.' U n f o r t u n a t e l y . S e v e n t y . but not for a s t u d y u n d e r t a k e n to h e l p a c o r p o r a t i o n get a r o u n d p a t e n t laws. 87 . I n d e e d t h e g r e a t m a j o r i t y o f n e w p r o d u c t s which are a p p r o v e d for m a r k e t i n g are not m e d i c a l a d v a n c e s .s e v e n p e r c e n t o f d r u g s m a r k e t e d had the F D A classification 'little o r n o t h e r a p e u t i c g a i n ' . v i c t i m s of drug t e s t i n g are not a w e l l .

S o u t h a m now w o n d e r e d w h e t h e r p e o p l e w h o w e r e d e b i l i t a t e d but not suffering from c a n c e r w o u l d r e a c t with t h e s p e e d of rejection of h e a l t h y p e o p l e . It s u g g e s t e d t h e possibility t h a t t h e b o d y might possess d e f e n c e m e c h a n i s m s a g a i n s t c a n c e r w h i c h could b e a r o u s e d t o fight t h e d i s e a s e . or w h o a r e given a p l a c e b o w h e n t h e y m i g h t have b e e n t r e a t e d by o t h e r m e a n s . T h e p a t i e n t s w e r e n o t told that t h e i r injections c o n t a i n e d c a n c e r c e l l s . T h e e l d e r l y p a t i e n t s t h r e w off t h e injected cells as p r o m p t l y a s h e a l t h y p a t i e n t s .t w o aged p e r s o n s from t h e J e w i s h C h r o n i c D i s e a s e H o s p i t a l w e r e selected for a s t u d y to a n s w e r this q u e s t i o n . Dr C h e s t e r S o u t h a m . i n the 1960s F o o d and D r u g C o m m i s s i o n e r G o d d a r d e s t i m a t e d t h a t only one i n t e n d r u g s t h a t w e r e investig a t i o n a l l y s t u d i e d w o u l d e v e n t u a l l y b e a p p r o v e d for m a r k e t i n g ' ( S h a p o . T h e law has a role to play in c u t t i n g u n n e c e s s a r y suffering to a m i n i m u m . t h e i n j e c t i o n s w e r e p o r t r a y e d as a skin test for i m m u n i t y or r e s p o n s e . i s w a s t e d . H e n c e t h e y d e c i d e d not t o stir u p w h a t t h e y t h o u g h t w o u l d b e unnecessary anxiety. T h e r i g h t s and w r o n g s o f t h e r e s e a r c h e r ' s b e h a v i o u r are t r o u b l i n g p r e c i s e l y b e c a u s e t h e e x p e r i m e n t w a s not a trivial o n e . B u t it m u s t be p o i n t e d o u t that in spite o f t h e intrinsic difficulties of S8 . h o w e v e r . o r o f p e o p l e with existing c a n c e r s . t h e y did n o t . 1979: 3 5 . Jewish Chronic Disease Hospital)'" i l l u s t r a t e s h o w a w e s o m e t h e m o r a l q u e s t i o n s can be. a p r e s t i g i o u s c a n c e r r e s e a r c h e r . and it s e e m e d stupid to t a k e e v e n t h e little risk' ( S h a p o . R a t h e r . 1979: 4 8 ) . M o r e o v e r . A s i t t u r n e d o u t .6 ) . One reported decision (Hyman v. . T w e n t y . The researchers predicted that a lump would a p p e a r and then gradually disappear doing no harm to the patients. t h e r e are r e l a t i v e l y few skilled c a n c e r r e s e a r c h e r s . . I t s h o u l d b e n o t e d . had u n d e r t a k e n t o build u p o n p r e v i o u s r e s e a r c h w h i c h had s h o w n that h e a l t h y p e o p l e w i t h o u t c a n c e r reject foreign c a n c e r cells w h i c h are injected into t h e m m u c h m o r e quickly t h a n c a n c e r p a t i e n t s . [ljet's face it. t h e r e w a s a t least s o m e m e d i c a l o p i n i o n that i n c e r t a i n c a s e s c a n c e r o u s t u m o u r s w o u l d form and s p r e a d . that h e w a s q u o t e d a s e x p l a i n i n g his o w n r e l u c t a n c e to v o l u n t e e r for c a n c e r cell i n j e c t i o n s on a n o t h e r o c c a s i o n by saying t h a t a l t h o u g h he 'did not r e g a r d t h e e x p e r i m e n t as d a n g e r o u s .Safety testing of drugs: from negligence to fraud M o s t o f t h e suffering o f p a t i e n t s w h o a r e g i v e n e x p e r i m e n t a l d r u g s . T h i s result had i m p o r t a n t m e d i c a l i m p l i c a t i o n s . S o u t h a m had d e c l a r e d t h a t t h e r e w a s essentially 'no risk' i n the p r o c e d u r e .

. C h l o r a m p h e n i c o l is of d e m o n s t r a t e d v a l u e i n the t r e a t m e n t o f t y p h o i d .t e r m effects of t h e d i s e a s e . 251 w e r e given t h e a n t i b i o t i c and 157 had i t w i t h h e l d .) W h a t is important. n o n e of t h e m s e r i o u s . while in t h e n o n . O f t e n they have involved p r i s o n e r s . T h e U n i t e d S t a t e s d o e s not h a v e a g o o d historical r e c o r d on subjecting powerless groups to d a n g e r o u s medical experimentat i o n .Safety testing of drugs: from negligence to fraud d r a w i n g m o r a l b o u n d a r i e s i n this a r e a . O f 4 8 0 t y p h o i d cases i n t h e c a r e of t h e r e s e a r c h e r s . L a t e r he did an e x p e r i m e n t in w h i c h p r i s o n e r s w e r e r e w a r d e d with t o b a c c o for being given berib e r i . ' B u t the price paid for t h i s i n f o r m a t i o n w a s t h a t w h e r e a s t h e m o r t a l i t y w a s only t w e n t y ( 7 . I n o t h e r w o r d s . O n e died as a result o f t h e e x p e r i m e n t ( P a p p w o r t h . 9 3 % ) in the u n t r e a t e d . T h e c o n c e r n o f t h e researchers was to discover whether relapses were more c o m m o n a m o n g t h o s e t r e a t e d w i t h c h l o r a m p h e n i c o l . a b o u t t w e n t y p e o p l e died t o d e m o n s t r a t e a c o m p a r a t i v e l y m i n o r d i s a d v a n t a g e of c h l o r a m p h e n i c o l t h e r a p y i n t y p h o i d ' ( P a p p w o r t h . A m o n g t h o s e cited w a s the w o r k o f Colonel Strong (later Professor of Tropical Medicine at Harvard). O n e e x a m p l e i n v o l v e d t h e purposeful w i t h h o l d i n g of a beneficial d r u g in t h e P h i l i p p i n e s ( L a n t i n et a l . ( N o n e o f t h e m d e v e l o p e d c a n c e r . 1963). T h u s t h e O h i o S t a t e P e n i t e n t i a r y i n C o l u m b u s has p r o v i d e d v o l u n t e e r s for c a n c e r r e s e a r c h e x p e r i m e n t s . I t i s t e l l i n g t h a t s o m e o f t h e G e r m a n d o c t o r s o n trial a t N u r e m b e r g a t t e m p t e d to defend t h e m s e l v e s by citing a n u m b e r of A m e r i c a n s t u d i e s o n p r i s o n e r s . ( N o n e of these c o n t r a c t e d the disease either. 1967: 6 1 ) . a g a i n . t h e r e are certain r e c u r r e n t a b u s e s w h i c h are b e y o n d any s t a n d a r d o f a c c e p t a b l e b e h a v i o u r . T h e s e men w e r e g i v e n i n j e c t i o n s o f live c a n c e r cells. W i t h o u t t h e k n o w l e d g e o f t h e victims he infected with plague a g r o u p of p r i s o n e r s c o n d e m n e d to d e a t h . T h e r e a r e m a n y e x a m p l e s t o m a t c h the infamous denial o f p e n i c i l l i n to A l a b a m a b l a c k s suffering from syphilis to o b s e r v e the l o n g . 1963 d e s c r i b e d a n u m b e r of horrifying c a s e s o f t h e use o f p r i s o n e r s i n m e d i c a l e x p e r i m e n t a t i o n . 9 7 % ) in t h e t r e a t e d series it w a s thirty six ( 2 2 . B e l o w i s one example.s e r i o u s c o m p l i c a t i o n w a s m o r e likely to o c c u r in p a t i e n t s t r e a t e d w i t h t h e a n t i b i o t i c . 1967: 181). H e n c e i t was d e m o n s t r a t e d t h a t a n o n .t r e a t e d g r o u p only six ( 3 . A m o n g t h e t r e a t e d g r o u p 2 8 ( 6 8 % ) had a r e l a p s e . 8 % ) had a r e l a p s e . ) A t C o o k C o u n t y jail i n C h i c a g o p r i s o n e r . n o n e b e i n g s e r i o u s .v o l u n t e e r s w e r e i n j e c t e d w i t h b l o o d from p a t i e n t s w h o had l e u k e m i a . Time m a g a z i n e on 12 J u l y . 89 .

which was to see whether either disease could be transmitted to others . going back to Queen Caroline. wife of George IV. The situation has improved everywhere. 1755). Finally the Kennedy hearings in 1975 (Subcommittee on Health. who used "half a dozen ofthe charity children belonging to St James' parish' to experiment with a smallpox vaccination before submitting her own children to it (Sloane. is the purpose ofthe experiment. a procedure that is generally reserved for emergencies.Safety testing of drugs: from negligence to fraud however. Here are two examples: * In 1963 at the Kansas State Penitentiary. who were left unsupervised in a prison with no medical staff over a weekend while suffering from such side-effects. In 1964. * From 1963 to 1971. Gettinger and Krajick (1979) also provided a variety of examples of questionable pharmacological experimentation on prisoners. the Atomic Energy Commission sponsored tests on scores of inmates in Oregon and Washington in which prisoners* testicles were exposed to massive doses of X-rays. eight inmates at the Oregon State Penitentiary who previously had had vasectomies had their testicles implanted with steroids and sex hormones to see what effect these substances had on sperm production (Gettinger and Krajick. The prisoners were enticed into the experiments with small financial rewards. who were allowed to continue taking the experimental drug for a considerable time after serious side-effects had appeared.Be/bre these experiments the possibility that they could have been was quite definite. 43 men were injected with a radioactive substance and their brains were X-rayed. particularly in the United States. The doctrine of informed consent in FDA regulations today affords patients many protections they did not previously have. 1979: 11). 1975) received affidavits from prisoners who were told by doctors that dangerous drugs had no side-effects. The subject's consent may be obtained only while he or she is so situated as to be able to comprehend fully the information presented. One could tell almost equally unsavoury stories of institutionalised children and mental retardates in drug testing. and the subject's consent must be obtained under 90 .

44 (158).9741 93d Cong..Safety testing of drugs: from negligence to fraud circumstances that minimize the possibility of undue influence or coercion. 1138(1973)). cannot claim those rights of doctor-patient relationships that do permit him. 1979. to withhold information when he judges it to be in the best interests of his patient' (Human Experimentation Hearings on s. lstscss. v. In addition. Failed to use simple language rather than medical terminology when explaining the details concerning the proposed study.. The Board of Regents recognised the right of a patient to refuse to participate in an experiment no matter how 'irrational' or •emotional' the reasons for such refusal might seem to be. 1976a: Part II. 91 . Failed to inform the subject ofthe results of pertinent animal and/or previous clinical studies with the drug to enable the subject to exercise free power of choice. Failed to inform the subjects that some would serve as inoculated control subjects who would receive either a placebo substance or an alternative drug. 47720). when he is acting as experimenter. In addition. An FDA survey of compliance with informed consent requirements in 238 clinical studies found that in the majority of cases there was at least one violation of informed consent regulations: Violations disclosed by the inspections included failure to obtain consent and the use of forms containing exculpatory language. No exculpatory language may be included in either written or oral consent (Federal Register. Failed to state what steps would be taken to prevent or minimize the possible risks and hazards associated with the drug. some forms were deficient in that they: Failed to provide the subject with a fair explanation of pertinent information as to what or how long additional tests or examinations would be required in connection with the use ofthe experimental drug. 'the physician. the information given must be in the primary language of either the subject or the subject's legal representative. Influential in the formulation of the FDA principles of informed consent were the deliberations of the New York Board of Regents following the Southam cancer injection case mentioned above. rather than the investigational new drug under study (Subcommittee on Health. in a therapeutic situation. 350). Aug 14. Moreover. p.

I f t h e r e a r e p r o b l e m s . D o c t o r . T r u e . h o w e v e r . Since scientific p r o o f of h a z a r d s is a l w a y s a difficult a n d p r o t r a c t e d p r o c e s s .p a t i e n t i n t e r a c t i o n i s simply not a m e n a b l e t o r i g o r o u s regulation. fraud in t h e t e s t i n g of d r u g s u n d o u b t e d l y is often the result of c o m p a n i e s s t r i v i n g to get a profitable p r o d u c t on the m a r k e t r e g a r d less of its safety or efficacy. T h e locus o f a b u s e s has p e r h a p s shifted from p r i s o n s t o l o c k e d . A d r u g w h i c h p r o d u c e s a flood of p r o d u c t liability suits is less likely to be c o m m e r c i a l l y v i a b l e . knowledge is power in a clinical s i t u a t i o n . F o r m a l r e g u l a t i o n s c a n n o t c o n c e i v a b l y cover all t h e s u b t l e w a y s t h a t a p h y s i c i a n can r e p r e s e n t an e x p e r i m e n t a l d r u g as m o r e safe and efficacious t h a n it is in fact k n o w n to be. ' But the w o r s t a b u s e s have o c c u r r e d i n i n s t i t u t i o n s w h i c h h a v e flouted the legal r e q u i r e m e n t s for Institutional Review Boards. the e c o n o m i c risks of u n s c r u p u l o u s c o n d u c t t o get t h e p r o d u c t m a r k e t e d are often less t h a n t h e e c o n o m i c b e n e f i t s . 3 AN INTERPRETATION OF THE CASE STUDIES The sources of fraud W h e n t h e officers of a c o m p a n y e n g a g e in a fraud which victimises c o n s u m e r s t h e e x p l a n a t i o n usually i n v o k e d i s the profit m o t i v e . T h e q u e r y : ' W h y w o u l d they d o i t w h e n t h e y k n o w t h e m a r k e t will e v e n t u a l l y c a t c h up with t h e m ? ' can be a naive question. N o t all a c t o r s w h o c o n t r i b u t e to t h e fraud. t h e n t h e c o m p a n y g e n e r a l l y will w a n t t o k n o w a b o u t t h e m . Safety is t h e r e f o r e a factor in a rational m a r k e t i n g 92 . Several r e s e a r c h p e r s o n n e l i n t e r v i e w e d for this study c o m p l a i n e d o f i n s t a n c e s w h e r e t h e i r s u p e r i o r s had e i t h e r i g n o r e d o r twisted r e s e a r c h f i n d i n g s w h i c h reflected badly on a c o m p a n y p r o d u c t . do so with t h e i n t e n t o f serving t h e i n t e r e s t s o f profit.Safety testing of drugs: from negligence to fraud N o t w i t h s t a n d i n g the i m p r o v e m e n t s .d o o r nursing h o m e facilities for t h e a g e d . the problems of medical e x p e r i m e n t a l a b u s e s will n e v e r g o a w a y . M a n y lower-level o r g a n i s a t i o n a l a c t o r s p e r f o r m their r e s e a r c h r e s p o n s i b i l i t i e s with g r e a t i n t e g r i t y and h o n e s t y only to h a v e t h e i r w o r k used for d i s h o n e s t p u r p o s e s b y p e o p l e m o r e s e n i o r i n t h e o r g a n i s a t i o n . More fundamentally. I n s t i t u t i o n a l R e v i e w B o a r d s are c e r t a i n l y p r o t e c t i o n s in t h a t t h e y s u b j e c t clinicians to p e e r r e v i e w of their t r e a t m e n t of i n s t i t u t i o n a l i s e d p a t i e n t s . M o s t p h a r m a c e u t i c a l c o m p a n i e s w a n t their r e s e a r c h e r s t o cond u c t r e s e a r c h h o n e s t l y and r i g o r o u s l y .

w h e r e the i n d e t e r m i n a t e risk of a legal b a c k l a s h from lack of safety is far o u t w e i g h e d by t h e e x t r a o r d i n a r y sales p r o s p e c t s for a d r u g . a s i n t h e S e a r l e a n d t h a l i d o m i d e case s t u d i e s . It is his offspring. T h e r e s e a r c h e r s involved may b e h o n e s t and o b j e c t i v e . h o w e v e r . but only r e p o r t t o t h e F D A t h e d a t a from t h o s e c o u n t r i e s which p r o d u c e f a v o u r a b l e r e s u l t s . and he d e f e n d s it like a son or d a u g h t e r . t h e y h a v e d i s h o n e s t r e s e a r c h e r s w o r k i n g for t h e m . in no way c o n n i v i n g to satisfy t h e c o m p a n y ' s p r o f i t . b u t it is unlikely to b e c o m e p u b l i c l y k n o w n b e c a u s e a c o m p a n y which d i s c o v e r s that o n e of its officers had b e e n fudging d a t a will be e m b a r r a s s e d by its failure t o p r e v e n t this from h a p p e n i n g u n d e r its n o s e . u n b e k n o w n t o t h e m . W h y do e m p l o y e e s p r o d u c e d i s h o n e s t d a t a for a c o m p a n y w h i c h d e m a n d s honesty of them? T o b e g i n t o a p p r e c i a t e the a n s w e r t o this q u e s t i o n w e must h a v e a n u n d e r s t a n d i n g o f t h e i n t e n s i t y o f c o m m i t m e n t o f m a n y scientists t o t h e i r w o r k . In t h e s e cases senior e x e c u t i v e s m a y c h o o s e t o i g n o r e o r d i s t o r t the a d v i c e o f p e o p l e w h o m t h e y pay t o give t h e m o b j e c t i v e d a t a o n d r u g s . A l s o t h e p h a r m a c o l o g i s t w h o s h o w s t h a t this new c o m p o u n d has c e r t a i n effects of t h e r a p e u t i c v a l u e sees it as his b a b y . but t h e y will be b i a s e d . S e n i o r e x e c u t i v e s c a n set o u t to be d i s h o n e s t by h a v i n g d i s h o n e s t r e s e a r c h e r s w o r k for t h e m . T h r e e research directors interviewed were open enough to admit t h a t t h e y had found i n s t a n c e s o f p e o p l e w h o w o r k e d for t h e m fudging d a t a . T h e n t h e r e i s t h e p r o b l e m o f c o m p a n i e s which set out t o b e h o n e s t . T h e r e is a r a n g e of w a y s t h a t fraud can o c c u r .m a k i n g i n t e r e s t s .Safety testing of drugs: from negligence to fraud d e c i s i o n . but w h i c h p e r p e t r a t e fraud b e c a u s e . and 93 . U S c o m p a n i e s often c o m m i s s i o n clinical s t u d i e s i n m a n y c o u n t r i e s . 1979: 9 ) . ' T h e line b e t w e e n bias and fraud is of c o u r s e a fine o n e . or t h e y can be d i s h o n e s t by t w i s t i n g t h e w o r k of h o n e s t r e s e a r c h e r s . C o m p a n i e s m a y . It is j u s t t h a t t h e i r d a t a are used selectively for t h a t p u r p o s e . O n e A m e r i c a n e x e c u t i v e c h a r a c t e r i s e d t h e a t t i t u d e o f his scientists as follows: ' T h e c h e m i s t w h o s y n t h e s i s e s a new c o m p o u n d is very p o s s e s s i v e a b o u t it. T h e r e will b e c a s e s . seek i n f o r m a t i o n from a n u m b e r of scientists but only r e p o r t to the h e a l t h a u t h o r i t i e s t h e f i n d i n g s o f t h o s e w h o say good t h i n g s a b o u t t h e p r o d u c t . Possibly t h e l a t t e r is t h e m o s t c o m m o n kind of fraud. rival t h e i m a g e s o f t h e g r e a t a r t i s t s ' ( S h a p o . It is n o t so m u c h t h a t t h e y will lie and c h e a t to defend it. T h e a b s o r p t i o n ' s y m b o l i z e d b y t h e idealized p o r t r a i t o f t h e scientist g r a b b i n g c a t n a p s i n his l a b o r a t o r y while p u r s u i n g t h e n e w e s t l e a d . I n n o n e o f t h e s e cases had t h e p r o b l e m g o n e p u b l i c .

P e r h a p s a scientist has m a d e p r e d i c t i o n s a b o u t t h e safety of a d r u g b a s e d on early d a t a and t h e c o m p a n y has i n v e s t e d a l a r g e a m o u n t of m o n e y on t h e s t r e n g t h of this p r e d i c t i o n . t h e o r g a n i s a t i o n w o u l d b e u n d e r p r e s s u r e t o c h u r n s o m e t h i n g o u t t o m e e t t h e goal i m p o s e d b y h e a d q u a r t e r s . O n e m e d i c a l d i r e c t o r told me t h a t o n e of his staff had run 10 trials which s h o w e d a d r u g to be clear on a c e r t a i n t e s t .s e t t i n g .Safety testing of drugs: from negligence to fraud t h e s a m e s e n s e o f o v e r c o m m i t m e n t which p r o d u c e s bias can lead t o fraud. A p a r t from this p s y c h o l o g i c a l p r e s s u r e . R i k e r w o u l d not h a v e t o yield t o this p r e s s u r e . t h e n f a b r i c a t e d d a t a o n t h e r e m a i n i n g 9 0 trials t o s h o w t h e s a m e r e s u l t . N o w if R i k e r ' s r e s e a r c h division w e r e to have a long dry spell t h r o u g h no fault of its o w n . S u c h p r e s s u r e s for fraud are likely to be g r e a t e s t w h e r e a s c i e n t i s t h a s b e e n p r o m o t e d or has built his or her prestige as "the p e r s o n w h o d i s c o v e r e d X ' . F r a u d can be an illegitim a t e m e a n s to a c h i e v i n g any o n e of a w i d e r a n g e of o r g a n i s a t i o n a l 94 . T h e p u r p o s e of this s e c t i o n has b e e n to s h o w that it is an overly s i m p l i s t i c m o d e l o f c o r p o r a t e m i s c o n d u c t w h i c h a s s u m e s that all fraud is m o t i v a t e d by t h e d e s i r e for profit. 3M i m p o s e s on R i k e r a goal t h a t e a c h y e a r 25 per cent of g r o s s sales s h o u l d be of p r o d u c t s i n t r o d u c e d in t h e last five y e a r s . I t c o u l d p r e s u m a b l y go to 3M and e x p l a i n t h e r e a s o n s for its run o f b a d luck. T h e fraud had b e e n p e r p e t r a t e d by a scientist w h o w a s falling b e h i n d in his w o r k l o a d and w h o had an o b l i g a t i o n to c o m p l e t e a c e r t a i n n u m b e r of e v a l u a t i o n s for t h e y e a r . t h e r e is often a p r e s s u r e d e r i v i n g from o r g a n i s a t i o n a l g o a l . S o m e t i m e s t h e goal p e r f o r m a n c e c r i t e r i o n w h i c h c r e a t e s p r e s s u r e for f r a u d / b i a s is not for t h e p r o d u c t i o n of a c e r t a i n n u m b e r of w i n n e r s but s i m p l y for c o m p l e t i n g a p r e d e t e r m i n e d n u m b e r of e v a l u a t i o n s in a given y e a r . a p h a r m a c e u t i c a l s u b s i d i a r y o f t h e 3 M c o r p o r a t i o n . T h e fact t h a t such goal r e q u i r e m e n t s do put r e s e a r c h d i r e c t o r s u n d e r p r e s s u r e was well illustrated b y o n e A m e r i c a n e x e c u t i v e w h o e x p l a i n e d t h a t r e s e a r c h d i r e c t o r s often forestall criticism of long dry spells by s p r e a d i n g out d i s c o v e r i e s . F u r t h e r d a t a w h i c h s h o w t h e p r e d i c t i o n to be in e r r o r might be seen as t h r e a t e n i n g a f o r t h c o m i n g d e c i s i o n on the p r o m o t i o n of the scientist. but b e c a u s e all of its c o m p o u n d s had t u r n e d o u t t o h a v e toxic effects.s c h e d u l i n g t h e p r o g r a m m e so that s o m e t h i n g new is always on the horizon. It is difficult to i m a g i n e h o w d e p r e s s i n g it m u s t be for scientists to h a v e s p e n t m a n y y e a r s of their lives and m i l l i o n s of their c o m p a n y * s m o n e y on a p r o d u c t to find t h a t it has b e e n a c o m p l e t e w a s t e . I n o r d e r t o foster i n n o v a t i o n . T a k e the s i t u a t i o n of R i k e r .

4. T h i s is n o t p o s s i b l e if. T h e r o d e n t c a n n o t c o m p l a i n o f painful s y m p t o m s before d e a t h . t h r o u g h n e g l e c t or p o o r h u s b a n d r y . t h e e n t i r e b o d y o f t h e a n i m a l must b e m e t i c u l o u s l y s e a r c h e d . t h u s d e p l e t i n g the n u m b e r o f a n i m a l s r e m a i n i n g alive and at risk for c a n c e r . is at a loss to deal 95 . d e s i g n e d to s a n c t i o n specific h e i n o u s a c t s . r e s u l t i n g in failure to o b t a i n a statistically significant i n c i d e n c e of t u m o r s . A l s o . The problem of regulating subtleties N o r e g u l a t o r y s c h e m e can ever effectively c o n t r o l t h e quality and i n t e g r i t y of s c i e n c e . 1978).Safety testing of drugs: from negligence to fraud a n d p e r s o n a l g o a l s w h e n l e g i t i m a t e m e a n s t o goal a t t a i n m e n t are b l o c k e d ( G r o s s . O n e o f t h e most poorly conducted areas of animal cancer r e s e a r c h i s t h e identification o f t h e c a n c e r i n t h e a n i m a l s ' b o d i e s . a s i s often t h e c a s e . P r e m a t u r e t e r m i n a t i o n o f t h e test before sufficient t i m e has e l a p s e d for t h e a n i m a l s t o d e v e l o p t u m o r s ( E p s t e i n . since c a r c i n o g e n s may c a u s e c a n c e r in any of a wide r a n g e o f o r g a n s . D o s e s t o o low for the size o f t h e a n i m a l test g r o u p . It is simply not p o s s i b l e to write a rule to p r o h i b i t e v e r y t y p e o f a b u s e o f scientific o b j e c t i v i t y . E x p o s u r e in excess o f t h e maximally tolerated dose. D e l i b e r a t e p r e m a t u r e sacrifice of a n i m a l s for o t h e r "studies' d u r i n g t h e c o u r s e o f t h e m a i n t e s t . 5 . resulting i n p r e m a t u r e a n i m a l d e a t h s before o n s e t o f c a n c e r . Such abuses c a n n o t be regulated out of existence. C o n s i d e r the following s t a t e m e n t by E p s t e i n ( 1 9 7 8 : 67) w h i c h gives an i m p r e s sion o f t h e infinity of sins of o m i s s i o n p o s s i b l e in t e s t i n g for c a n c e r in animals. T h e p r o c e s s of finding a c a n c e r in t h e fresh c a r c a s s of a m o u s e or rat is different from t h e d i s c o v e r y of c a n c e r in a h u m a n by a d o c t o r . The case s t u d i e s i n this c h a p t e r h a v e b e g u n t o i l l u s t r a t e h o w existing criminal l a w . E p s t e i n later p o i n t s o u t five specific p l o y s which are a v a i l a b l e to r e s e a r c h e r s w h o d o not w a n t t o find c a n c e r i n a n i m a l s yet w h o w o u l d s h u d d e r a t t h e p r o s p e c t o f o u t r i g h t fraud. 3. t h e a n i m a l has b e e n a l l o w e d t o die and d e c o m p o s e b e f o r e a n a d e q u a t e a u t o p s y . 1978: 3 0 1 ) . 1. U s i n g t o o few a n i m a l s [for a c a n c e r w h i c h t h e r e s e a r c h e r has g r o u n d s to s u s p e c t will have only a low r a t e of i n c i d e n c e in animals]. 2.

like o t h e r costs of r e g u l a t i o n . and p e r i o d i c a t t e m p t s are 96 . C l e a r l y s o m e scientists and s o m e d r u g c o m p a n i e s h a v e m o r e i n t e g r i t y t h a n o t h e r s . has done more to foster m e t h o d o l o g i c a l i n n o v a t i o n t h a n to stultify it. T h a t state o f t h e art w o u l d be frozen for d e c a d e s b e c a u s e t o e x p e r i m e n t w i t h n e w s t a n d a r d s w o u l d b e illegal. H e a l t h a u t h o r i t i e s can e l i m i n a t e specific g r o s s a b u s e s . I n d e e d . It can be a v o i d e d by a b a l a n c e d a p p r e c i a t i o n o f t h e limits o f r e g u l a t i o n . p e r h a p s unlike many other US regulatory agencies. h e / s h e will tell c o l l e a g u e s and o t h e r c o m p a n i e s w h o h a v e not c a u g h t o n t o the i m p r o v e m e n t . L e t u s c o n s i d e r s o m e o t h e r a v o i d a b l e costs o f r e g u l a t i o n . S u c h an a t t i t u d e . O n e o f t h e m o s t telling criticisms from i n d u s t r y o f t h e F D A ' s G L P r e g u l a t i o n s w a s t h a t t h e y would stultify m e t h o d o l o g i c a l i n n o v a t i o n in t o x i c o l o g i c a l r e s e a r c h . A t least this w a s t h e view o f s o m e r e s p o n d e n t s a b o u t the i m p a c t o f ' o v e r .Safety testing of drugs: from negligence to fraud w i t h a n i r r e s p o n s i b l e p a t t e r n o f c o n d u c t . T h i s role of t h e F D A in fostering i n n o v a t i o n is a m a t t e r of c o n s i d e r a b l e c o n c e r n t o c o m p a n i e s . o n e o f t h e d a n g e r s of o v e r .a n g l e d s e c t i o n s o n t h e o r g a n s o f sacrificed a n i m a l s . n o individual e l e m e n t o f w h i c h is s a n c t i o n a b l e in its o w n right. S i n c e F D A r e g u l a t i o n s are b a s e d o n the c u r r e n t state o f t h e a r t . is not an inevita b l e c o n s e q u e n c e of r e g u l a t i o n .r e g u l a t i o n ' o n their w o r k a t t i t u d e s and t h o s e o f their employees. A n u m b e r of i n t e r v i e w r e s p o n d e n t s p o i n t e d o u t t h a t w h e n a n F D A i n s p e c t o r sees a g o o d n e w idea in t h e c o u r s e of an i n s p e c t i o n . and a n a p p r o p r i a t e mix o f e n f o r c e m e n t o f s t a n d a r d s and e d u c a t i o n a s t o social r e s p o n s i b i l i t i e s .r e g u l a t i o n is t h a t it can e n g e n d e r an a t t i t u d e t h a t p e o p l e h a v e no r e s p o n s i b i l i t y b e y o n d t h a t w h i c h is set d o w n in the r e g u l a t i o n s . R e g u l a t i o n s can n e v e r force scientists to go the e x t r a m i l e w h e n t h e r e i s r e a s o n t o d o so. A r e a l i s t i c a p p r a i s a l leads to t h e c o n c l u s i o n that t h e F D A . He insisted on o b l i q u e s e c t i o n s as well to i n c r e a s e t h e p r o b a b i l i t y of finding a p r o b l e m w h i c h he had r e a s o n to s u s p e c t m i g h t exist. T h e p r o b l e m w a s solved w h e n t h e F D A a g r e e d t o e x c l u d e ' s t u d i e s t o d e v e l o p n e w m e t h o d o l o g i e s for t o x i c o l o g y e x p e r i m e n t a t i o n ' from t h e s c o p e o f t h e G L P r e g u l a t i o n s . T h e d a n g e r w a s t h a t a set of rules w o u l d be w r i t t e n w h i c h e m b o d i e d t h e state of t h e art of toxicological e x p e r i m e n t a t i o n in 1978. t h e i n n o v a t i o n m a y in t i m e c o m e to be r e g a r d e d as such an i m p o r t a n t s a f e g u a r d as to d e s e r v e m a n d a t o r y status as a regulat i o n . but in t h e final analysis the public is a t t h e m e r c y o f t h e s c i e n t i s t ' s i n t e g r i t y . T h e medical d i r e c t o r of an A m e r i c a n c o m p a n y told of an instance w h e n a c o n t r a c t lab had d o n e only r i g h t .

008. T h e r e are nearly 13. T h e q u e s t i o n is w h e t h e r t h e a t t e m p t to t r i p . b u t a r b i t r a r i n e s s and i r r a t i o n a l i t y are not a n i n e v i t a b l e c o n s e q u e n c e of r e g u l a t i o n per se. T h e a n t i . T h e R e g u l a t o r y Affairs D i r e c t o r o f a n A m e r i c a n c o r p o r a t i o n justified this n e e d to c o n t r o l safety i n n o v a t i o n by c o m p e t i t o r s b y s a y i n g : ' C o m p a n i e s d o n ' t w a n t t o leap-frog t h e m s e l v e s into bankruptcy. T a k e t h e following s t a t e m e n t i n a n A b b o t t L a b o r a t o r i e s d o c u m e n t o n t h e costs o f r e g u l a t i o n : It is r i d i c u l o u s to try to explain to a l a y m a n i n v e s t i g a t o r from t h e F D A w h y y o u d a r e d to use a p a t i e n t w h o s e urine specific gravity w a s 1. fairly c o n s i s t e n t l y e s p o u s e d the view that r e g u l a t i o n s i n e v i t a b l y p r o d u c e d i r r a t i o n a l i t y . A t t h e s a m e t i m e . T h i s is t h e t r a p w h i c h industry i d e o l o g u e s foster. but t o d i s m i s s (or transfer t o o t h e r d u t i e s ) irrational i n s p e c t o r s . t h e i m p r e s s i o n c o m m u n i c a t e d by m o s t of t h e o p e r a t i n g staff of c o r p o r a t i o n s i n t e r v i e w e d was t h a t t h e great majority o f g o v e r n m e n t i n s p e c t o r s were o p e n to persuasion w h e n they a t t e m p t e d to impose scientifically i r r a t i o n a l r e g u l a t o r y r e q u i r e m e n t s . R e g u l a t i o n s s o m e t i m e s are i m p o s e d a r b i t r a r i l y and i r r a t i o n a l l y b y c e r t a i n g o v e r n m e n t ins p e c t o r s . . h o w e v e r . .u p this small g r o u p by an e v e r i n c r e a s i n g n u m b e r of r e g u l a t o r y h u r d l e s is w o r t h t h e price paid. It should b e i n c u m b e n t u p o n r e g u l a t o r y a g e n c i e s t o p r e p a r e cost o f regul a t i o n i m p a c t s t a t m e n t s before r u s h i n g i n w i t h new r e q u i r e m e n t s .Safety testing of drugs: from negligence to fraud m a d e to pull into line c o m p a n i e s w h i c h m a k e a habit of i n t r o d u c i n g n e w safety m e a s u r e s w h i c h u l t i m a t e l y b e c o m e a n i n d u s t r y . . t h e r e i s n o need t o s u c c u m b t o a s s u m p t i o n s that all such c o s t s a r e i n e v i t a b l e .r e g u l a t o r y i d e o l o g y is seen at its worst in the same A b b o t t document: Of course there are going to be rare occasions w h e r e investigators will b e d i s h o n e s t .000 i n d i v i d u a l clinical i n v e s t i g a t o r s a c c o r d i n g to t h a t d i v i s i o n ' s 97 . M o r e o v e r .010 to 1. b e c a u s e t h e n o r m a l in y o u r lab is 1. a n d to be on g u a r d against r e g u l a t i o n s w h i c h in p r a c t i c e p r o v e c o s t .i n e f f e c t i v e . He p r o b a b l y had a n e x t r a glass o f w a t e r t h a t m o r n i n g that c h a n g e s it. T h e s o l u t i o n is not to do away w i t h r e g u l a t i o n . H u m a n e x p e r i e n c e m a k e s i t perfectly clear t h a t t h e r e a r e p e r s o n s w i t h less t h a n t h e o p t i m u m d e g r e e o f integrity in e v e r y walk of life.w i d e b u r d e n .' It is i m p o r t a n t to realise t h a t r e g u l a t i o n s do entail costs. R e g u l a t o r y Affairs staff.025." T h e p o i n t is t h a t t h i s d o e s seem so difficult to e x p l a i n .

r e g u l a t i o n to c o n t r o l t h e s u b t l e t i e s of scientific a b u s e . W h a t e v e r t h e r e a s o n .r e g u l a t i o n offers m o r e p r o t e c t i o n t h a n e x t e r n a l 98 . O n e U S R e g u l a t o r y Affairs D i r e c t o r p o i n t e d out s o m e t h i n g which w o u l d b e true of m o s t c o m p a n i e s in t h e i n d u s t r y : 'Since I've b e e n at [my c o m p a n y ] t h e r e h a s not b e e n o n e case w h e r e t h e F D A has r e q u i r e d u s t o stop clinical t r i a l s on a d r u g b e c a u s e t h e r e h a v e b e e n p r o b l e m s with it. O n e w o n d e r s w h a t kind o f r e s e a r c h e r A b b o t t w o u l d c o n s i d e r t o have t o o much integrity. o f w h i c h a total o f 2 8 have b e e n disqualified and a r e n o l o n g e r eligible t o w o r k o n I N D ' s o r N D A ' s . 1 5 W h i l e r e j e c t i n g t h e m o r e s w e e p i n g forms o f industry r h e t o r i c a b o u t r e g u l a t i o n . t h e r e f o r e .Safety testing of drugs: from negligence to fraud c o m p u t e r listing. b u d g e t s m a n y t i m e s g r e a t e r t h a n t h o s e o f h e a l t h r e g u l a t o r y a u t h o r i t i e s ? A c u r i o u s thing a b o u t t h e A b b o t t s t a t e m e n t is t h a t it t a l k s of an ' o p t i m u m d e g r e e of i n t e g r i t y ' . m o r e staff c a p a b l e o f a s s e s s i n g t h a t i n f o r m a t i o n . T h i s i s u n q u e s t i o n a b l y t r u e o f risks p o s e d t o p a t i e n t s i n t h e safety t e s t i n g o f n e w d r u g s . 2 % o f the clinical i n v e s t i g a t o r s d o e n o u g h h a r m t o w a r r a n t s o m u c h a t t e n t i o n ? It is a l w a y s n e c e s s a r y to h a v e several studies a n d . t h e c o m p a n y will c o m e t o k n o w o f m o s t p r o b l e m s long b e f o r e t h e r e g u l a t o r s . s e r i o u s a s s a u l t and r o b b e r y a r e all less t h a n o n e i n 500 o f t h e g e n e r a l p o p u l a t i o n . and m o r e i n t i m a t e k n o w l e d g e of a p r o d u c t w h i c h they c r e a t e d . it is a tool w h i c h will n o r m a l l y only be a p p l i e d after t h e d a m a g e is d o n e . ' O f c o u r s e o n e can a r g u e t h a t c o m p a n i e s often s t o p testing a d a n g e r o u s d r u g only b e c a u s e m a r k e t forces and p o t e n t i a l p r o d u c t liability c o s t s force t h e m to do it. it is n e c e s s a r y to c o m e to grips with t h e fact t h a t r e g u l a t i o n offers less p r o t e c t i o n t o c o n s u m e r s t h a n internal c o m p a n y safety s t a n d a r d s . T h e y h a v e m o r e i n f o r m a t i o n r e p o r t e d t o t h e m . I n e v i t a b l y . more than one investigator working on a candidate d r u g . E x t e r n a l l y i m p o s e d r e g u l a t i o n is t h e r e f o r e not only a m o r e c l u m s y tool than s e l f . but t h e r e h a v e b e e n m a n y cases w h e r e t h e c o m p a n y has d o n e s o . p r i s o n s and c o u r t b u d g e t s t o r e g u l a t e such c r i m e s . t h e fact is t h a t they m o r e often do it of t h e i r own volition t h a n b e c a u s e of r e g u l a t o r y compulsion. A r e s t r i n g e n t r e g u l a t i o n s b i n d i n g every i n v e s t i g a t o r t o t e d i o u s and e x p e n s i v e a d m i n i s t r a t i v e p r o c e d u r e s justifiable m e r e l y t o i n c r e a s e t h e c h a n c e o f c a t c h i n g the o n e bad i n v e s t i g a t o r out of500? T h e i n c i d e n c e o f h o m i c i d e . C a n 0 . D o e s this m e a n that w e s h o u l d s t o p s p e n d i n g t h e vast p o l i c e . T h e fact t h a t s e l f .

H e c o u l d verify t h e n u m b e r o f a n i m a l s t a k e n from t h e a n i m a l s t o r e . W h e r e there is no external regulation. Making self-regulation work I n t e r n a l c o m p a n y i n s p e c t o r s a r e m o r e likely t o k n o w w h e r e the b o d i e s a r e b u r i e d t h a n g o v e r n m e n t i n s p e c t o r s . As an i n s i d e r he could do so quietly w i t h o u t r a i s i n g t h e kind of a l a r m w h i c h might lead t h e c r i m i n a l to p o u r a n a p p r o p r i a t e a m o u n t o f d r u g s u b s t a n c e d o w n t h e sink. Such a s e l f .Safety testing of drugs: from negligence to fraud r e g u l a t i o n i s e v e n m o r e o v e r w h e l m i n g l y t h e case i n m a n y c o u n t r i e s . s e l f . F D A G o o d L a b o r a t o r y P r a c t i c e s r e g u l a t i o n s have r e c o g n i s e d this f u n d a m e n t a l reality and p l a c e d p r e d o m i n a n t r e l i a n c e on selfregulatory m e c h a n i s m s . " S e c o n d . Finland.d e p t h r e t r o s p e c t i v e r e v i e w o f d a t a w a s a n o p t i o n that t h e a g e n c y c o u l d only afford i n e x t r a o r d i n a r y c i r c u m s t a n c e s . H i s familiarity with t h e l a b o r a t o r y m a d e this e a s y . F o r a g o v e r n m e n t i n s p e c t o r this w o u l d h a v e b e e n m o r e difficult.r e g u l a t i o n p r o v i d e s t h e sole p r o t e c t i o n . T h e medical d i r e c t o r m e n t i o n e d a b o v e w h o b e c a m e s u s p i c i o u s t h a t o n e o f his s c i e n t i s t s had c o n d u c t e d a 100-trial s t u d y by r u n n i n g 10 and fabric a t i n g 9 0 had a v a i l a b l e m a n y w a y s o f c h e c k i n g o u t his d o u b t s . S w i t z e r l a n d and G e r m a n y . the a m o u n t o f d r u g s u b s t a n c e which had b e e n u s e d . N o r w a y . Industry argued t h a t i f Q A U s had t o m a k e their f i n d i n g s a v a i l a b l e t o t h e F D A . S p a i n . A Q A U w h i c h k n e w t h a t its 99 . however. It is r e a s o n a b l e t h a t a c o m p a n y w h i c h m a k e s a profit b e c a u s e o f t h e benefits of a d r u g s h o u l d also b e a r t h e cost of p r o t e c t i n g the public from its p o t e n t i a l d a n g e r s . including the d e v e l o p e d e c o n o m i e s of D e n m a r k .r e g u l a t o r y r e q u i r e m e n t shifts t h e financial b u r d e n o f r e g u l a t i o n a w a y from g o v e r n m e n t and on to t h e c o r p o r a t i o n . e v e n t h e w e a l t h i e s t g o v e r n m e n t s i n t h e w o r l d c a n n o t afford effective i n s p e c t i o n of c o r p o r a t e c o n d u c t as a m a t t e r of sheer b u d g e t a r y p r a c t i c a l i t y . and s o o n . ' " w h e r e g o v e r n m e n t a p p r o v a l i s not r e q u i r e d b e f o r e a c o m p a n y b e g i n s p r e l i m i n a r y safety t e s t i n g of a new drug on h u m a n beings. The decision to t h r o w the major b u r d e n of regulation on to an internal Q A U raised some thorny issues. T h e F D A w a s q u i c k t o learn from the S e a r l e investig a t i o n t h a t i n . Each drug-testing laboratory is required by t h e r e g u l a t i o n s t o h a v e a Q u a l i t y A s s u r a n c e U n i t ( Q A U ) w h i c h will act as an i n t e r n a l p o l i c e m a n of r e g u l a t o r y c o m p l i a n c e . t h e n u m b e r o f s a m p l e s w h i c h had b e e n t e s t e d . a s w e shall see later i n the b o o k . t h e n t h e i r e f f e c t i v e n e s s as a m a n a g e m e n t tool to e n s u r e t h e quality of r e s e a r c h w o u l d b e u n d e r m i n e d .

A s c r e e n i n g p r o c e s s t a k e s p l a c e . If an a u t o m o b i l e c o m p a n y has r e t o o l e d and i s g e a r e d t o p r o d u c e 500. lab e m p l o y e e s and t h e i r s u p e r v i s o r s j u s t ' k n o w ' t h a t i n f o r m a t i o n a b o u t this i s t o b e p a s s e d u p w a r d . such t h a t if a c o m p a n y has b e e n t o u t i n g a n e w d r u g . We will r e t u r n to this issue in C h a p t e r 9.000 units o f s o m e car. t h e r e is a n a t u r a l t e n d e n c y for ' b a d n e w s ' o f a n y sort not to rise to t h e t o p in an o r g a n i z a t i o n . T h e n e e d for formal m e c h a n i s m s to e n s u r e t h a t ' b a d n e w s ' g e t s t o the t o p w a s a c e n t r a l t h e m e i n S t o n e ' s seminal analysis of corporate crime: First. as to getting to the higher-ups information a d e q u a t e to a p p r e c i a t e t h e legal j e o p a r d y t h e i r c o m p a n y is in. W o r s e still. Q A U r e p o r t s w o u l d b e c o m e a public r e l a t i o n s function of t h e c o m p a n y r a t h e r t h a n a c o m p l i a n c e function. W h i l e t h e latter Q A U r e p o r t s w o u l d b e t r e a t e d a s c o n f i d e n t i a l c o m p a n y d o c u m e n t s b y t h e F D A . this d o e s not p r e v e n t a c o u r t r e q u i r i n g the t a b l i n g o f any Q A U r e p o r t . a test d r i v e r or his s u p e r v i s o r k n o w s that i n f o r m a t i o n s u g g e s t i n g t h a t t h e car t u r n s o v e r t o o easily is not g o i n g to be w e l c o m e d ' u p s t a i r s ' . A n e x e m p l a r y r e q u i r e m e n t o f t h e G L P s i s t h a t Q A U status r e p o r t s m u s t r o u t i n e l y b e p l a c e d before the study d i r e c t o r and m a n a g e m e n t o f t h e c o m p a n y . only in t h e v a g u e s t t e r m s . T h e F D A w a s p e r s u a d e d by this a r g u m e n t and d e c i d e d t h a t . t h e s e r e c o r d s a v a i l a b l e for r e g u l a r i n s p e c t i o n would b e s e p a r a t e d from r e p o r t s o f f i n d i n g s and p r o b l e m s and c o r r e c t i v e a c t i o n s r e c o m m e n d e d . c e r t a i n sorts o f w r o n g d o i n g o f a 100 . j u s t a s c o u r t s c a n d e m a n d o t h e r t y p e s o f c o m p a n y d o c u m e n t s which are c o n f i d e n t i a l for r o u t i n e i n s p e c t o r i a l p u r p o s e s . O t h e r r e g u l a t o r y s c h e m e s tend t o ignore the i m p o r t a n c e of ensuring that people at the top of an o r g a n i s a t i o n k n o w a b o u t r e g u l a t o r y p r o b l e m s b o t h s o t h a t they can be h e l d legally a c c o u n t a b l e for t h e m and so that they might be forced to t a k e rectifying a c t i o n . and t h e drug b e g i n s ' e x p e r i e n c i n g difficulties' i n the l a b . as a m a t t e r o f a d m i n i s t r a t i v e p o l i c y . if at all. H o w e v e r .Safety testing of drugs: from negligence to fraud c o m m e n t s w o u l d b e read b y F D A officials (and b y c o n s u m e r g r o u p s w h o c o u l d get t h e c o m m e n t s from the F D A u n d e r F r e e d o m o f I n f o r m a t i o n laws) w o u l d be less t h a n frank in its r e p o r t s to m a n a g e m e n t . i n s p e c t o r s w o u l d not r e q u e s t r e p o r t s o f f i n d i n g s a n d p r o b l e m s u n c o v e r e d b y t h e Q A U o r r e c o r d s o f corr e c t i v e a c t i o n s r e c o m m e n d e d and t a k e n . F D A i n s p e c t o r s w o u l d still a u d i t t h e Q A U to e n s u r e t h a t it had effective c o m p l i a n c e s y s t e m s i n place and t o c h e c k c e r t a i n o b j e c t i v e c o m p l i a n c e c r i t e r i a .

B a d n e w s from o n e p a r t o f t h e w o r l d d o e s n o t t r a v e l quickly e n o u g h t o o t h e r p a r t s o f t h e w o r l d . t h e law n o t o n l y fails to b r i n g a b o u t t h e n e c e s s a r y i n t e r n a l flow of information.is not j u s t s c r e e n e d o u t c a s u a l l y . a n d c o m p e t i t o r s i n all c o u n t r i e s . c o m m o n l y 101 . b u t also from d o c t o r s . t o i n t e r c e p t any such i n f o r m a t i o n t h a t c o u l d ' t a i n t ' his p r e s i d e n t o r b o a r d c h a i r m a n . independent contract l a b o r a t o r i e s . In this w a y . price-fixing or o t h e r c r i m i n a l activity . B e y o n d t h i s . and p r e v e n t i n g fraud o u g h t to be a c o n s i d e r a t i o n in d e c i s i o n s on o r g a n i s a t i o n a l s t r u c t u r e s . p h a r m a c i s t s . c e n t r a l l y c o n t r o l l e d by a study d i r e c t o r w h o gives a d i s c r e t e task to each s u b o r d i n a t e . T h e t h a l i d o m i d e d i s a s t e r s h o w e d t h a t this i s exactly w h a t d o e s not h a p p e n i n p h a r m a c e u t i c a l c o m p a n i e s . A n y o n e p e r s o n i s a w a r e only o f w h a t s/he a n d t h e p e o p l e w h o a n s w e r t o h i m / h e r are d o i n g . 1975: 4 4 . it b e c o m e s the j o b of s o m e o n e . T h e very s t r u c t u r e of a r e s e a r c h o r g a n i s a t i o n will have i m p l i c a t i o n s for c r i m e p r e v e n t i o n . p e r h a p s t h e g e n e r a l c o u n s e l . o f w r o n g d o i n g a w a y from t h e very p e o p l e w h o m i g h t best d o s o m e t h i n g a b o u t i t ( S t o n e . c o l l e c t i n g the information is not e n o u g h . The information.M e r r e l l b o a r d from k n o w l e d g e o f t h e M E R / 2 9 fraud i l l u s t r a t e s S t o n e ' s p o i n t . u n i v e r s i t y r e s e a r c h e r s .r e g u l a t i o n s h o u l d b e m o r e t h a n s e t t i n g u p i n t e r n a l policing s y s t e m s .5 ) . it may systematically operate to keep information. M o s t r e g u l a t o r y a g e n c i e s only r e q u i r e t h a t a d v e r s e r e a c t i o n s which c o m e to t h e a t t e n t i o n of t h e c o m p a n y within their country be reported. ' B a d n e w s ' c a n be s t o p p e d by o n e s u p e r i o r w h o d e c i d e s t h a t it will rise no further in the organisational hierarchy. F o r a p h a r m a c e u t i c a l c o m p a n y . e a c h r e s e a r c h e r is in t h e d a r k as to w h a t t h e o t h e r is d o i n g . P e r h a p s the most criminogenic research a r r a n g e m e n t is a hierarchical o n e .for e x a m p l e . S t o n e a r g u e s t h a t t h e law h a s a n i m p o r t a n t role t o play i n e n s u r i n g t h a t t r a n s n a t i o n a l c o r p o r a t i o n s h a v e a n effective i n t e r n a t i o n a l c o m m u n i c a t i o n s s y s t e m . digested in an a p p r o p r i a t e form for a c t i o n . h o s p i t a l s . O p p o s e d t o this i s a r e s e a r c h t e a m a p p r o a c h . M o r e o v e r . if at all. S e l f . m u s t b e d e l i v e r e d t o t h e ' r i g h t ' d e s k s . d i v u l g i n g his s u s p i c i o n s only in p r i v a t e . T h e s t r u c t u r e d c o m m u n i c a t i o n b l o c k a g e which p r o t e c t e d t h e R i c h a r d s o n . i n f o r m a t i o n a b o u t t h e safety o f its p r o d u c t s s h o u l d be g a t h e r e d not only from its o w n l a b o r a t o r i e s a r o u n d t h e w o r l d .Safety testing of drugs: from negligence to fraud m o r e s e r i o u s sort . health regulatory authorities. E v e r y m e m b e r of the research organisation r e p o r t s t o j u s t o n e s u p e r i o r .

e t c . T h e i n t r o d u c t i o n o f f i n a n c i a l c o n s i d e r a t i o n s leads t o c o m p e t i t i o n ( N o e l . ) m o n t h study in rats ( d o g s . E a c h has a task w h i c h o v e r l a p s with s o m e o n e else's t a s k . C o m p e t i t i o n in p r i c e t a k e s place at t h e e x p e n s e of c o m p e t i t i o n in q u a l i t y b e c a u s e w h e r e a s t h e s p o n s o r suffers directly from higher p r i c e s . U n d e r t h e n e w s y s t e m this i s not p o s s i b l e . W h e n different p e o p l e are w o r k i n g o v e r t h e s a m e f i g u r e s it is m o r e difficult to fiddle t h o s e figures. 1977: 112). p r i m a t e s . ) ? ' W e h a v e l e a r n e d t h a t h o w e v e r p r e c i s e and d e t a i l e d o u r p r o t o c o l s . it is t h e e s t i m a t e o f c o s t a l o n e which is o c c a s i o n a l l y the b a s i s for s e l e c t i n g a t e s t i n g facility. It is t h e r e f o r e e s s e n t i a l t h a t e a c h k n o w s w h a t t h e o t h e r is d o i n g . food a d d i t i v e . the H u n t i n g t o n Research C e n t r e . C o n v e r s e l y . appreciate the d i f f e r e n c e s i n t h e c o n t e n t s o f t h e study p r o p o s e d .Safety testing of drugs: from negligence to fraud c h a r a c t e r i s e d i n i n d u s t r y a s m a t r i x m a n a g e m e n t . U n d e r a system w h e r e e v e r y o n e k n o w s w h a t e v e r y o n e else is d o i n g it is hard to p r e v e n t bad n e w s from r e a c h i n g t h e t o p .e t c . N o t u n c o m m o n l y . it is difficult for s o m e o n e at t h e t o p to q u i e t l y p a s s d o w n an i n s t r u c t i o n to have s o m e dirty work done. t h e r e is an o b v i o u s n e e d for r e g u l a t i o n s w h i c h set a m i n i m u m s t a n d a r d b e l o w w h i c h no r e s e a r c h o r g a n i s a t i o n is a l l o w e d to fall in r e s p o n s e t o m a r k e t p r e s s u r e s . W h e n m a r k e t m e c h a n i s m s h a v e a n anti-social effect o f t h i s k i n d . To facilitate this t h e m a t r i x r e s e a r c h t e a m will typically have a w e e k l y m e e t i n g w h e r e e a c h m e m b e r will give a r e p o r t on p r o g r e s s . The research director of an American transnational w h i c h h a d c h a n g e d from a h i e r a r c h i c a l to a m a t r i x r e s e a r c h o r g a n i s a t i o n e x p l a i n e d : ' U n d e r t h e old system I could go and tell one of my s e c t i o n h e a d s to t h r o w o u t a sick rat and not tell a n y o n e a b o u t it. H e r e t h e study d i r e c t o r is the c o o r d i n a t o r o f a system of inter-relationships among r e s e a r c h e r s . often it is only t h e c o n s u m e r w h o will suffer from p o o r e r q u a l i t y . ' 1 1 Financial dependence and scientific independence T h e p r o b l e m o f t h e financial d e p e n d e n c e o f c o n t r a c t labs i s p o i n t e d l y i l l u s t r a t e d by t h e following view of P e t e r N o e l from o n e of the largest British contract labs. ) on a d r u g ( p e s t i c i d e . or would not. w e a r e a s k e d : 'Will y o u p l e a s e p r e p a r e a p r o t o c o l and e s t i m a t e of cost for a 3 . A further p r o t e c t i o n a g a i n s t b i d d i n g 102 . L o w e r costs have n o t i n f r e q u e n t l y b e e n r e a c h e d b y a b b r e v i a t i n g p r o t o c o l s and s o m e t i m e s . s p o n s o r s could not.( 6 . e t c .

This p r a c t i c e . T h e f i n a n c i a l d e p e n d e n c e o f c o n t r a c t l a b o r a t o r i e s has also b e e n a p r o b l e m which has c o n c e r n e d the E n v i r o n m e n t a l Protection A g e n c y i n t h e U n i t e d S t a t e s . O f t e n it is i m p o r t a n t to give different secret c o d e s to t h e n e w p r o d u c t . i t d o e s not necessarily m e a n that the contract laboratory a r r a n g e m e n t is i n h e r e n t l y inferior t o i n . . I n t e r n a l c o r p o r a t e p o l i c e m e n can m o r e r e a d i l y d i s c o v e r t h e s k e l e t o n s i n t h e i r own c o r p o r a t e closets t h a n t h e y can t h o s e o f o t h e r c o m p a n i e s . B r e a k i n g t h e s e c r e c y of t h e c o d e is p r o b a b l y less likely to o c c u r b e t w e e n o r g a n i s a t i o n s than within one organisation. T h i s p r o p o s a l is a clumsy b u r e a u c r a t i c o n e w h i c h p r o v i d e s little real g u a r a n t e e o f g r e a t e r i n t e g r i t y . O n e t e c h n i q u e w o u l d limit the p r o p o r t i o n of its b u s i n e s s t h a t any c o n t r a c t l a b o r a t o r y could h a v e with a part i c u l a r p e s t i c i d e p r o d u c e r . T h e c o n t r a c t l a b o r a t o r y r e l a t i o n s h i p p e r m i t s c o m p e t i t i v e forces to be for g o o d or ill. W h i l e this c e r t a i n l y d o e s h a p p e n . n o w followed b y m a n y A m e r i c a n c o m p a n i e s . i s b o t h a n extra legal p r o t e c t i o n for t h e s p o n s o r . A s t a t e m e n t b y f o r m e r F D A C o m m i s s i o n e r S c h m i d t b e f o r e t h e S e n a t e is a first step to u n d e r s t a n d i n g h o w this can b e d o n e .5 ) . On the other h a n d . C o n t r a c t i n g o u t r e s e a r c h d o e s p e r m i t s p o n s o r s w i t h integrity t o d i s t a n c e t h e i r r e s e a r c h p e o p l e from e v a l u a t i o n o f ' t h e i r own b a b y ' .h o u s e t h a n t o o u t s i d e w o r k . an e x i s t i n g p r o d u c t with w h i c h it is to be c o m p a r e d .h o u s e a r r a n g e m e n t s ( W i l c o x e t a l . and s o m e p r o t e c t i o n for t h e r e s p o n s i b l e c o n t r a c t lab from t h e price c u t t e r w h i c h i s p r e p a r e d t o i g n o r e G L P s .Safety testing of drugs: from negligence to fraud q u a l i t y a w a y is for t h e s p o n s o r to write into t h e c o n t r a c t a r e q u i r e m e n t t h a t G L P s m u s t b e followed b y t h e l a b o r a t o r y . 1978: 1 4 . In this c h a p t e r it has b e e n seen h o w a s p o n s o r can a b r o g a t e its o w n r e s p o n s i b i l i t y for r e s e a r c h s t a n d a r d s t h r o u g h a n u n s p o k e n u n d e r s t a n d i n g with a c o n t r a c t l a b o r a t o r y w h i c h p r o d u c e s the findings i t w a n t s . and a p l a c e b o i n o r d e r t o p r e v e n t u n i n t e n t i o n a l (or i n t e n t i o n a l ) b i a s e s affecting t h e i n t e r p r e t a t i o n o f t h e effects o f t h e t h r e e t r e a t m e n t s . B u t t h e r e is no r e a s o n why they c a n n o t be h a r n e s s e d for g o o d . T h e r e a r e p o w e r f u l e c o n o m i c and legal i n c e n t i v e s for d r u g m a n u f a c t u r e r s t o c a r r y out a d e q u a t e a n i m a l s t u d i e s o f their 103 . a s p o n s o r c o m p a n y which has a n o u t s t a n d i n g c o m p l i a n c e s y s t e m is in a b e t t e r p o s i t i o n to apply its s t a n d a r d s of e x c e l l e n c e to i n . T h a t a g e n c y h a s b e e n giving c o n s i d e r ation to limiting the p r o b l e m by m e a s u r e s to ensure that contract labs d o not b e c o m e f i n a n c i a l l y d e p e n d e n t u p o n one o r m o r e p e s t i c i d e m a n u f a c t u r e r s .

T h i s c r o s s . w e l l . An a l t e r n a t i v e w h i c h a v o i d s s o m e of t h e s e p r o b l e m s is for the g o v e r n m e n t to a p p r o v e a list of i n d e p e n d e n t 'third p a r t i e s ' to u n d e r t a k e d r u g t e s t i n g . the G o v e r n m e n t w o u l d c o m e to set r e s e a r c h p r i o r i t i e s . tend to stagnate. a l t h o u g h it may e l i m i n a t e outright bias of certain kinds.p a r t y t e s t i n g bill. and c o m p e t i t o r s ' p r o d u c t s are not u n c o m m o n l y i n c l u d e d in such s t u d i e s . 1976a: P a r t II. Since I b e l i e v e t h a t all m o n o p o l i e s .Safety testing of drugs: from negligence to fraud p r o d u c t s . T h e cost t o t h e t a x p a y e r o f g o v e r n m e n t d o i n g all d r u g t e s t i n g w o u l d b e b e y o n d t h e p o s s i b l e . W e a t F D A u n f o r t u n a t e l y k n o w . w h e t h e r public or private. T h e g o v e r n m e n t could act a s a ' b r o k e r ' a w a r d ing b i d s to c o n d u c t e v a l u a t i o n s paid for by s p o n s o r s on t h e basis of 104 . F o r a d e c a d e S e n a t o r G a y l o r d N e l s o n a t t e m p t e d t o p e r s u a d e the US C o n g r e s s to a c c e p t a t h i r d . Dr S c h m i d t has p o i n t e d out some o f t h e a r g u m e n t s against a g o v e r n m e n t monopoly o f d r u g testing.c h e c k . N e l s o n ' s basic a r g u m e n t had b e e n t h a t industry s h o u l d b e n e i t h e r testing t h e safety of its o w n p r o d u c t n o r d e c i d i n g w h o will do t h a t testing for t h e m . b u t industry foot the bill. Second. R e g u l a t o r y a g e n c i e s can foster this c o m p e t i t i v e c h e c k b y r e q u i r i n g t w o c o m p a n i e s s e e k i n g t o e n t e r a m a r k e t with similar p r o d u c t s t o e a c h d o c o m p a r a t i v e s t u d i e s with t h e o t h e r ' s p r o d u c t . T h i r d . from a n e m b a r r a s s i n g . a b y . the p r o s p e c t o f a n y single i n s t i t u t i o n g a i n i n g such c o n t r o l o v e r all preclinical drug investigation troubles me. and p e r h a p s s o m e l a b o r a t o r i e s i n g o v e r n m e n t d e p a r t m e n t s . a fact of life is t h a t m o s t t o x i c o l o g y l a b o r a t o r i e s and t o x i c o l o g i s t s are a l r e a d y e s t a b l i s h e d in p r i v a t e i n d u s t r y . S i m i l a r t o x i c o l o g i c a l s t u d i e s are d o n e o n closely related d r u g s b y different d r u g f i r m s . 1976a: P a r t I I . I n d u s t r y critics a r g u e that t h e g o v e r n m e n t s h o u l d do t h e t e s t i n g .p u b l i c i z e d m i x u p of a n i m a l s in t h e c o u r s e of an F D A study o f R E D N o .p r o d u c t o f t h e free e n t e r p r i s e s y s t e m . 2 . so t h a t n o n i n d u s t r y facilities and p e r s o n n e l for this w o r k simply are not a v a i l a b l e ( S u b c o m m i t t e e o n H e a l t h . 'disinterest' d o e s n o t in any s e n s e a s s u r e q u a l i t y . T h e s e w o u l d b e p r i m a r i l y p r i v a t e and u n i v e r s i t y l a b o r a t o r i e s . p r o v i d e s a strong s t i m u l u s to i n d i v i d u a l drug firms to have a c c u r a t e d a t a on their o w n p r o d u c t s ( S u b c o m m i t t e e o n H e a l t h . t h a t G o v e r n m e n t t e s t i n g i s v u l n e r a b l e t o the s a m e p r o b l e m s of quality control as testing d o n e by private firms. 9 2 ) . 103-4). It is i n e v i t a b l e t h a t in c a r r y i n g out its a c t i v i t i e s .

not a c c o r d i n g to how pleasing the results were to the sponsor. C o n t r a c t s w o u l d be w o n a c c o r d i n g to t h e quality of past r e s e a r c h . O n e r e a s o n w h y simply r e m o v i n g t h e d i r e c t cash n e x u s b e t w e e n s p o n s o r and c o n t r a c t o r b y h a v i n g t h e g o v e r n m e n t act a s b r o k e r m i g h t not be sufficient for all s i t u a t i o n s is t h a t it d o e s not r e m o v e p r e s s u r e s on c o n t r a c t o r s to a c h i e v e a c e r t a i n s a m p l e size by a d e a d l i n e . To c h e c k that t h e lab is d o i n g its r a w d a t a c o l l e c t i o n p r o p e r l y . scientific i n d e p e n d e n c e c o u l d b e a s s u r e d . t h e r e are i n c e n t i v e s for d a t a f a b r i c a t i o n a m o n g clinical i n v e s t i g a t o r s (especially w h e n a s m u c h a s $ 1 . T h e first lab is t h e r e f o r e in no p o s i t i o n to fiddle its r e s u l t s at t h e d a t a analysis s t a g e . or w h e r e g r o u n d s for s u s p i c i o n exist. T h e U S N a t i o n a l C a n c e r I n s t i t u t e t a k e s its g u a r a n t e e s o f t h e intergrity of research u n d e r t a k e n by i n d e p e n d e n t contractors even further. T h e case for N C I t y p e m e a s u r e s h e r e i s t h e r e f o r e also clear. e x p e r i e n c e with t h e e v a l u a t i o n o f t h e t y p e o f p r o d u c t c o n c e r n e d and t e c h n i c a l c o m p e t e n c e . J u s t a s w i t h t o x i c o l o g i c a l s t u d i e s . Contractors p r o d u c i n g data which the superior m e t h o d o l o g i e s of competitors s h o w e d to be in e r r o r w o u l d lose o u t in t h e c o m p e t i t i v e struggle for research excellence. but t h e r e is no r e a s o n t h a t t h e y could not be used s p a r i n g l y in a r e a s of high sensitivity or i m p o r t a n c e . 0 0 0 p e r subject i s paid b y A m e r i c a n c o m p a n i e s . T h e s e k i n d s o f c h e c k s are o b v i o u s l y c o s t l y . H e n c e t h e r a t i o n a l e for t h e m o r e s t r i n g e n t r e q u i r e m e n t s o f c o m p e t i t i o n b e t w e e n c o n t r a c t o r s and t h e N a t i o n a l C a n c e r I n s t i t u t e m e a s u r e s . W e h a v e s e e n t h a t d a t a can b e fabricated i n o r d e r t o m e e t a d e a d l i n e . A t least i f clinical t e s t i n g c o n t r a c t s w e r e a w a r d e d b y g o v e r n m e n t . W i t h the e l i m i n a t i o n o f t h e d i r e c t c a s h n e x u s b e t w e e n s p o n s o r and cont r a c t o r . e n a b l i n g s o m e d o c t o r s to e a r n up to $1 million a y e a r from d r u g r e s e a r c h ) . we would no longer have the situation of the Australian Medical D i r e c t o r o f a n A m e r i c a n t r a n s n a t i o n a l w h o could say quite o p e n l y to m e : ' O f c o u r s e we do p a t a d o c t o r on t h e back and c o n g r a t u l a t e 105 . j u s t as it c a n be m a n u f a c t u r e d to p r o d u c e favourable r e s u l t s . q u a l i t y o f p r o t o c o l s . C o n t r a c t o r s are sent c o d e d c o m p o u n d s and r e q u i r e d t o r e t u r n r a w d a t a s h e e t s t o a n o t h e r i n d e p e n d e n t c o n t r a c t o r which d o e s t h e statistical a n a l y s i s . N C I will o c c a s i o n a l l y slip it a c o d e d c o m p o u n d w h i c h has c e r t a i n clearly e s t a b l i s h e d effects t o a s c e r t a i n t h a t such effects are r e p o r t e d .Safety testing of drugs: from negligence to fraud e c o n o m i c s . Even greater guarant e e s w o u l d p r e v a i l w e r e t h e r e a r e q u i r e m e n t t h a t the s t u d i e s b e u n d e r t a k e n by two or more research contractors.

singly or in c o m b i n a t i o n with like f i r m s . 1980). A n o t h e r a l l e g e d t a c k is for the firm. T h i s w o u l d m e a n t h a t t h e quality o f r e s e a r c h w o u l d be s u b j e c t e d to e v a l u a t i o n and r e . S h a p o ( 1 9 7 9 : 57) incisively a r g u e d : ' A s a m a t t e r of d e m o c r a t i c v a l u e s . it is wise to k n o w w h e n c e the i n s t i t u t e o r t h e s c i e n t i s t s w h o w o r k t h e r e o b t a i n their f i n a n c i a l support. In the absence o f t h e more sweeping reforms mentioned above. T h e s e p o l i c i e s could n e v e r b e totally effective b e c a u s e . O f t h e 106 the to the of 18 . should be i n f o r m e d w h e t h e r a r e s e a r c h e r p u b l i s h i n g d a t a a b o u t a p a r t i c u l a r drug was financially supported in that research by the manufacturer o f t h e d r u g . to set up s u p p o s e d l y i n d e p e n d e n t r e s e a r c h i n s t i t u t e s w h o s e s c i e n t i s t s s e e m a l w a y s t o find e v i d e n c e t o s u p p o r t t h e s t a n c e t a k e n b y t h e firm.Safety testing of drugs: from negligence to fraud him m o r e if as well as following the p r o t o c o l p r o p e r l y and filling out t h e forms i n d e t a i l h e finds w h a t w e p r e d i c t e d .a n a l y s i s not only by g o v e r n m e n t s c i e n t i s t s but b y t h e scientists o f c o m p e t i t o r s w h o have a c l e a r v e s t e d i n t e r e s t in u n c o v e r i n g m e t h o d o l o g i c a l w e a k n e s s e s . D r S o m e r s D i s t i l l e r s g a v e t h a l i d o m i d e t o four p r e g n a n t w h i t e r a b b i t s . ' A n o t h e r r e f o r m w h i c h w o u l d use c o m p e t i t i v e forces t o i m p r o v e t h e q u a l i t y of r e s e a r c h w o u l d be to m a k e findings on the safety of d r u g s a v a i l a b l e u n d e r F r e e d o m o f I n f o r m a t i o n A c t s (see M c G a r i t y and S h a p i r o . t h e p u b l i c s h o u l d h a v e a right to c e r t a i n o t h e r t y p e s of i n f o r m a t i o n . O n e o f t h e m a n y l e s s o n s from t h e t h a l i d o m i d e d i s a s t e r w a s i m p o r t a n c e of giving c o m p a n y officers g u a r a n t e e s of a right p u b l i s h f i n d i n g s p r o m p t l y from t h e r e s e a r c h they do for c o m p a n y . T h e p u b l i c . a s E p s t e i n ( 1 9 7 8 : 82) has p o i n t e d o u t . c o n s u m e r g r o u p s should b e able t o e v a l u a t e the d a t a w h i c h h a v e led to a d e c i s i o n to set a p r o d u c t loose u p o n c o n s u m e r s . d e s p i t e m a s s i v e c o n t r a r y e v i d e n c e . T h u s . D u r i n g F e b r u a r y and M a r c h o f 1962. w h e n some high-sounding institute states that a c o m p o u n d is h a r m l e s s or a p r o c e s s free of risk. t h e r e is a s t r o n g p r e s u m p t i o n in favor of m a k i n g public the facts a b o u t e x p e r i m e n t a t i o n w h o s e s u b j e c t s are t h e p u b l i c ' D r u g c o m p a n i e s s h o u l d not h a v e t h e right to t r e a t as a p r i v a t e c o m m e r c i a l s e c r e t s o m e t h i n g w h i c h has a cost in risk of injury b o r n e by t h e public. a n d p a r t i c u l a r l y t h e m e d i c a l profession a t l a r g e . M e d i c a l j o u r n a l s should have a policy o f r e q u i r i n g such d i s c l o s u r e . T h a t ' s only n a t u r a l . S i m i l a r l y . large c o r p o r a t i o n s are infinitely r e s o u r c e f u l in c h a n n e l l i n g t h e i r funds indirectly to s u p p o r t captive researchers.

T h i s i s n o t t o say t h a t t h e c o m p a n i e s w e r e u n t o u c h e d b y t h e e v e n t s d i s c u s s e d h e r e . S c h e r i n g . civil a c t i o n s w h i c h w e r e u n i v e r s a l l y s e t t l e d o u t of c o u r t . c o m p a n i e s have not suffered s e v e r e l y at the h a n d s of c r i m i n a l c o u r t s . O n t h e c o n t r a r y . Biometric Testing I n c . w a s s e n t e n c e d w i t h o u t trial to a de facto c o r p o r a t e d e a t h s e n t e n c e . T h e r e i s e v i d e n c e t h a t t h e c o r p o r a t i o n s i n v o l v e d w e r e not only d e t e r r e d . but also i n s o m e m e a s u r e r e h a b i l i t a t e d . S o m e r s w a s a n x i o u s t o publish his f i n d i n g s q u i c k l y . Deterrence and rehabilitation The s e r i o u s c o n s e q u e n c e s for t h e thalidomide corporations i n v o l v e d not c r i m i n a l s a n c t i o n s . 1 3 had t h e t e r r i b l e t y p e s o f d e f o r m i t i e s n o w a s s o c i a t e d with t h a l i d o m i d e . Distillers.suffered at least in t h e s h o r t t e r m on t h e stock m a r k e t or in p r o f i t a b i l i t y . with a n integrity w h i c h m a n y r e s e a r c h e r s w i t h i n i n d u s t r y m i g h t not h a v e s h o w n . D. . It is unlikely to rise from the d e a d i n r e h a b i l i t a t e d form. but t h a t t h e d e t e r r e n c e b y and large p r e c e d e d r a t h e r t h a n followed from any c r i m i n a l action which might have been t a k e n against them. the way that 107 . G r u n e n t h a l . as a m a t t e r of c o n t r a c t . in t h e o t h e r case studies of this c h a p t e r . This i s a n i m p o r t a n t p r o t e c t i o n n o t only b e c a u s e i t e n a b l e s c o m p a n y scientists to b l o w t h e w h i s t l e after a s e r i o u s c o v e r . they w r o t e to D i s t i l l e r s s u g g e s t i n g t h a t p u b l i c a t i o n s h o u l d be d e l a y e d for t h e t i m e b e i n g .u p . t h e right to p u b l i s h i n d e p e n d e n t l y in a c a d e m i c j o u r n a l s any f i n d i n g s from t h e i r r e s e a r c h . p u b l i s h e d his p a p e r in The Lancet of 28 A p r i l 1962. S i m i l a r l y . w e h a v e seen t h a t t h e c o m p a n i e s c o n s i d e r e d in t h e m a j o r case s t u d i e s in t h i s c h a p t e r . A n o b v i o u s e x c e p t i o n h e r e i s I B T w h i c h . but civil a c t i o n s c o s t i n g m a n y h u n d r e d s o f million d o l l a r s . W e h a v e s e e n .Safety testing of drugs: from negligence to fraud b a b y r a b b i t s b o r n . if t h e y w e r e d e a l t w i t h by a c r i m i n a l court at all. T h e y w e r e set back in t h e m a i n not b e c a u s e of c r i m i n a l s a n c t i o n s b u t from t h e a d v e r s e p u b l i c i t y s u r r o u n d i n g t h e allegations made against them. Executives of these companies c o m m u n i c a t e t h e m e s s a g e t h a t the c a m p a i g n s against t h e m had c o n s e q u e n t i a l d e t e r r e n t effects. G. b u t also b e c a u s e t h e r e is b o u n d to be a p r e v e n t i v e effect from t h e k n o w l e d g e t h a t a c o m p a n y ' s c o v e r c o u l d be b l o w n at any t i m e by a scientist w h o has a c o n t r a c t u a l right to do so.R i c h a r d s o n M e r r e l l . B u t w h e n G r u n e n t h a l l e a r n e d o f t h e r e s u l t s . I B T . Searle. a l l o w s its s c i e n t i s t s . i n effect. A t least o n e A m e r i c a n c o m p a n y . S o m e r s . t h o u g h .

H e a d office b e g a n s e n d i n g t r o u b l e s h o o t e r s t o s u b s i d i a r i e s a r o u n d the w o r l d t o c h e c k t h a t t h e n e w s t a n d a r d s w e r e being m e t . w h o s e j o b it w a s to c l e a n up t h e c o m p a n y . F D A policy. 1977: 5). S e a r l e ' s fiasco w a s t h e catalyst for t h e i n t r o d u c t i o n o f G o o d L a b o r a t o r y P r a c t i c e s r e g u l a t i o n s for t h e first t i m e . C r i t i c s o f t h e p r o c e s s w o u l d call it legislation by crisis r a t h e r then regulatory rehabilitation. R i c h a r d s o n . T h e m o s t s t r a i g h t f o r w a r d c o n c l u s i o n o f this c h a p t e r m u s t b e . t h e r e can b e little q u e s t i o n t h a t c o n s i d e r a b l e c o r p o r a t e r e h a b i l i t a t i o n t o o k place. f o r m e r l y with o n e o f t h e m o s t sloppy internal c o n t r o l s y s t e m s in t h e A m e r i c a n p h a r m a c e u t i c a l i n d u s t r y . and that the e v i d e n c e s u b m i t t e d t o s u p p o r t a n a p p l i c a t i o n reflected p r o f e s s i o n a l i s m a n d science o f t h e h i g h e s t o r d e r ( G a r d n e r . i s a n u n a c c e p t a b l e position. t h o u g h c o m m o n p l a c e t o d a y . T h e t h a l i d o m i d e a n d S e a r l e crises also r e s u l t e d in a kind of r e g u l a t o r y r e h a b i l i t a t i o n . A p o s i t i o n m o r e firmly g r o u n d e d in t h e r e a l i t i e s d o c u m e n t e d h e r e has been expressed by Epstein (1978: 300): 108 . set up a t o u g h i n t e r n a t i o n a l i n t e r n a l c o m p l i a n c e s y s t e m . M E R / 2 9 and t h a l i d o m i d e c o m i n g closely on top of each o t h e r permitted Senator Kefauver to push through s w e e p i n g a m e n d m e n t s t o t o u g h e n t h e U S F o o d .M e r r e l l led t h e i n d u s t r y i n w o r l d w i d e a u d i t i n g p r o g r a m m e s o f c o r p o r a t e s t a n d a r d s i n quality o f d r u g t e s t i n g and g o o d m a n u f a c t u r i n g p r a c t i c e s . T h e a p p o i n t e e w a s a s t r o n g p e r s o n a l i t y . a former F D A District C o m m i s s i o n e r . T h e policy o f t h e F D A n e c e s s a r i l y has b e e n t h a t u n l e s s t h e r e i s a c o m p e l l i n g r e a s o n t o b e l i e v e o t h e r w i s e . D r u g and C o s m e t i c A c t i n 1962. a n d a r g u a b l y still is.Safety testing of drugs: from negligence to fraud S e a r l e . A l m o s t every d e v e l o p e d c o u n t r y severely t i g h t e n e d its r e g u l a t o r y c o n t r o l s on t h e p h a r m a c e u t i c a l i n d u s t r y in t h e w a k e of t h a l i d o m i d e . in t h e face o f t h e w i d e s p r e a d a b u s e s in t h e safety t e s t i n g of d r u g s w h i c h h a v e b e e n d o c u m e n t e d . following its c r i s e s o f t h e e a r l y 1960s.M e r r e l l a p p o i n t e d a ' D i r e c t o r of S t a n d a r d s ' to a p o s i t i o n with c o n s i d e r a b l e o r g a n i s a t i o n a l c l o u t . A n o l d e r R i c h a r d s o n M e r r e l l e x e c u t i v e . that t h e following s t a t e m e n t o f w h a t h a s b e e n . w h o saw the t r a n s f o r m a t i o n c l a i m e d t h a t a t t h e t i m e R i c h a r d s o n . W h e t h e r o r not this i s t r u e . S i m i l a r l y . w e w o u l d p r o c e e d from t h e a s s u m p t i o n t h a t t h e f o u n d a t i o n w a s i n t a c t . something u n u s u a l a t t h a t t i m e . A w o r l d wide c o r p o r a t e standards manual was introduced.

But t h e r e a l i s t i c s t a n c e is still o n e of a priori r e s e r v a t i o n s a b o u t the v a l i d i t y of d a t a s u p p l i e d by i n d u s t r y . m a n i p u l a t i o n . e s p e c i a l l y w h e n the d a t a b a s e has b e e n m a i n t a i n e d as c o n f i d e n t i a l at i n d u s t r y ' s i n s i s t e n c e . I f w e get back t o o f a v o u r a b l e a p i c t u r e on a p r o d u c t . B . B . e s p e c i a l l y w h e n profitable p r o d u c t s o r p r o c e s s e s are i n v o l v e d . T h a t w o u l d r e b o u n d a g a i n s t us. J. J. The Medical D i r e c t o r w o r k e d for a n A m e r i c a n t r a n s n a t i o n a l which c o n c e n t r a t e s a s u b s t a n t i a l p r o p o r t i o n of its clinical t e s t i n g p r o g r a m m e in A u s t r a l i a : J. : But presumably an expert fraud would produce neither extremely favourable nor extremely unfavourable results. I n d u s t r y e x e c u t i v e s like to a r g u e t h a t it is n o w t h e 1980s and that t h e a b u s e s o f t h e 1970s and 1960s are p h e n o m e n a o f t h e past. from gross i n a d e q u a c y . but pretty average-looking results! M e d i c a l D i r e c t o r : In t h a t case it w o u l d n o t affect o u r r e s u l t s . 109 . we w o u l d t h e n go and o v e r p r o m o t e it. A n d I don't think that is necessary. C o n s i d e r t h e following interv i e w w h i c h I had in 1980 with a M e d i c a l D i r e c t o r in A u s t r a l i a (a d e v e l o p e d c o u n t r y w i t h a r e p u t a t i o n a s h a v i n g one o f t h e t o u g h e s t regulatory schemes). E v i d e n c e o f such c o n s t r a i n t s n o w justifies a priori r e s e r v a t i o n s a b o u t t h e validity of d a t a d e v e l o p e d by institutions or individuals whose economic interests a r e affected. : Do you or the Health Department ever do audits of your doctors to see that the patients on which you have forms actually exist! M e d i c a l D i r e c t o r : N o . : But what about the instances which have been proven in the US of doctors providing data on fictitious patients in order to collect more money for clinical testing! M e d i c a l D i r e c t o r : T h e r e are n o i n c e n t i v e s f o r t h i s .Safety testing of drugs: from negligence to fraud C o n s t r a i n t s o n d a t a . biased i n t e r p r e t a t i o n . B . s u p p r e s s i o n and o u t r i g h t d e s t r u c t i o n . are c o m m o n p l a c e .

such as failure to p r o p e r l y c l e a n a m a c h i n e b e t w e e n p r o d u c t i o n r u n s o f different t y p e s o f d r u g s (so t h a t t h e f i r s t p r o d u c t might c o n t a m i n a t e t h e s e c o n d ) t o m o r e u n u s u a l t y p e s o f offences w h i c h n o r m a l l y involve criminal intent. F D A had 6. I n s o m e c o u n t r i e s . violations o f t h e regulations are criminal offences. G M P s are little m o r e t h a n v o l u n t a r y c o d e s . T h e F D A has a D r u g P r o d u c t P r o b l e m R e p o r t i n g P r o g r a m which is a m a j o r s o u r c e of l e a d s on G M P v i o l a t i o n s . while in o t h e r s . such a s the U n i t e d S t a t e s . s u c h a s A u s t r a l i a . T h e B r i t i s h C o m m i t t e e o n Safety o f D r u g s w a s set u p after t h e t h a l i d o m i d e t r a g e d y .4 Unsafe manufacturing practices SOME CASE STUDIES L a w s r e g u l a t i n g t h e safe m a n u f a c t u r e o f d r u g s h a v e b e e n r e s p o n sive to c r i s e s in a w a y very similar to t h e r e g u l a t i o n of t e s t i n g .100 d r u g p r o b l e m s r e p o r t e d from 110 . In t h e year e n d i n g 3 1 M a r c h 1978. D r u g and C o s m e t i c A c t o f 1938 w a s b r o u g h t i n t o b e i n g after o v e r o n e h u n d r e d p e o p l e died i n t h e elixir s u l f a n i l a m i d e d i s a s t e r . M o s t c o u n t r i e s n o w h a v e r e g u l a t i o n s for G o o d M a n u f a c t u r i n g P r a c t i c e s ( G M P s ) . It will b e s e e n i n this c h a p t e r h o w t h e U S F o o d . An example o f t h e latter would be where a m a n u f a c t u r e r w a n t o n l y a t t e m p t e d to save m o n e y by s u b s t i t u t i n g a less e x p e n s i v e i n g r e d i e n t for t h e o n e set d o w n in the specifications. T o u g h e r cont r o l l i n g l e g i s l a t i o n e n s u e d in F r a n c e w h e n in 1954 m o r e t h a n a h u n d r e d p e o p l e died after b e i n g g i v e n i n c o r r e c t l y labelled t a b l e t s for t h e t r e a t m e n t of b o i l s . ' T h e k i n d s o f p r o b l e m s w h i c h such c o d e s a d d r e s s r a n g e from unsafe p r a c t i c e s w h i c h i n v o l v e no c r i m i n a l i n t e n t .

1978: 17). O t h e r p r o b l e m s r e p o r t e d w e r e a d v e r s e r e a c t i o n s . visible p r e c i p i t a t e s or s e d i m e n t s in d r u g s m a i n l y in solution form. I n 1 9 7 1 . c a p s u l e s . p r e d n i s o n e (for a r t h r i t i s . ' P o t e n c y c a n n o t be d e t e r m i n e d . O n e lot o f a n a n t i h i s t a m i n e solution was shipped in bottles that reportedly exploded because o f t h e gas p r o d u c e d by c o n t a m i n a t i n g b a c t e r i a . s u l f a . s u s p e c t e d p o t e n c y p r o b l e m s . S o m e recalls h a v e b e e n m a s s i v e . and o t h e r c o n d i t i o n s ) w i t h 3 0 p e r c e n t .Unsafe manufacturing practices off- pharmacists. m i g h t d i s c o v e r a p r o b l e m a n d t h e c o m p a n y will a g r e e . m i s s i n g o r i m p r o p e r listing o f label e x p i r a t i o n d a t e s . 1978: 11). F D A t e s t s p i c k e d up n i t r o g l y c e r i n t a b l e t s (for t h e c o n t r o l of anginal p a i n ) w i t h as little as 16 p e r c e n t o f t h e l a b e l l e d a m o u n t . and s o l u t i o n s . M o s t recalls are v o l u n t a r y . a s t h m a . C l a s s III r e c a l l s . 1974: 140).p r o d u c i n g c o n t a m i n a n t s . t o recall t h e p r o d u c t from t h e m a r k e t . and m o r p h i n e w i t h 6 8 p e r c e n t . In a r e p o r t on o n e lot of m o r e t h a n a million digitalis t a b l e t s . F o r the p e r i o d J a n u a r y 1974 to D e c e m b e r 1977 t h e r e w e r e 177 court a c t i o n s initia t e d a g a i n s t p h a r m a c e u t i c a l c o m p a n i e s for alleged drug p r o d u c t q u a l i t y p r o b l e m s ( P a u l s and K l o e r . T h e F D A tests similarly disclosed o p h t h a l m i c o i n t m e n t s c o n t a m i n a t e d with metal particles. T h e s e included inj u n c t i o n s . s e i z u r e s and p r o s e c u t i o n s . and h o r m o n e s o l u t i o n s w i t h unidentified f e v e r . The most c o m m o n reported problems were c o l o u r e d t a b l e t s . u n k n o w n interfering substance 1 2 111 . and a b n o r m a l o d o r o r t a s t e ( H o p k i n s . an F D A r e p o r t said. a single drug c o m p a n y had to recall from t h e m a r k e t a total of 957 million digoxin t a b l e t s ( S i l v e r m a n a n d L e e . i n j e c t a b l e V i t a m i n B c o n t a i n i n g f r a g m e n t s o f m e t a l and g l a s s . 1978). S i l v e r m a n and L e e have also d e t a i l e d h o w recalls c a n involve s e r i o u s m a t t e r s : O n e liver p r e p a r a t i o n a p p r o v e d only for v e t e r i n a r i a n use w a s m i s l a b e l l e d and m a r k e t e d for injection into h u m a n b e i n g s . c r a c k e d o r c r u m b l e d d o s a g e u n i t s such a s t a b l e t s o r glass a m p u l e s . p e r h a p s u n d e r t h r e a t o f court a c t i o n .a total of 332 c a s e s . r e s e r p i n e (for h y p e r t e n s i o n ) with 2 5 p e r c e n t . e m p t y o r slack-filled d o s a g e u n i t s . for p r o b l e m s w h i c h a r e 'not likely to c a u s e a d v e r s e h e a l t h c o n s e q u e n c e s ' w e r e e x c l u d e d from t h e s e f i g u r e s . o r t h e c o m p a n y itself.d r u g s w i t h m o l d . T h e F D A . T h e F D A e n f o r c e m e n t r e p o r t s i n d i c a t e t h a t b e t w e e n M a r c h 1975 a n d S e p t e m b e r 1977 t h e r e w e r e 687 C l a s s I and II recalls from the m a r k e t o f p r e s c r i p t i o n d r u g s ( P a u l s and K l o e r .

In K o r e a recently pills s u p p o s e d l y c o n t a i n i n g a l i f e .Unsafe manufacturing practices c a u s e d p r e m a t u r e d e a t h s a m o n g test a n i m a l s ' ( S i l v e r m a n and L e e . . former Director o f t h e F D A ' s Division of D r u g M a n u f a c t u r i n g . D r u g e x e c u t i v e s w h o h a v e w o r k e d in A s i a are full of s t o r i e s of pirate r e p r o d u c t i o n s of t h e i r p r o d u c t s using forged labels and t a b l e t s of i d e n t i c a l s i z e . A few w e l l . 1974: 1 4 0 . O n e A u s t r a l i a n g e n e r a l m a n a g e r told of a case in S o u t h . 1969: 157). 1967).d e a t h d r u g for severe h e a r t d i s e a s e w e r e found to c o n t a i n only flour ( S i l v e r m a n et a l . but they do build up c o m m u n i t y i m m u n i t y t o t h e a n t i b i o t i c s o t h a t future full-strength a d m i n i s t r a t i o n s are r e n d e r e d ineffective. P i r a t e s s o m e t i m e s b r i b e t e c h n i c i a n s to steal p u n c h e s and dies so that the r e p u t a b l e c o m p a n y ' s l o g o can be s t a m p e d on a pill w h i c h might consist of no more than starch. A n e n t e r p r i s i n g c o m p o u n d e r c o l l e c t e d d i s c a r d e d penicillin vials and c a r d b o a r d c o n t a i n e r s with t h e l a b e l s i n t a c t . Bud Loftus. On further i n v e s t i g a t i o n s . Such a n t i b i o t i c s a r e u n l i k e l y to effect a c u r e for a n y t h i n g . s h a p e and c o l o u r t o their o w n . H e r e chalk w a s u s e d b e c a u s e it w a s i n s o l u b l e in w a t e r ( R a n g n e k a r .a n d . I t w a s later found t h a t t h e p r o c a i n e b e n z y l p e n i c i l l i n w h i c h had b e e n a d m i n i s t e r e d t o t h e m w a s i n r e a l i t y a s o l u t i o n of c h a l k . S u c h g r o s s a b u s e s are less c o m m o n i n d e v e l o p e d c o u n t r i e s . 1982: 111). a most r e m a r k a b l e r a c k e t c a m e t o light. H o w e v e r . I recall a c a s e of a b o u t ten y e a r s ago [in I n d i a ] which we solved in a m a t t e r of h o u r s . M a n y " b a t h t u b ' m a n u f a c t u r e r s i n G u a t e m a l a have a n t i b i o t i c s o n t h e m a r k e t with less t h a n half t h e r e q u i r e d s t r e n g t h o f a c t i v e i n g r e d i e n t .p l a c e d p e r s o n s r e p o r t e d at a h o s p i t a l w i t h s w o l l e n h a n d s . O t h e r k i n d s o f s e r i o u s p r o d u c t safety v i o l a t i o n s are frequently p e r p e t r a t e d today by transnational companies in developed c o u n t r i e s . He o p e r a t e d his r a c k e t on a very big scale and w a s able to p a l m off w h o k n o w s h o w m a n y t h o u s a n d s o f s p u r i o u s vials o f t h e so-called p r o c a i n e b e n z y l p e n i c i l l i n before h e w a s n a b b e d and j a i l e d . and 112 .E a s t A s i a w h e r e w a t e r had b e e n s u b s t i t u t e d for i n j e c t a b l e p e n i c i l l i n .1 ) . I n 1979 w e saw M e r c k u n d e r t a k e t w o p r o d u c t r e c a l l s . p o i n t s out that in the late 1950s and early 1960s i n t h e U n i t e d S t a t e s t h e c o u n t e r f e i t i n g o f d r u g s and p i r a t i n g o f p u n c h e s and dies b e c a m e a big p r o b l e m (see also K r e i g . T h e w o r s t a b u s e s o c c u r i n the T h i r d W o r l d . He filled t h e vials with chalk and p a c k e d t h e m n e a t l y in t h e c a r d b o a r d c o n t a i n e r s .

A . . I do not feel t h e r e w a s any r e s p o n s i b i l i t y on 113 .M . w e r e n o t i n c o m p l i a n c e with t h e M i n i s t r y ' s G M P s t a n d a r d s . T h e m a n u f a c t u r e r told r e p o r t e r s : 'my c h e m i s t s and I d e e p l y regret t h e fatal r e s u l t s . t h e A m e r i c a n H o m e P r o d u c t s s u b s i d i a r y . Q u i n i n e d i h y d r o c h l o r i d e i s given to patients w h o may have malaria. The Japanese Ministry of H e a l t h a n d W e l f a r e found t h a t as of 31 M a r c h 1979 126 d r u g m a n u f a c t u r i n g p l a n t s .d e s t r o y i n g oxalic acid. b u t . we shall begin with an e a r l y crisis w h i c h c h a n g e d t h e history of t h e p h a r m a c e u t i c a l industry. and r e f e r r e d t o ' e q u i p m e n t c o n s t r u c t e d o f w o o d w h i c h d o e s not a s s u r e e x c l u s i o n from d r u g s of c o n t a m i n a n t s from p r e v i o u s b a t c h e s that m i g h t affect safety. Lasix injections are often used in e m e r g e n c y s i t u a t i o n s to r e m o v e e x c e s s i v e fluid r a p i d l y from t h e b o d y . . c o m p r i s i n g 9. in that the stability t e s t i n g p r o g r a m d o e s not i n c l u d e q u a n t i t a t i v e assays o f t h e p r e s e r t a t i v e s y s t e m n o r any m i c r o b i o l o g i c a l t e s t i n g o f A m p h o j e l . T h e F D A also told the P r e s i d e n t of A m e r i c a n H o m e P r o d u c t s . m a n y o f t h e m c h i l d r e n .T and O x a i n e . we a r e not d e a l i n g with a p r o b l e m which is limited to p o o r c o u n t r i e s or d a y s g o n e by. d e c i d e d to m a n u f a c t u r e t h e p r o d u c t in a liquid form that it b e c a m e a killer. It w a s only w h e n a T e n n e s s e e c o m p a n y . N e v e r t h e l e s s . c a s t i g a t e d with a b i t i n g r e g u l a t o r y l e t t e r from t h e F D A .4 p e r cent of t h o s e in the c o u n t r y . that the c o m p a n y had failed 'to subject m a t e r i a l s liable t o m i c r o b i o l o g i c a l c o n t a m i n a t i o n t o m i c r o b i o l o g i c a l tests p r i o r t o u s e ' . ' In 1979 in A u s t r a l i a we saw an e x t r e m e l y h a z a r d o u s p a c k a g i n g m i x . John Culligan. as i n t h e t r e a t m e n t o f a c u t e h e a r t failure. T h u s . and that t h e r e is no a s s u r a n c e of stability of finished d r u g s . .e t h y l e n e glycol w a s t r a n s f o r m e d in t h e b o d y into k i d n e y .u p i n w h i c h q u i n i n e d i h y d r o c h l o r i d e w a s d i s c o v e r e d i n blister p a c k a g e s of L a s i x a m p u l e s . T h e a c t i v e i n g r e d i e n t w a s dissolved in d i .'.e t h y l e n e glycol to form t h e liquid.M . quality or p u r i t y . failure to m a i n t a i n e q u i p m e n t i n a c l e a n m a n n e r b y r e a s o n o f t h e p r e s e n c e o f m o l d ' . . T h e l e t t e r o f 2 1 J u n e alleged 'failure to provide a d e q u a t e ventilation to minimize contamination o f p r o d u c t s b y e x t r a n e o u s a d u l t e r a n t s and d i s s e m i n a t i o n o f m i c r o o r g a n i s m s from o n e a r e a to a n o t h e r .Unsafe manufacturing practices W y e t h . . T h e d i . T h e result w a s a slow a g o n i s i n g d e a t h for 107 d o c u m e n t e d c a s e s . The elixir sulfanilamide disaster S u l f a n i l a m i d e w a s a p r o d u c t widely in use a r o u n d the world in t h e late 1930s. M a s s e n g i l l & C o . .

W h e n i t w a s found that t h e law w a s all but p o w e r l e s s to p u n i s h t h e c o m p a n y . H o w e v e r .r a n g i n g p r o v i s i o n s w a s c l e a r . A p a n i c e n s u e d in w h i c h 11. 1974: 8 7 ) . There were other batches w i t h t h e w r o n g label but t h e c o r r e c t e m b o s s i n g identification o n t h e b o t t l e c a p s . M a s s e n g i l l had n o t t e s t e d the elixir form of sulfanilamide for safety o n e i t h e r h u m a n s u b j e c t s o r a n i m a l s . the need for a n e w F o o d . N o s o o n e r had this crisis b e e n d e a l t with w h e n a n o t h e r label m i x . 0 0 0 . A n era o f s t r i c t e r r e g u l a t i o n of p h a r m a c e u t i c a l s had b e g u n . A b b o t t ' s p r o b l e m s w e r e barely b e g i n n i n g .000 b o t t l e s of s o l u t i o n w e r e recalled to t r a c k d o w n t h e salt m a s q u e r a d i n g a s d e x t r o s e . P r e s i d e n t R o o s e v e l t signed t h e n e w act into law in J u n e 1938. w i t h 3 8 recalls i n s e v e n y e a r s . A p p a r e n t l y t h e chief c h e m i s t t o o k a different view: he c o m m i t t e d suicide. A b b o t t had to send w a r n i n g t e l e g r a m s to p h y s i c i a n s at a cost e s t i m a t e d a t b e t w e e n $ 7 5 0 . In 1964 it w a s d i s c o v e r e d t h a t 300 b o t t l e s o f s o d i u m c h l o r i d e solution ( c o m m o n salt) w e r e m i s l a b e l l e d as " D e x t r o s e 5% in W a t e r ' . The Abbott affair I n t h e 1960s and 1970s A b b o t t w a s t h e w o r l d ' s largest m a n u f a c t u r e r of sterile i n t r a v e n o u s solutions.Unsafe manufacturing practices o u r p a r t ' ( S i l v e r m a n a n d L e e . so high s t a n d a r d s of p r o d u c t quality are i m p e r a t i v e . 0 0 0 ( S i l v e r m a n and Lee. to be followed after t h e t h a l i d o m i d e d i s a s t e r in 1961 by an e v e n stricter era. D r u g and C o s m e t i c A c t w i t h w i d e . Intravenous solutions.1974:142). Such a l e a k a g e of b a c t e r i a c o u l d r e s u l t in s e p t i c a e m i a or b l o o d p o i s o n i n g . o n e of t h e m i n v o l v i n g 93 different p r o d u c t s . of course. T h e result w a s m o r e c o n t a m i n a t i o n o f 114 . 0 0 0 and $ 1 . F u r t h e r recalls o c c u r r e d b e t w e e n O c t o b e r 1964 a n d A p r i l 1965 after it w a s d i s c o v e r e d that plastic l i n e r s on its s c r e w .u p w a s found: b o t t l e s o f " D e x t r o s e 1 0 % S a l i n e ' had b e e n e r r o n e o u s l y labelled ' D e x t r o s e 2 7 2 % in Lactated Ringer's Solution'. S o m e b o t t l e s w e r e d i s c o v e r e d t o c o n t a i n m o u l d . T h e A c t i n c o r p o r a t e d a v a r i e t y of p r o v i s i o n s to e n s u r e t h a t d r u g s m a n u f a c t u r e d i n t h e U n i t e d S t a t e s w e r e safe. a r e c o m m o n l y used on critically ill p a t i e n t s . the Council on E c o n o m i c P r i o r i t i e s ( 1 9 7 3 ) found A b b o t t t o have t h e w o r s t p r o d u c t safety r e c o r d i n t h e A m e r i c a n p h a r m a c e u t i c a l i n d u s t r y . T h e n in 1969 F D A d i s c o v e r e d t h a t for s o m e time t h e r e had b e e n a p r o b l e m w i t h t h e a n n e a l i n g o f t h e glass i n the n e c k s o f A b b o t t b o t t l e s o f i n t r a v e n o u s fluid.t o p caps w e r e d e f e c t i v e and p o s e d a severe risk t h a t b a c t e r i a w o u l d e n t e r t h e i n t r a v e n o u s s o l u t i o n .

If t h e r e w a s no visible e v i d e n c e of c o n t a m i n a t i o n . S u b s e q u e n t l y the c o m p a n y stated t h a t a p r o b l e m had e x i s t e d for s o m e m o n t h s . B u t t h e c o m p a n y did not recall s u s p e c t s t o c k s . W. M o n t h s later F D A G e n e r a l C o u n s e l W. A n i n s p e c t o r d i s c o v e r e d the problem w h e n he noticed A b b o t t personnel in O r e g o n opening p a c k i n g c a s e s o f s o l u t i o n s sent from C h i c a g o and h o l d i n g the b o t t l e s u p t o t h e light t o d i s c o v e r d e f e c t s . The c o m p a n y agreed to spend several h u n d r e d thousand dollars to s t r e n g t h e n its q u a l i t y c o n t r o l p r o g r a m m e . l e a r n e d of a secret c i t a t i o n h e a r i n g into t h e m a t t e r by t h e F D A and a s k e d for a t r a n s c r i p t o f t h i s . i t had its r e p r e s e n t a t i v e s c h e c k i n g o u t s t a n d i n g s t o c k s s i m p l y by visual e x a m i n a t i o n . d e t a i l e d t h e story of s e p t i c a e m i a . T o w a r d s t h e end o f 1970. D r H e r b e r t L e y . W a s the m a n u f a c t u r e r m o r e c o n c e r n e d a b o u t t h e security o f its r e p u t a t i o n t h a n t h e safety o f its p r o d u c t s ? M o r e c o n c e r n e d a b o u t profits t h a n p a t i e n t s ? It is n o t a story c a l c u l a t e d to build p u b l i c confidence in the drug industry. a m e d i c a l p a p e r in t h e p r e s t i g i o u s New England Journal of Medicine. T h e c o m p l a i n t s w e r e r u n n i n g at an e v e n h i g h e r level by t h e end o f F e b r u a r y . it did not notify F D A . G o o d r i c h r e p l i e d refusing to fulfil t h e M i n t z F r e e d o m of I n f o r m a t i o n request on the g r o u n d s that the d o c u m e n t s requested contained secret c o m m e r c i a l information. the solutions were to be accepted as satisfactory. Morton Mintz. had this t o say a b o u t t h e e p i s o d e : W e s u b s e q u e n t l y l e a r n e d t h a t t h e m a n u f a c t u r e r had b e g u n r e c e i v i n g a n u m b e r o f c o m p l a i n t s a b o u t t h e large v o l u m e p a r e n t e r a l s s t a r t i n g i n D e c e m b e r . t h e F e b r u a r y 4. 1 9 7 1 . i t w a s n ' t e v e n a l l o w e d i n all i n s t a n c e s . arising from a new w a v e 115 . I n s t e a d .Unsafe manufacturing practices t h e fluid a n d m o r e recalls t h r o u g h o u t 1969. 1968. At almost exactly the same time that the F D A counsel was w r i t i n g t h i s r e p l y . T h i s e n t i r e c h a i n o f e v e n t s r a i s e s s o m e real q u e s t i o n s . but they a g r e e d to a recall only m o n t h s later w h e n F D A i n s p e c t o r s i n d e p e n d e n t l y disc o v e r e d c o n t a m i n a t e d b o t t l e s . i s s u e . the Washington Post i n v e s t i g a t i v e j o u r n a l i s t . W e h a v e found u n o p e n e d cases that w e r e m a r k e d with a s y m b o l t h a t t h e firm said i n d i c a t e d c o n t a m i n a t i o n and a p p r o v a l by its field p e r s o n n e l . N o t only w a s this m e a s u r e i n a d e q u a t e . or b l o o d p o i s o n i n g . F D A C o m m i s s i o n e r . In a s p e e c h to the P h a r m a c e u t i c a l M a n u f a c t u r e r s A s s o c i a t i o n i n M a y 1969.

I n J a n u a r y 1971 t h e r e w e r e further s h a t t e r i n g r e v e l a t i o n s . " 116 . w e r e riddled w i t h s e p t i c a e m i a w i t h i n t h e span o f a few days ( F u l l e r . St A n t h o n y ' s hospital in D e n v e r reported 24 cases. since his i n t r a v e n o u s supply w a s s h r i n k i n g to z e r o . a r i s i n g from a d e s i g n c h a n g e to a s c r e w . ' N o p r o b l e m at all. C o u l d you possibly help me o u t ? ' ' A b s o l u t e l y . I c a n ' t use t h e A b b o t t stuff. and its p r o d u c t i o n line s h u t d o w n . E i g h t d e a t h s o v e r t h e p r e v i o u s t h r e e m o n t h s w e r e r e p o r t e d from the H e n r y F o r d H o s p i t a l i n D e t r o i t . W e r e p a t i e n t s g o i n g to die as a result of not b e i n g able to get s u p p l i e s from o t h e r small c o m p a n i e s ? P r o b a b l y n o n e d i d . "You canT he a s k e d i n c r e d u l o u s l y .g o r o u n d w a s s t a r t i n g all o v e r a g a i n . No less t h a n five p a t i e n t s . g e r m s w o u l d b e w a s h e d from u n d e r t h e n e w .s t y l e disc lining t h e c a p . T h e F D A w e r e u n d e r s t a n d a b l y h e s i t a n t t o act b e c a u s e A b b o t t s u p p l i e d 4 5 per cent o f t h e m a r k e t for t h e p r o d u c t . or I d o n ' t k n o w w h a t ' s going to h a p p e n to t h e p a t i e n t s . b a r e l y a y e a r after t h e F D A had so g r a c i o u s l y d r o p p e d its criminal charges against A b b o t t . It w a s d i s c o v e r e d that the p r o b l e m w a s as it had b e e n in 1964. all o f t h e m in a c o r o n a r y intensive care unit a t t h e U n i v e r s i t y o f V i r g i n i a M e d i c a l H o s p i t a l .Unsafe manufacturing practices o f p a t i e n t s r e c e i v i n g A b b o t t ' s i n t r a v e n o u s fluids. A b b o t t w a s e v e n t u a l l y p u s h e d into a m a s s i v e r e c a l l . T h e n e w s o f t h e n e w t r o u b l e had b e g u n leaking i n D e c e m b e r . ' c a m e t h e c h e e r y voice o f t h e detail m a n . "Don't w o r r y a b o u t it at a l l . o b v i o u s l y . ' he told the detail m a n .o n c a p . 'I've got to h a v e at least five or six d o z e n IV b o t t l e s of v a r i o u s s o l u t i o n s h e r e by six o ' c l o c k t o n i g h t . t h e m e r r y . 1972: 53). Fifty d e a t h s w e r e b l a m e d o n t h e c o n t a m i n a t i o n b y the U S C e n t e r for D i s e a s e C o n t r o l . a s t h e following d e p r e s s i n g a n e c d o t e i l l u s t r a t e s . T h e r e p o r t s m o u n t e d t h r o u g h o u t J a n u a r y and F e b r u a r y . but t h e r e c e r t a i n l y w e r e p r o b l e m s .' said t h e d e t a i l m a n .a f t e r n o o n . A n d t h e facts s h o w e d t h a t this had n o t h i n g to do w i t h t h e 1969 o u t b r e a k . In o t h e r w o r d s . 'I'll j u s t get t h e o r d e r d o w n on t h e pad a n d have t h e stuff up t h e r e by m i d . O n e h o s p i t a l s u p e r i n t e n d e n t frantically p h o n e d a different p h a r m a c e u t i c a l h o u s e . ' T h e s u p e r i n t e n d e n t w a s s t u n n e d and grateful t h a t h e could get t h i s e m e r g e n c y h e l p . If t h e b o t t l e w a s s h a k e n o r t h e t o p b a n g e d l o o s e . T h e r e w e r e also 4 5 o t h e r cases o f b l o o d p o i s o n i n g at t h e h o s p i t a l t r a c e d to the A b b o t t fluids. t h e biggest in F D A h i s t o r y . including one d e a t h . ' W e ' r e really on a s p o t .

H o s p i t a l p e r s o n n e l w h o used m e t h o d s o f o p e n i n g c a p s o n the b o t t l e s w h i c h t h e c o m p a n y m i g h t n o t h a v e f o r e s e e n w e r e held p a r t i a l l y r e s p o n s i b l e for t h e t r a g e d y . offered to plead guilty if t h e c h a r g e s against indiv i d u a l e x e c u t i v e s w e r e d r o p p e d . t h e s h i p m e n t is y o u r s ' ( F u l l e r . I t w a s t h e only o c c a s i o n i n the d e c a d e w h e n t h e F D A w e n t to c o u r t w i t h c r i m i n a l c h a r g e s a g a i n s t a major t r a n s n a t i o n a l p h a r m a c e u t i c a l c o m p a n y . T h e c o u r t a c q u i t t e d t h e c o m p a n y and its officers of all c h a r g e s . T h e s e w e r e all legal p r o b l e m s t h a t F D A w a s a c u t e l y a w a r e o f and t h a t defense counsel exploited. A n A b b o t t e x e c u t i v e told m e t h a t the c o m p a n y . ' O n l y o n e m i n o r t h i n g and we can c l e a r that up in no t i m e .s t e r i l e s o l u t i o n s and their r e p o r t e d 350 v i c t i m s from 21 h o s p i t a l s . 1972: 5 7 . o u t o f c o n c e r n t o p r o t e c t its p e o p l e from b e i n g m a d e sacrificial l a m b s . the m o r e fundam e n t a l p r o b l e m w a s t h a t t h e r e w a s not t h e e v i d e n c e t o link the specific G M P v i o l a t i o n s r e p o r t e d b y t h e F D A ' s district i n s p e c t o r s a s t h e c a u s e o f t h e sterility p r o b l e m . H o w e v e r . W o r k s h e e t s were defective. ' w a s t h e r e p l y . w e r e indicted by a g r a n d j u r y . E v e n h e r e . firm c o n t r a c t . as well as t h e c o m p a n y itself. I t could b e e s t a b l i s h e d t h a t t h e r e w e r e G M P v i o l a t i o n s . h o w e v e r . Five A b b o t t e x e c u t i v e s . the F D A ' s D i r e c t o r of D r u g Manufacturing at the t i m e . I n s p i t e o f t h e a c q u i t t a l . ' said t h e s u p e r i n t e n d e n t . 'All we n e e d is a t h r e e . U S P m e t h o d o l o g y had b e e n not closely followed. A b b o t t did suffer. B u d L o f t u s . explains: 2 T h e r e w e r e all k i n d s o f p r o b l e m s with t h e F D A a n a l y s t s ' h a n d l i n g of and actual testing o f t h e samples. N e v e r t h e l e s s .y e a r .8 ) . T h e i n s u r m o u n t a b l e difficulty w a s t h a t t h e p r o s e c u t i o n c o u l d not p r o v e a c a u s a l c o n n e c t i o n b e t w e e n t h e alleged G M P v i o l a t i o n s and the alleged non-sterility. I n t h e n e w s r e p o r t s o n t h e n o n . this t i m e t h e F D A could not resist t h e p r e s s u r e t o r e c o m m e n d c r i m i n a l p r o s e c u t i o n s t o t h e J u s t i c e D e p a r t m e n t . ' A s s o o n as y o u sign it. ' t h e detail man added. t h e r e w e r e e v i d e n t i a r y p r o b l e m s . t h o u g h t h e r e w a s d i s p u t e a b o u t h o w major t h e y w e r e .Unsafe manufacturing practices i c a n ' t t h a n k you e n o u g h . T h e cost o f c r i m i n a l 117 . A b b o t t ' s long history of delinq u e n c i e s w i t h t h e s o l u t i o n s w a s not r e c o g n i s e d a s a n issue.s t e r i l e solut i o n s had b e e n p r o d u c e d and t h a t p e o p l e died as a result. B u t t h e offer w a s r e j e c t e d . T h e e v i d e n c e w a s also c o m p e l l i n g t h a t n o n . ' W h a t ' s t h a t ? ' asked the s u p e r i n t e n d e n t .

1972).d o w n . s a m p l e s w e r e i n p r a c t i c e selected b y p r o d u c t i o n staff only from t h e t o p layer in e a c h c a g e . W h e n t h e c o n t a m i n a t e d b a t c h w a s p r o d u c e d . p r o b a b l y an e x a g g e r a t e d f i g u r e . but it d o e s give s o m e i m p r e s s i o n o f t h e w a y t h a t r e g u l a t o r y c o s t s can b e h i g h e r t h a n any fine w h i c h a c o u r t c o u l d c o n c e i v a b l y i m p o s e . the r e c o r d i n g t h e r m o m e t e r a t t a c h e d to t h e a u t o c l a v e failed to indicate a rise in t e m p e r a t u r e .' Evans Medical A s i m i l a r B r i t i s h d i s a s t e r i n v o l v i n g c o n s i d e r a b l e injury and d e a t h from t h e use o f c o n t a m i n a t e d i n t r a v e n o u s s o l u t i o n s w a s the subject of an official e n q u i r y in 1972 ( C l o t h i e r R e p o r t . O b v i o u s l y p r o d u c t i o n staff h a v e a s t r o n g e r i n c e n t i v e to see t h e i r p r o d u c t i o n a p p r o v e d and d e s p a t c h e d . T h e n t h e r e w e r e p e r s o n a l c o s t s t o t h e A b b o t t e x e c u t i v e s w h o s e r e p u t a t i o n s w e r e put o n t r i a l . A b b o t t e x e c u t i v e s c l a i m e d that the c o s t o f t h e 1971 F D A r e g u l a t o r y a c t i o n against t h e m w a s $480 m i l l i o n . H e n c e . s o m e o f t h e m are b a s k e t cases t o d a y . T h e y suffered t e r r i b l e p e r s o n a l b a t t e r i n g s u n d e r days o f c r o s s . t h e instrum e n t t e c h n i c i a n w o u l d r e p a i r t h e t h e r m o m e t e r and i t w o u l d show that the t e m p e r a t u r e was n o r m a l . no d o u b t b e c a u s e this was the easiest course. an attitude developed w h e r e t e m p e r a t u r e w a r n i n g s w e r e not t a k e n seriously. There were other respects in which SOPs c r e a t e d i n c e n t i v e s for p r o d u c t i o n staff to t a k e t h e ' e a s y ' c o u r s e in o v e r s e e i n g t h e q u a l i t y o f t h e i r o w n w o r k : i n t h e a b s e n c e o f firm d i r e c t i o n from q u a l i t y c o n t r o l . T h e y ' v e never been the same since. I t w a s c o m m o n for t h e p e n o f o n e t h e r m o m e t e r t o b e c o m e s t u c k . The government enquiry r e v e a l e d t h a t t h e d i s a s t e r was t h e result o f b o t h t h e i g n o r i n g o f s o m e o f t h e c o m p a n y ' s S t a n d a r d O p e r a t i n g P r o c e d u r e s ( S O P s ) and t h e i n a d e q u a c y o f o t h e r S O P s w h i c h w e r e followed. This warning was ignored in contravention of SOPs b e c a u s e t h e r e c o r d i n g t h e r m o m e t e r s had a history o f b r e a k i n g d o w n .Unsafe manufacturing practices c o n v i c t i o n w o u l d h a v e b e e n n o t h i n g c o m p a r e d with t h e cost t o A b b o t t o f its p l a n t s h u t . T h e p r o b l e m a r o s e w h e n a b a t c h of p r o d u c t at E v a n s M e d i c a l failed to reach sterilising t e m p e r a t u r e in an autoclave. N o r m a l l y . refusing t o m o v e from the b a s e l i n e . It is the C o m m i t t e e ' s opinion 118 .e x a m i n a t i o n . A s o n e c o l l e a g u e s y m p a t h i s e d : ' T h e guys w h o w e r e d e f e n d a n t s i n t h a t c a s e . S O P s afforded w e a k quality g u a r a n t e e s i n t h a t t h e y placed the d e c i s i o n to r e l e a s e a b a t c h of p r o d u c t for sale in t h e h a n d s of p r o d u c t i o n staff i n s t e a d of quality c o n t r o l staff.

1972: 11). t h e l a r g e s t p a c e m a k e r m a n u f a c t u r e r i n t h e w o r l d . ' W o l f e w a s c o n c e r n e d a b o u t the "the possibility of b a c t e r i a l and viral infections from such a gross p r a c t i c e as r e u s i n g p a c e m a k e r s ' ( S u b c o m m i t t e e o n H e a l t h . T h e s e d e v i c e s are t h e n i m p l a n t e d i n t o n e w p a t i e n t s . He listed t h e following difficulties: 1) 1970 . 1973: 2 8 8 ) .p o w e r e d c a r d i a c p a c e m a k e r s i m p l a n t e d i n their b o d i e s t o n o r m a l i s e h e a r t b e a t . Since 1972 i n t h e U n i t e d S t a t e s t h e r e h a v e b e e n a total of 34 v o l u n t a r y recalls of p a c e m a k e r lots m a n u f a c t u r e d b y v a r i o u s c o m p a n i e s . b o t t l e s in t h e u p p e r t w o l a y e r s of the c a g e s w e r e s t e r i l e . the second largest m a n u f a c t u r e r of p a c e m a k e r s .R e c a l l o f 3 4 3 e x t e r n a l p a c e m a k e r s b e c a u s e of battery placement problems. . t h e F D A s o u g h t a n i n j u n c t i o n t o close d o w n t h e p r o d u c t i o n o f C o r d i s p a c e m a k e r s until satisfactory quality c o n t r o l m e a s u r e s w e r e i n t r o d u c e d . w e r e discussed i n t h e c h a p t e r o n b r i b e r y . The present case study is concerned with M e d t r o n i c s ' main comp e t i t o r .D u e to c a r e l e s s s w i t c h i n g of a t r a n s i s t o r . 2) M a r c h 1973 . The Cordis litigation A p p r o x i m a t e l y a q u a r t e r of a m i l l i o n h e a r t p a t i e n t s a r o u n d the w o r l d h a v e b a t t e r y . t h o u s a n d s o f p a c e m a k e r s d e p r i v e d o f signal t o i n d i c a t e b a t t e r y failure ( S u b c o m m i t t e e o n H e a l t h . W o l f e a l s o d r e w a t t e n t i o n to a r e p o r t from a M i n n e a p o l i s F D A i n s p e c t i o n t e a m : ' M e d t r o n i c s has i n s t i t u t e d a p r o g r a m of resterilizing p a c e m a k e r s and l e a d s t h a t h a v e b e e n d i s i m p l a n t e d p r i o r t o e x p i r a t i o n o f t h e w a r r a n t y p e r i o d . S e n a t e h e a r i n g s h a v e also w i t n e s s e d a c o n c e r t e d a t t a c k o n M e d t r o n i c b y D r Sidney Wolfe c o n c e r n i n g t h e q u a l i t y of its m a n u f a c t u r i n g . S o m e o f t h e activities o f M e d t r o n i c . .R e c a l l of 1000 p a c e m a k e r s b e c a u s e of p r o b l e m with power supply. 3) M a r c h 1973 . 119 . T h e c a s e study p r o v i d e s s o m e invalua b l e l e s s o n s a b o u t t h e limits of legal s o l u t i o n s to m a n u f a c t u r i n g quality p r o b l e m s .Unsafe manufacturing practices t h a t . T h e c o m m i t t e e o f e n q u i r y c o n c l u d e d t h a t t h e g e n e r a l l y sloppy a p p r o a c h to S O P s w a s t h e result of a 'lack of v i g o u r ' a m o n g key m i d d l e m a n a g e r s and a w i l l i n g n e s s to p l a c e in r e s p o n s i b l e p o s i t i o n s p e o p l e w h o w e r e i n a d e q u a t e l y t r a i n e d i n quality c o n t r o l p r i n c i p l e s . and t h o s e i n t h e lowest layer w e r e not s t e r i l e ' ( C l o t h i e r R e p o r t . In 1975 in t h e D i s t r i c t C o u r t for t h e S o u t h e r n D i s t r i c t o f F l o r i d a . the Cordis C o r p o r a t i o n . 1973: 2 8 8 ) .

a b l a c k o u t spell a n d falls. t h e w o r s t c o m p l i c a t i o n . T h e y might fail for. down because the p a c e m a k e r is i n t o h e a r t failure a g a i n b e c a u s e p a t i e n t c a n n o t t o l e r a t e it. F D A a l l e g e d that C o r d i s p a c e m a k e r s had a k n o w n failure r a t e o f 5 p e r c e n t . outlined the range of possible medical c o n s e q u e n c e s o f p a c e m a k e r defect. T h e a n s w e r is it can r a n g e a n y w h e r e from n o t h i n g to instant death. n o 120 . is d e a t h . or he m i g h t suffer a b r o k e n a r m . b r o k e n leg. It w o u l d be i m p o s s i b l e to c o v e r all the F D A c i t a t i o n s h e r e . T h e r e a r e p a c e m a k e r s t h a t fail i n t e r m i t t e n t l y . It may be sufficient so t h a t t h e p a t i e n t e i t h e r has a s i n k a b l e e p i s o d e . eight h u n d r e d times a m i n u t e . of c o u r s e . but h i g h e r s t a n d a r d s m u s t be e x p e c t e d o f a p a c e m a k e r w h i c h only has to fail o n c e to c a u s e s e r i o u s injury or d e a t h . F D A i n s p e c t o r s had r e p o r t e d a list of 148 o b j e c t i o n a b l e deviat i o n s from q u a l i t y c o n t r o l s t a n d a r d s at t h e C o r d i s p l a n t . t h e y m a y n e v e r survive that period b e c a u s e t h e h e a r t r a t e d o e s n ' t r e t u r n i n t i m e t o again get their circulation back to normal. T h e r e a r e s y m p t o m s w h i c h are w h e r e e i t h e r t h e h e a r t r a t e slows s l o w e d d o w n or a p e r s o n m a y go t h e r a t e h a s s l o w e d d o w n and t h e m i n i m a l . a few s e c o n d s at a t i m e . w h e r e it's r u n n i n g a t six. and that o f a s a m p l e o f 9 7 e x p l a n t e d p a c e m a k e r s which had failure r e p o r t s . Nine other manufacturers combined a c c o u n t e d for t h e r e m a i n i n g 37 failures. F D A i n s p e c t o r s found t h a t i n t h e C o r d i s plant t h e r e w e r e m a c h i n e s for w h i c h t h e r e w e r e n o w r i t t e n o p e r a t i n g p r o c e d u r e s . t h e s e c a r d i a c p a t i e n t s c a n n o t t o l e r a t e that r a t e for an indefinite p e r i o d of t i m e a n d c o u l d c o n c e i v a b l y go into heart failure and d i e . fractured skull. but it is i m p o r t a n t to give s o m e flavour o f t h e n a t u r e o f F D A c o n c e r n s . that's instant death. let's s a y . A car w h i c h runs well 95 p e r c e n t o f t h e t i m e may be r e g a r d e d as a g o o d c a r . such a s dizzy spells. If you h a v e a p a c e m a k e r t h a t r u n s at 150 and the p a t i e n t is not a w a r e o f t h e p r o b l e m but j u s t i s not feeling w e l l .Unsafe manufacturing practices A d e f e c t i v e l y m a n u f a c t u r e d h e a r t p a c e m a k e r is a frightful risk to h u m a n h e a l t h . T h e r e a r e p a t i e n t s t h a t are not a w a r e o f a n y s y m p t o m s and that on e x a m i n a t i o n o n e can find a d e f e c t i v e p a c e m a k e r . If you have a r u n a w a y p a c e m a k e r . W e l l . If t h e p e r i o d is long e n o u g h . 60 were made by Cordis. o n e o f t h e g o v e r n m e n t w i t n e s s e s a t the injunction h e a r i n g . D r C e n t e r .

F o r e x a m p l e . V a r i o u s t y p e s of t e s t i n g e q u i p m e n t w e r e alleged t o b e d e f e c t i v e . T h e w r i t t e n r e q u i r e m e n t s o f t h e firm w e r e t o s a m p l e and test t h e s q u a r e root o f the n u m b e r of incoming quarts of epoxy. H o w e v e r . but when lots failed t o meet them they w e r e 3 121 . I n s o m e c a s e s e m p l o y e e s w e r e found t o b e a s s e m b l i n g p a c e m a k e r p a r t s o n t h e s t r e n g t h o f d i a g r a m s w h i c h had h a n d w r i t t e n . lint-free a t m o s p h e r e and t h a t solder w a s b e i n g put o n p a c e m a k e r s w i t h o u t t e s t i n g t h e s o l d e r i n g flux. u n a u t h o r i s e d c h a n g e s all o v e r t h e m . w h e n a 964 q u a r t lot c a m e in. they put a n o t h e r c h a r t on and t h e p a p e r d i d n ' t m a t c h and t h e r e a d i n g said 140 d e g r e e s . P a c e m a k e r s a r e e n c a p s u l a t e d several t i m e s i n e p o x y . O n e o p e r a t o r w a s e v e n w o r k i n g from a d i a g r a m for a kit different from t h e o n e she w a s w o r k i n g on. 'Life t e s t i n g ' w a s d o n e t o see h o w the p a c e m a k e r s stood u p t o s t r e s s . 3 2 s a m p l e s should have b e e n c h e c k e d . d r y . w h e n t h e o v e n s h o u l d have b e e n and p r o b a b l y w a s a t 4 0 . t h e F D A c o u n s e l s u m m e d u p how i n s p e c t o r s a l l e g e d the life-testing device to be of limited v a l u e : t h e c h a r t used t o r e c o r d t h e t e m p e r a t u r e o f t h a t critical d e v i c e f o c u s e d so strongly in t h e m i d d l e t h a t it c o u l d n ' t be r e a d . ' It w a s a l s o c l a i m e d that c e r t a i n p a r t s w e r e not stored in a c l e a n . O n e critical a r e a w h e r e all o f t h e s e deficiencies w e r e r e p o r t e d t o exist w a s with the h e l i u m leak t e s t e r . Inspectors observed o p e r a t o r s t o s a m p l e only o n e q u a r t p e r lot. 'I d o n ' t e v e n let w a t e r used to b r u s h my t e e t h stand o v e r n i g h t . P a c e m a k e r p r o b l e m s h a v e b e e n s h o w n t o arise from m o i s t u r e leaking into the c o m p o n e n t s .f r e e w a t e r for t h e final c l e a n i n g of t h e p a c e m a k e r s w a s left t o stand o v e r n i g h t . passed. M a i n t e n a n c e o f e q u i p m e n t w a s b e i n g d o n e o n c e every t w o w e e k s instead o f every week according to requirements. not o n e . S o m e t i m e s o p e r a t o r s w e r e a s s e m b l i n g a c c o r d i n g to c h a n g e s to specifications given verbally or t e l e p h o n e d i n from e n g i n e e r i n g .Unsafe manufacturing practices s p e c i f i c a t i o n s . F D A c o u n s e l L e v i n e c o m p l a i n e d . It w a s a l l e g e d t h a t p y r o g e n . n o c a l i b r a t i o n p r o c e d u r e s . u n d a t e d . and n o m a i n t e n a n c e s c h e d u l e . and w h e n this w a s p o i n t e d o u t t o m a n a g e m e n t . Specifications were established. so leak t e s t i n g is critical. W h e n i t e m s failed c e r t a i n t e s t s . T h e g o v e r n m e n t a l l e g e d c e r t a i n w a i v e r d e v i a t i o n s . t h e y w e r e often r e t e s t e d to see if a p o s i t i v e result w a s p r o d u c e d o n t h e s e c o n d test w i t h o u t a n evalua t i o n of why t h e failure o c c u r r e d on t h e first. c l e a n i n g fluid and oil in t h e s o l d e r i n g m a c h i n e for p u r i t y .

1972. T h e y w e r e lying t h e r e for a n y o n e ' s u s e . a m a j o r s u p p l i e r for t h e d e f e n d a n t s . since t h e y d o i n d i c a t e t h a t the p a c e m a k e r i s o k a y . ' A s the final stage o f t h e a p p r o v a l p r o c e s s . 5 1 . M a n y m o r e p a g e s could b e filled listing t h e m u l t i t u d e o f specific F D A a l l e g a t i o n s a g a i n s t C o r d i s . T h e r e w e r e n o official a u t h o r i z a t i o n s i g n a t u r e s o r d a t e s o n t h e s e s h e e t s r e l e a s i n g t h e p a c e m a k e r s . It w a s not until D e c e m b e r of 1974 t h a t Mr H e r s h e n s o n w e n t b a c k to find out w h a t w a s going on with C T S . T h e y should have had limited access to t h e s e p u n c h e s . with t e s t i n g e q u i p m e n t d e s i g n e d for c a p a c i t o r s m a d e by a different m a n u f a c t u r e r . a c c o r d i n g t o the i n s p e c t o r s . a l t h o u g h t h e s a m e resistor is used in them. it l o o k s like we h a v e a C T S p r o b l e m here. T h e firm had p r o b l e m s with C T S r a t e resistors as far back as O c t o b e r .Unsafe manufacturing practices C a p a c i t o r s w e r e being t e s t e d . i n d i c a t i n g t h a t t h e p a c e m a k e r had b e e n a p p r o v e d w e r e n ' t being s i g n e d . t a s k s w e r e being signed off a s c o m p l e t e d b e f o r e t h e y a c t u a l l y w e r e c o m p l e t e d . T h e d a n g e r s of having quality control people reporting to production will be d i s c u s s e d later in this c h a p t e r . T h e g o v e r n m e n t c h a r g e d that e v e n w h e n C o r d i s did b e c o m e a w a r e o f p r o b l e m s its r e s p o n s e s w e r e i n a d e q u a t e . T h e y d e c i d e d t o recall c e r t a i n lots.u p s o f c o n t a i n e r s and labels w e r e a l l e g e d . M o r e o v e r . a t r a v e l c a r d w a s p u n c h e d with a h e a r t .p r e s i d e n t for m a n u f a c t u r i n g . A c c o r d i n g t o t h e i n s p e c t i o n r e p o r t . 122 . ' T h e F D A a r g u e d t h a t t h e w h o l e quality control function was d a n g e r o u s l y s l o p p y and that quality g o a l s w e r e s u b s e r v i e n t t o p r o d u c t i o n g o a l s . M a n u f a c t u r i n g i n s p e c t o r s w e r e used a s quality control inspectors and they reported through a manufacturing i n s p e c t i o n m a n a g e r t o the v i c e .7 r a t e resistor.' T h a t w a s in 1972. I w a n t to call t h e C o u r t ' s a t t e n t i o n to G o v e r n m e n t ' s E x h i b i t N o . T h e y did n o t recall o t h e r s . F D A Counsel. This w o u l d serve little p u r p o s e .s h a p e d p u n c h to i n d i c a t e t h a t t h e p a c e m a k e r had passed all tests and w a s a c c e p t a b l e . Levine: Dr S t e r n e r told I n s p e c t o r O g l e s b a y t h a t they had a p r o b l e m with t h e i r C T S 2. H o o t e n : ' T h e r e w e r e t w o o f t h e s e p u n c h e s lying loose on t h e b e n c h . C e r t a i n m i x . I n s p e c t o r H o o t e n c l a i m e d : "The Q u a l i t y C o n t r o l r e c o r d s h e e t s . which on an internal m e m o r a n d u m a Cordis employee h a s w r i t t e n on t h e t o p .

or e v e n a slow d e t e r i o r a t i o n . you c a n e x a m i n e t h e p a t i e n t a t t w o o'clock and e v e r y t h i n g is p e r f e c t . C o u n s e l for C o r d i s did not d i s p u t e very m a n y o f t h e F D A ' s 148 a l l e g e d d e f i c i e n c i e s . it w a s a r g u e d : ' C o r d i s is at least as good as t h e rest o f t h e p a c e m a k e r i n d u s t r y . t h e p a c e m a k e r i n d u s t r y is not p e r f e c t . r e s u l t i n g in fixed rate of p a c i n g . T h u s t h e n e e d for a n i n j u n c t i o n t o close d o w n C o r d i s until t h e s i t u a t i o n w a s s t r a i g h t e n e d out. t h e r e n e v e r will be a s e c o n d visit. I t w a s c o n c e d e d : ' R e g r e t t a b l y . T h e c o u r t declined t o g r a n t t h e F D A its i n j u n c t i o n . ' T h e s e c o n d e l e m e n t o f t h e successful C o r d i s defence w a s that the suffering to p a t i e n t s from g r a n t i n g t h e g o v e r n m e n t its i n j u n c t i o n w o u l d e x c e e d t h e benefits t o t h e m . . T h e first e v i d e n c e of failure may o c c u r at 2:15 t h a t s a m e d a y . If t h e r e is a p r o b l e m in t h e p a c e m a k e r . h e said: W e l l . . we a n t i c i p a t e t h a t only a small p e r c e n t a g e o f t h e listed p a c e r s will m a l f u n c t i o n . W h e n Dr C e n t e r w a s a s k e d w h a t it m e a n t to him to be told that ' p a t i e n t s be m o n i t o r e d on a m o n t h l y basis t h r o u g h 14 m o n t h s after i m p l a n t a t i o n ' . p r e m a t u r e rate d e c r e a s e f o l l o w e d by c e s s a t i o n of p a c i n g or. t h e r e i s n o way t o a d e q u a t e l y m o n i t o r a p a t i e n t on a m o n t h l y basis. t h e letter read: . " N e v e r t h e l e s s . p a c e m a k e r s are n o t p e r f e c t . T h e r e f o r e . H o w e v e r . I t h i n k t h e C o u r t also will h a v e to be a w a r e o f t h e p o t e n t i a l effect of g r a n t i n g t h e g o v e r n m e n t t h e relief w h i c h it s e e k s in 123 . T y p e 2.Unsafe manufacturing practices C o r d i s had sent a ' D e a r D o c t o r ' l e t t e r a b o u t quality p r o b l e m s w i t h o n e of its p a c e m a k e r s . w e r e c o m m e n d for c o n s e r v a t i v e m a n a g e m e n t t h a t t h e s e p a t i e n t s be m o n i t o r e d on a m o n t h l y basis t h r o u g h 1 4 m o n t h s after i m p l a n t a t i o n t o d e t e c t e i t h e r o f t h e t w o p o t e n t i a l t y p e s o f m a l f u n c t i o n : T y p e 1 . H e n c e t h e F D A view w a s t h a t a p a t t e r n o f n e g l e c t o f quality w a s c o m p o u n d e d by a r e l u c t a n c e on t h e part of t h e c o m p a n y to t a k e effective a c t i o n to p r o t e c t p a t i e n t s o n c e t h e fruits of this n e g l e c t b e c a m e a p p a r e n t . T h e C o r d i s d e f e n c e attorney: N o w . i f y o u r a p p o i n t m e n t t o see t h e p a t i e n t is not for a n o t h e r m o n t h and t h e r e is a rapid d e t e r i o r a t i o n . realistically s p e a k i n g . In p a r t . and C o r d i s is not p e r f e c t . it's obviously very p o s s i b l e t h a t if n o t h i n g is d o n e in t h e m e a n t i m e . loss of s e n s i n g .

this i s really u n u s u a l . C o u l d you give us any p a r t i c u l a r r e a s o n for this opinion? Y e s . w e will s h o w that t h e r e w o u l d be v a r i o u s a d d i t i o n a l m e d i c a l p r o b l e m s in shifting from a C o r d i s p a c e m a k e r t o s o m e o t h e r p a c e m a k e r . hopefully t h e n only t e m p o r a r i l y . T h e a v e r a g e life of p a c e m a k e r s from most c o m p a n i e s at t h a t t i m e w a s a b o u t 18 to 20 m o n t h s . a p p r o x i m a t e l y forty t o fifty t h o u s a n d t h r o u g h o u t t h e w o r l d . C o r d i s has o n t h e o r d e r o f 2 0 p e r c e n t . N o w . D r M o r s e ' s t e s t i m o n y was d i s p a r a g e d b y F D A o n t h e g r o u n d s t h a t he a d m i t t e d to b e i n g a C o r d i s s h a r e h o l d e r . medical evidence 124 . A corporation c a l l e d M e d t r o n i c w a s t h e first o n t h e m a r k e t . D r M o r s e . t h a t e n d e d t h e i r life five y e a r s a g o . If t h e relief r e q u e s t e d by t h e F o o d and D r u g A d m i n i s t r a t i o n is g r a n t e d . Dr M o r s e : Q: Dr M o r s e : I feel t h a t t h e C o r d i s p a c e m a k e r is the most reliable on the m a r k e t today.Unsafe manufacturing practices r e m o v i n g C o r d i s . C o r d i s is the Avis o f t h e p a c e m a k e r industry. I h a v e had C o r d i s f i x e d . I c o n t i n u e to use C o r d i s p a c e m a k e r s b e c a u s e I feel that they are t h e best d e s i g n e d a n d t h e m o s t versatile p a c e m a k e r and the most reliable p a c e m a k e r that's available at the present time. w e will s h o w t h a t t h e c u r r e n t d e m a n d for new and r e p l a c e m e n t p a c e m a k e r s c a n n o t b e met and that t h e r e will b e very s e r i o u s p o s s i b l e c o n s e q u e n c e s for p e r s o n s w h o n e e d p a c e m a k e r s initially and for t h o s e w h o a l r e a d y have p a c e m a k e r s i m p l a n t e d i n t h e m and r e q u i r e r e p l a c e m e n t s . T h e rest i s s c a t t e r e d a m o n g a b o u t five d o m e s t i c and four foreign m a n u f a c t u r e r s . C o r d i s had a p o i n t . T h e y h a v e a b o u t 5 0 o r 6 0 p e r c e n t o f t h e m a r k e t . i n e s t a b l i s h i n g this c o n c l u s i o n . If a C o r d i s s h u t d o w n c a u s e d c e r t a i n p a t i e n t s to c h a n g e over to a n o t h e r brand of p a c e m a k e r . e v e n a s s u m i n g that one would be available. F u r t h e r . a s t o t h e p a r t i c u l a r p e r s o n s w h o have C o r d i s p a c e m a k e r s p r e s e n t l y i m p l a n t e d i n t h e m . none of w h o m is anywhere near either Medtronic or Cordis.r a t e p a c e m a k e r s five y e a r s a g o . from the market. T h e d e f e n c e relied h e a v i l y o n t h e t e s t i m o n y o f one medical practit i o n e r . that lasted four y e a r s .

that we didn't go t h r o u g h item by item. I can a s s u r e t h e C o u r t a n d t h e F D A t h a t M r H e r s h e n s o n w a s fully p r e p a r e d t o stand c r o s s . i n testifying for the d e f e n c e . in s u m m i n g up argued: N o w . d o n e . H o w e v e r . H o w e v e r . T h a t ' s t r u e . N e i t h e r side w a s really willing or a b l e to s p e n d m o n t h s in c o u r t a r g u i n g w h e t h e r or not e a c h o f t h e 144 specific deficiencies in turn had b e e n satisfactorily rectified. T h e r e is no e v i d e n c e e i t h e r of p r e s e n t v i o l a t i o n of l a w . I s u b m i t . w h i c h I t h i n k is sort of a logical impossibility w h e n you don't k n o w what the situation is right now. T h e third and s t r o n g e s t e l e m e n t o f t h e C o r d i s d e f e n c e w a s that i n t h e m o n t h s b e t w e e n t h e i n s p e c t i o n and t h e c o u r t case t h e c o m p a n y had rectified all o f t h e p r o b l e m s n o t e d b y t h e F D A . M r L e v i n e p o i n t e d out t h a t this w a s r a t h e r c o n c l u s i o n a r y .e x a m i n a t i o n on e v e r y item and to satisfy e v e r y o n e that each a n d e v e r y o n e w a s . It would j u s t s h a k e t h e faith of e v e r y o n e w h o has a p a c e m a k e r in t h e m . and t h e s e p e o p l e a r e c o n c e r n e d .Unsafe manufacturing practices i n d i c a t e d that i n c r e a s e d risks of infection could follow from implanting a n e w m o d e l . i n fact. M o r s e said: 4 I t h i n k it w o u l d be a c a t a s t r o p h e o f t h e first o r d e r . i f t h e C o u r t has e v e n t h e slightest d o u b t . t h e real key to o u r c a s e . A s k e d w h a t t h e effect w o u l d b e . N o w . b e c a u s e this i s t h e s e c o n d largest m a n u f a c t u r e r in the c o u n t r y . n o r h a v e t h e y p r e s e n t e d any e v i d e n c e o f l i k e l i h o o d o f r e c u r r e n c e . . i t w a s this third m a j o r d e f e n c e which w o n the day. T h e r e w o u l d be a t r e m e n d o u s r e a c t i o n t h r o u g h o u t t h e c o u n t r y . C o r d i s c o u n s e l . D r M o r s e . especially in cases w h e r e the i m p l a n t i n g of a larger m o d e l involved a surgical e n l a r g i n g o f t h e pocket for the d e v i c e . and t h e r e i s o v e r a h u n d r e d t h o u s a n d o f them. is Mr H e r s h e n s o n ' s t e s t i m o n y t h a t a s o f this d a t e e v e r y t h i n g i s c o r r e c t e d . c e r t a i n l y t o t h e best o f t h e c o m p a n y ' s ability. t h a t i s simply b e c a u s e I d i d n ' t w a n t t o w a s t e t h e C o u r t ' s t i m e a s k i n g item by i t e m . . also m a d e m u c h o f t h e p s y c h o l o g i c a l i m p a c t on p a t i e n t s of a C o r d i s s h u t d o w n . T h e r e w o u l d be h y s t e r i a a m o n g t h e p a t i e n t s . N o t w i t h s t a n d i n g all of the subs i d i a r y a r g u m e n t s . w e very 125 . . since the g o v e r n m e n t has not b e e n t h e r e t o see w h a t c o n d i t i o n s are r i g h t n o w .

Unsafe manufacturing practices r e s p e c t f u l l y s u g g e s t that it o r d e r t h e F D A to inspect C o r d i s and to r e p o r t any significant a d v e r s e f i n d i n g s i m m e d i a t e l y and directly to the Court. T h e F D A w a s not t o b e d e t e r r e d a n d t o o k u p the offer. F i n a l l y . I t i s w h e n t h e r e g u l a t o r y a g e n c y s e e k s i n j u n c t i v e relief t h a t t h e p r o b l e m is w o r s t . ' T h e r e i s little g u a r a n t e e t h a t e l i m i n a t i n g any g i v e n set o f s y m p t o m s which c o m e t o n o t i c e w o u l d also r e m o v e t h e s y s t e m i c c a u s e s . but with c u r i n g t h e u n d e r l y i n g c o r p o r a t e m a l a i s e o f w h i c h t h e s e w e r e s y m p t o m s : "Large o r s m a l l . I n j u n c t i o n s to p r e v e n t a d a n g e r o u s p r a c t i c e a r e m o r e i m p o r t a n t t h a n r e t r i b u t i o n against past sins in t e r m s o f t h e i m m e d i a t e p r i o r i t y of a r e g u l a t o r y a g e n c y to save lives and p r e v e n t suffering. Before d i s c u s s i n g t h e s e further d e v e l o p m e n t s . F D A c o u n s e l L e v i n e e x p r e s s e d i t w h e n he said t h a t t h e g r e a t c o n c e r n w a s not with rectifying t h e 144 specific d e f i c i e n c i e s . if t h e m o t i o n should be d e n i e d . Yet the inbuilt 126 . i t i s w o r t h c o n s i d e r i n g the i m p l i c a t i o n s of w h a t had t r a n s p i r e d up to that point. This p r o b l e m is not so a c u t e w i t h c r i m i n a l p r o s e c u t i o n s or civil d a m a g e s a c t i o n s against a c o m p a n y for past a c t i o n s . s u g g e s t e d that the F D A could t a k e up this offer and s e n d in a t e a m of i n s p e c t o r s to assess t h e c u r r e n t s i t u a t i o n . t h e r e is no way of e s t a b l i s h i n g this w i t h o u t setting t h e d o g on a c o u r s e of c h a s i n g its tail a g a i n . in his d e c i s i o n to d e n y t h e m o t i o n for a p r e l i m i n a r y i n j u n c t i o n . we invite and e n c o u r a g e the F o o d and D r u g A d m i n i s t r a t i o n t o i n s p e c t C o r d i s and also t o a s s u r e itself t h a t e v e r y t h i n g has b e e n corrected. an o b j e c t i o n w h i c h is a r e p e t i t i o n of a p o i n t m a d e i n t h e last c h a p t e r . e s p e c i a l l y given the g e n e r a l policy of t h e F D A ( a n d m o s t o t h e r r e g u l a t o r y a g e n c i e s ) o f giving offenders an o p p o r t u n i t y v o l u n t a r i l y to set their h o u s e in o r d e r before t a k i n g c o u r t a c t i o n . H e n c e . T h e r e will a l w a y s b e d e l a y s b e t w e e n a n i n s p e c t i o n and court action b a s e d o n t h e r e s u l t s of t h a t i n s p e c t i o n . t h e r e i s t h e o p p o r t u n i t y for the c o m p a n y t o i g n o r e F D A w a r n i n g s u p t o t h e p o i n t o f t h e c o u r t h e a r i n g and t h e n a r g u e in c o u r t t h a t it has n o w rectified all s h o r t c o m i n g s . T h e regul a t o r y a g e n c y is t h e n invited to do a n o t h e r i n s p e c t i o n and t h e a d v e r s a r i e s a r e set on t h e r o u n d a b o u t a g a i n . as we have a s k e d . It m i g h t be a r g u e d that if the c o m p a n y really d o e s rectify the d e f i c i e n c i e s t h e n t h e p u b l i c h a s b e e n p r o t e c t e d . J u d g e F a y . t h e i m p o r t a n t t h i n g i s t h e p a t t e r n o f i n a d e q u a t e q u a l i t y c o n t r o l . B u t t h e r e is a m o r e f u n d a m e n t a l o b j e c t i o n to this a r g u m e n t . I n t h e first p l a c e .

5 L e t u s r e t u r n t o t h e C o r d i s saga. if it w e r e t r u e . t h r e e days after t h e F D A c o m p l a i n t for i n j u n c t i o n w a s d e n i e d b y the c o u r t . Specific deficiencies n o t e d b y t h e i n s p e c t o r s t o t a l l e d 137. and o b v i o u s l y t h a t w o u l d be very significant. I t h i n k t h a t w o u l d be very bad. t e n d e d t o r e s p o n d i n his r e p o r t t o t h e u n d e r l y i n g reality o f t h e C o r d i s p r o b l e m r a t h e r t h a n t o t h e e x t e n t to w h i c h specific deficiencies had b e e n rectified. dealt with. w h e n w e c a m e b a c k in this m o s t r e c e n t i n s p e c t i o n we saw t h e same t h i n g s we saw i n t h e M a y . As C o r d i s had d o n e twice p r e v i o u s l y . P r o f e s s o r H i n e s . t w o F D A i n s p e c t o r s revisited t h e C o r d i s p l a n t . B e f o r e P r o f e s s o r H i n e s t h e C o r d i s c o u n s e l again c e n t r e d their c a s e a r o u n d t h e fact t h a t specific deficiencies had b e e n . not to deal with d i s e a s e s . O n 2 8 A u g u s t 1975. that the s a m e s i t u a t i o n r e c u r r e d . t h e j u d g e . w e l l . but we will s h o w t h a t we t o o k significant m e a s u r e s i n t h e i n t e r i m w h i c h u n f o r t u n a t e l y i n t w o o r t h r e e cases o u t of a b o u t 150 did not w o r k well e n o u g h and we have t a k e n more m e a s u r e s since. and w e r e b e i n g . P a r t o f t h e g o v e r n m e n t ' s c a s e i s saying t h a t . This t i m e .Unsafe manufacturing practices t r a d i t i o n of W e s t e r n law is not to a d d r e s s itself to p a t t e r n s of c o n d u c t . Professor Hines found that the FDA observations represented 'significant 127 . W e s t e r n law h a s not b e e n a b l e t o deal w i t h p h e n o m e n a like o r g a n ised c r i m e at t h e i r r o o t : Al C a p o n e had to be dealt with by conv i c t i o n for an o b s c u r e tax v i o l a t i o n . t h a t we had d o n e n o t h i n g . b u t w i t h s y m p t o m s . i n fact.J u n e i n s p e c t i o n a n d way back i n t h e F e b r u a r y i n s p e c t i o n . He did c o n c l u d e t h a t F D A ' s 137 n e w a l l e g a t i o n s w e r e s u b s t a n t i a l l y c o r r e c t a n d t h a t m a n y o f t h e deficiencies w h i c h existed i n t h e A u g u s t O c t o b e r i n s p e c t i o n w e r e similar t o deficiencies n o t e d i n t h e t w o e a r l i e r i n s p e c t i o n s . but to specific i t e m s of c o n d u c t . two o r t h r e e . W e i n t e n d t o d e m o n s t r a t e t h a t w e d i d . and F D A r e t u r n e d t o t h e c o u r t to s e e k i n j u n c t i v e relief for a second t i m e . T h e C o m m i s s i o n e r . T h a t i s w h y . T h e r e a r e s e v e r a l . lacking confidence in his c a p a c i t y to deal with t h e highly t e c h n i c a l issues o f t h e c a s e . d o s o m e t h i n g a b o u t e v e r y t h i n g and i n fact n o n e o f t h e later o b s e r v a t i o n s are r e a l l y t h e s a m e . i t w r o t e t o t h e F D A i n d i c a t i n g how i t i n t e n d e d t o r e m e d y t h e specific deficiencies. C o r d i s c o r r e c t i o n s o f t h e e a r l i e r deficiencies w e r e d e s c r i b e d as 'reactive rather than pro-active'. t o c h o o s e a n o t h e r a r e a o f failure. d e c i d e d to set up a special h e a r i n g to be c o n d u c t e d by Professor Hines.

. and t h e t e c h n i c a l q u e s t i o n s t h a t you will be d e c i d i n g will be a very significant basis f o r j u d g e E a t o n to m a k e his u l t i m a t e d e c i s i o n a s t o w h e t h e r this o p e r a t i o n r e m a i n s o p e n or is closed d o w n . . P r o f e s s o r H i n e s c o n c l u d e d that the w h o l e C o r d i s o p e r a t i o n w a s s o l a c k i n g i n s y s t e m a t i s a t i o n and d o c u m e n t a t i o n as to be 'not c o n d u c i v e to n o r c o n s i s t e n t with the p r o d u c t i o n o f high reliability p a c e r s . T h e s e r e q u i r e C o r d i s activity (1) t o e s t a b l i s h a c c e p t a b l e reliability g o a l s . H e did not r e c o m m e n d that C o r d i s b e shut d o w n o r t h a t F D A s u p e r v i s i o n w a s r e q u i r e d . It is on t h e o r d e r of forty-million d o l l a r s a n n u a l sales o r t w o t h o u s a n d e m p l o y e e s . o f c o u r s e . in a d d i t i o n to j u s t settling t e c h n i c a l q u e s t i o n s . t h e C o m m i s s i o n e r found t h a t n o p r o c e d u r e s t o b r i n g t h e i r p r o d u c t i o n u n d e r t h e quality a s s u r a n c e p r o g r a m m e had b e e n d e v e l o p e d a t all. the lack o f c o m p r e h e n s i v e o p e r a t i n g a n d i m p l e m e n t i n g p r o c e d u r e s and 'the lack o f a vigorous internal auditing program to assure compliance with operating p r o c e d u r e s . p e r h a p s a final. T h e t e r m s o f t h e injunction w o u l d b e t h o s e c o n t a i n e d i n the C o m m i s s i o n e r ' s R e c o m m e n d a t i o n s . P e r h a p s P r o f e s s o r H i n e s w a s influenced b y this w a r n i n g w h e n i n his r e p o r t he w a s careful to frame his r e c o m m e n d a t i o n s as reforms w h i c h s h o u l d b e u n d e r t a k e n b y C o r d i s . ' With respect to one model ofCordis p a c e m a k e r s ( t h e K a p p a l i n e ) . T h i s . g r e a t p o w e r w a s being placed in his hands. . I n s u m . t h e d e f e n d a n t s w e r e a b l e t o m a k e m u c h o f t h e fact that m a n y o f t h e c h a n g e s a n d i m p r o v e m e n t s r e q u i r e d p a c e m a k e r production t o b e u n d e r w a y i n o r d e r t h a t t h e n e e d e d i m p r o v e m e n t s could b e effected. F D A counsel argued before the convened court: A n i n j u n c t i o n s h o u l d n o w b e issued. effect on t h e life o f a very large e n t e r p r i s e . w a s a p o o r a r g u m e n t for a l l o w i n g C o r d i s t o cont i n u e d i s t r i b u t i n g p a c e m a k e r s w h i l e its o p e r a t i o n s w e r e b e i n g brought under appropriate controls. you are really h a v i n g a d r a m a t i c . c o m p r e h e n s i v e p l a n for p r o d u c t a s s u r a n c e ' . On the strength of Professor H i n e s ' s report. (2) t o e s t a b l i s h d a t a c o l l e c t i o n and 128 .Unsafe manufacturing practices d e f i c i e n c i e s w h i c h had r e s u l t e d from a lack o f a carefully c o n c e i v e d . ' C o r d i s c o u n s e l r e m i n d e d P r o f e s s o r H i n e s that i n spite o f t h e fact t h a t his role w a s defined by the j u d g e as to e x p r e s s a view on t h e t e c h n i c a l q u e s t i o n s . . I n d e e d . so t h a t it is m o r e t h a n j u s t t e c h n i c a l q u e s t i o n s as I am sure you a p p r e c i a t e . . .

' L e v i n e a r g u e d : i d o n ' t k n o w w h e t h e r t h e new labelling h e r e will r e m e d y t h e past four o r five y e a r s o f t h e s t a t e m e n t o f rigid c o n t r o l . ' T h e F D A had lost t h e b a t t l e . F D A based its w h o l e case in law a g a i n s t C o r d i s on m i s b r a n d i n g . As s u c h . C o r d i s c l a i m e d in the b r o c h u r e s and d i r e c t i o n s . 'All p a c e r s b e i n g s h i p p e d from C o r d i s plant as of t o d a y have t h i s n e w l a b e l l i n g . (5) t o i n c r e a s e final p r o d u c t t e s t i n g . ' But J u d g e E a t o n immediately intervened here: 'Perhaps we have a n e w l a w s u i t n o w . (3) t o b r i n g K a p p a pacer m o d e l p r o d u c t i o n u n d e r t h e p r o d u c t a s s u r a n c e system and t o modify p r o m o t i o n a l l i t e r a t u r e t o reflect t h e n e w n e s s o f t h e d e v i c e .Unsafe manufacturing practices statistical a n a l y s e s of field e x p e r i e n c e in o r d e r to d e v e l o p e s t i m a t e s o f p a c e r r e l i a b i l i t y . T h e y d o not h a v e any s t a t e m e n t a b o u t rigid control. we fully a c c e p t his [Professor H i n e s ' ] r e c o m m e n d a t i o n s and w e are w o r k i n g a s hard a s possible t o i m p l e m e n t t h e m as soon as p o s s i b l e and that is rapidly b e i n g a c c o m p l i s h e d . . (4) t o c o m p l e t e the design of a c o m p r e h e n s i v e pacer assurance system. t h e injunction t o s t o p the d i s t r i b u t i o n o f misb r a n d e d p r o d u c t s s h o u l d b e i s s u e d . t h e F D A a r g u e d . 129 . It w a s o n e o f t h e few a t t e m p t s by t h e F D A to pull out all legal stops against a m o d e r a t e l y l a r g e c o m p a n y . The bombshell was t h a t a c o u p l e of w e e k s before t h e D e c e m b e r 1975 c o u r t h e a r i n g (on 19 N o v e m b e r ) C o r d i s i n s t i t u t e d n e w labelling for all C o r d i s p a c e m a k e r s and sent c o p i e s t o all p h y s i c i a n s w h o c u r r e n t l y used those l a b e l s . C o r d i s a r g u e d t h a t ' .u s e l i t e r a t u r e w h i c h w e n t t o d o c t o r s t h a t its p a c e m a k e r s w e r e ' m a n u f a c t u r e d u n d e r rigidly c o n t r o l l e d c o n d i t i o n s ' a n d t h a t t h e y p e r f o r m e d with "a high d e g r e e of reliability o v e r a n e x t e n d e d p e r i o d o f t i m e ' . T h e failure t o close d o w n t h e C o r d i s p l a n t gave i m p e t u s t o F D A efforts to h a v e specific m e d i c a l d e v i c e r e g u l a t i o n s e n a c t e d . and the w a r . (6) to staff t h e i n t e r n a l quality a u d i t g r o u p so that it can be v i g o r o u s [ s i c ] . ' T h e n c a m e t h e c l i n c h e r . Such a s t r a t e g y w a s n e c e s s a r y b e c a u s e a t t h a t t i m e G M P s applied only t o drugs and not to implantable medical devices. to i n c l u d e t h e t h i r t e e n a r e a s specified by t h e C o m m i s s i o n e r in o r d e r t o a c h i e v e rigid c o n t r o l . B e c a u s e t h e s e s t a t e m e n t s w e r e i n a c c u r a t e . In c o n t r a s t . It lost e v e r y b a t t l e a g a i n s t C o r d i s . it w a s also a salutary lesson on t h e limits of law in c o n t r o l l i n g c o r p o r a t e a b u s e s . We all pick up t h e n e w m a t e r i a l and we start o v e r in r e f e r e n c e to t h e l a b e l l i n g .f o r . . and (7) to d e v e l o p a high reliability discipline and i n t e g r a t i o n o f m a n a g e m e n t p o l i c i e s .

t h e m e e t i n g w a s n o n . We have seen t h a t c r i m i n a l p r o s e c u t i o n s of t r a n s n a t i o n a l p h a r m a c e u t i c a l c o m p a n i e s u n d e r t h e F o o d . i m m e d i a t e a c t i o n had t o b e t a k e n a b o u t t h e risk t o t h e p u b l i c . E s s e n t i a l l y the p r o b l e m s w e r e a n u m b e r of s l o p p y p r a c t i c e s which c r e a t e d a risk t h a t u n d e t e c t e d n o n . H o w e v e r . T h e following case s t u d y is p r o b a b l y m o r e typical in t h a t it i l l u s t r a t e s h o w c o n t r o l w a s effected t h r o u g h n e g o t i a t i o n w i t h o u t r e c o u r s e t o litigation.e x i s t e n t . E x e c u t i v e s from the firm c o n t a c t e d t h e F D A ' s h e a d office and a s k e d if t h e y could c o m e to W a s h i n g t o n to discuss it. In t h e m e a n t i m e t h e district office had sent head office an i n j u n c t i o n r e c o m m e n d a t i o n for t h e c l o s u r e o f t h e p l a n t . T h e F D A district d i r e c t o r w a n t e d t o close d o w n the p l a n t and c o m m e n c e c r i m i n a l p r o c e e d i n g s a g a i n s t the c o m p a n y and c e r t a i n of its officers. D r u g and C o s m e t i c A c t a r e virtually n o n . I n p a r t . F D A i n s p e c t o r s b e c a m e a w a r e o f t h e fact t h a t t h e r e had b e e n a m a j o r b r e a k d o w n o n t h e quality s y s t e m a t t h e largest m a n u f a c t u r ing p l a n t o f o n e o f t h e t o p A m e r i c a n c o m p a n i e s .p r o d u c t i v e .s t e r i l e p r o d u c t s w e r e going o n t o t h e m a r k e t . T h e d e t a i l s of t h e s e p r a c t i c e s will not be discussed h e r e . T h e crisis built u p g r a d u a l l y .Unsafe manufacturing practices A fourth modern case study: an anonymous transnational T h e C o r d i s c a s e study s e r v e d to i l l u s t r a t e t h e limits of law in r e g u l a t i n g unsafe m a n u f a c t u r i n g p r o b l e m s . T h e case study concerns an a n o n y m o u s American transnational pharmaceutical c o m p a n y a n d a n o n y m o u s F D A officers. ' W e w e r e t e r r i f i e d ' a b o u t t h i s risk. N e v e r t h e l e s s . but they w e r e of a m a g n i t u d e to c a u s e o n e F D A officer to d e s c r i b e the q u a l i t y b r e a k d o w n as ' o n e o f t h e m o s t s e r i o u s I h a v e seen in 30 years e x p e r i e n c e ' . S o t h e F D A w a s clearly not g o i n g t o rush i n t o criminal p r o s e c u t i o n s . Such a n o n y m i t y arises from t h e fact t h a t my chief i n f o r m a n t . a s e n i o r F D A official. T h e y w e r e told t h a t t h e y c o u l d . an i n f o r m a l s e t t l e m e n t w a s effected precisely b e c a u s e of a r e a l i s a t i o n by s o m e F D A officers that legal c o n t r o l s did have s e v e r e limits in t h e kind of s i t u a t i o n t h e y w e r e d e a l i n g with. r e q u e s t e d it be t h a t w a y . F u r t h e r e v i d e n c e e m e r g e d s u b s e q u e n t t o that initial m e e t i n g 130 . c l a i m e d t h e F D A h e a d office official w h o s e j o b it was to react to the p r o b l e m . At t h e initial m e e t i n g b e t w e e n F D A and c o m p a n y officers i t was p o i n t e d o u t t o t h e c o m p a n y that t h e injunction r e c o m m e n d a t i o n had b e e n r e c e i v e d . G o v e r n m e n t c o n t r a c t s for p r o d u c t s from t h e p l a n t w e r e cut off after an initial i n v e s t i g a t i o n by the F D A ' s d i s t r i c t office. but only i f they c a m e with d e c i s i o n m a k i n g a u t h o r i t y .

E v e n if t h e r e w e r e no d r u g s l a c k i n g sterility. T h e r e w a s a lack of a s s u r a n c e o f t h e sterility in all lots w h i c h had been m a n u f a c t u r e d in serious violation of G M P s . P r o d u c t s a l r e a d y o n t h e m a r k e t w o u l d not b e r e c a l l e d until such t i m e a s n e w s t o c k s m a n u f a c t u r e d u n d e r t h e r e f o r m e d q u a l i t y c o n t r o l system had c o m e o u t t h e end o f the p r o d u c t i o n l i n e . T o c o m p r o m i s e this p r i n c i p l e w o u l d b e i n t o l e r a b l e . a c c o r d i n g t o t h e key F D A official in t h e n e g o t i a t i o n s . it did r e m a i n t r u e t h a t t h e d r u g s w e r e 'illegal' i n t h e sense that they had not b e e n m a d e a n d t e s t e d a c c o r d i n g t o t h e s t a n d a r d s set d o w n i n law.1 0 million. h o w e v e r . the c o m p a n y b e c a m e m o r e co-operative. B e c a u s e t h e c o m p a n y w a s s o large i n the p r o d u c t lines c o n c e r n e d . T h e p r o d u c t w a s n e c e s s a r y i n s u r g e r y . T h e o b j e c t i o n to this p a r t o f t h e a g r e e m e n t w a s . The probability t h a t a n u m b e r of lots on t h e m a r k e t w e r e n o n . t h a t illegal d r u g s w e r e out t h e r e on t h e m a r k e t and should be w i t h d r a w n as a m a t t e r of p r i n c i p l e . O n e m e a s u r e w a s a g r a d u a t e d recall of v a r i o u s p r o d u c t s which w a s said t o cost t h e c o m p a n y S 8 . M o r e o v e r .s t e r i l e . T h a t is precisely w h y s t r o n g v a l i d a t i o n of i n . it is difficult to test w i t h any c e r t a i n t y t h e sterility of an e n d .Unsafe manufacturing practices c u l m i n a t i n g in a r e c o m m e n d a t i o n by t h e district office for c r i m i n a l p r o s e c u t i o n s . I t w a s a g r e e d t h a t t h e c o m p a n y w o u l d d i s m i s s its p r o d u c t i o n and quality c o n t r o l m a n a g e r s . w i t h o u t i t c e r t a i n o p e r a t i o n s could not t a k e p l a c e . A p l a n of a c t i o n to rectify t h e p r o b l e m w a s w o r k e d out at m e e t ings b e t w e e n t h e F D A a n d the c o r p o r a t i o n ' s g e n e r a l c o u n s e l . O l d stock w o u l d be recalled o v e r four to five m o n t h s a s m o r e and m o r e n e w stock w a s p r o d u c e d .p r o d u c t . N o a d v e r s e r e a c t i o n s had b e e n r e p o r t e d . M a s s i v e t h i n g s w e r e d o n e h e r e ' . w h o w e r e r e g a r d e d as h a v i n g special r e s p o n s i b i l i t y for t h e quality crisis. i m m e d i a t e recall o f all p r o d u c t s p r o d u c e d u n d e r t h e d e f e c t i v e q u a l i t y c o n t r o l s y s t e m w o u l d have c r e a t e d s h o r t a g e s w h i c h m a y h a v e p u t c e r t a i n p a t i e n t s at risk. t h e F D A official did not h a v e such a s m o o t h r i d e . A s t h i s e v i d e n c e e m e r g e d from t h e district office i n v e s t i g a t i o n s .p r o c e s s c o n t r o l s for sterility is e s s e n t i a l . A h u g e a n d costly p r o g r a m m e to u p g r a d e t h e quality a s s u r a n c e s y s t e m a t t h e p l a n t and i n t h e c o m p a n y g e n e r a l l y w a s i m p l e m e n t e d . T h e s e a r g u m e n t s w e r e further confused b y t h e fact that F D A did not h a v e e v i d e n c e t h a t any o f the i n v e n t o r y w a s n o n . I t had b e e n a g r e e d t h a t t h e recalls s h o u l d b e g r a d u a l .s t e r i l e could only be g u e s s e d . T h e recall p r o g r a m m e w a s a major s o u r c e o f d i s s e n s i o n w i t h i n t h e a g e n c y . 131 . W h i l e t h e c o r p o r a t e g e n e r a l c o u n s e l w o n full s u p p o r t for t h e r e g i m e of r e h a b i l i t a t i o n from his p r e s i d e n t .

We had m a g n i f i c e n t (if b e l a t e d ) c o o p e r a t i o n from t h e firm. .Unsafe manufacturing practices A l l p r o t a g o n i s t s w i t h i n the a g e n c y s e e m e d sincere i n their d e s i r e t o a s s u r e m a x i m u m p r o t e c t i o n for t h e c o n s u m e r . M o r e o v e r . . any p u n i s h m e n t of t h e m w o u l d be strictly p u n i t i v e . T h e law is t h e l a w . b u t I c a n ' t r e m e m b e r t h e m ) w e r e o u t o f t h e i n d u s t r y . . This senior F D A officer justified his p o s i t i o n as follows: I s t a t e d my o p i n i o n t h a t t h e g o v e r n m e n t w o u l d win if it w e n t f o r w a r d [on t h e case a g a i n s t t h e c o r p o r a t i o n and two individual d e f e n d a n t s ] . T h e district d i r e c t o r w a n t e d t o p r o c e e d w i t h c r i m i n a l a c t i o n against t h e c o m p a n y a n d t h e t w o e x e c u t i v e s w h o had b e e n d i s m i s s e d . ' T h a t kind of r e a s o n i n g has a l w a y s d i s g u s t e d me b e c a u s e w h e n it is used the tail literally w a g s t h e d o g . U l t i m a t e l y . t h e r e w e r e informal i n d i c a t i o n s t h a t t h e y w e r e highly unlikely to ever go b a c k to t h e p h a r m a c e u t i c a l industry and pose a threat to the public again. t h e view o f t h e F D A h e a d office official w h o had d o n e the n e g o t i a t i n g w a s t h a t it w o u l d be "vindictive' to p r o s e c u t e t h e "two old m e n ' w h o had suffered e n o u g h from p r o f e s s i o n a l d i s g r a c e and loss o f e m p l o y m e n t . F D A t o o k into c o n s i d e r a t i o n its t r a c k r e c o r d with the court j u r i s d i c t i o n i n v o l v e d . . T h e p r o b l e m had b e e n c o r r e c t e d . prosecution). I n c o n t r a s t . . T h a t p a r t i c u l a r F D A district office w a s not r e s p e c t e d b y a t least o n e j u d g e u p t h e r e w h o t h o u g h t they w e r e high h a n d e d a n d less t h a n o b j e c t i v e i n a n o t h e r m a t t e r referred t o him. T h e stated p u r p o s e o f t h e C o n g r e s s i n e n a c t i n g the A c t w a s "to p r o t e c t t h e p u b l i c h e a l t h and w e l f a r e . T h e w i n n i n g a r g u m e n t o f t h o s e w h o d e f e n d e d t h e g r a d u a l recall w a s that this was part o f a total p a c k a g e o f c o n s e n s u a l measures which. T h i s h a v i n g b e e n s e t t l e d . t h e p u b l i c h e a l t h and welfare w o u l d n o t be at all s e r v e d . n o r e c o m m e n d a t i o n went from t h e F D A to t h e J u s t i c e D e p a r t m e n t for a c r i m i n a l p r o s e c u t i o n . T h e former p l a n t m a n a g e r a n d p l a n t Q C d i r e c t o r (they had different t i t l e s . in my o p i n i o n . . The c o m p a n y m i g h t r e n e g e o n s o m e p a r t s o f its side o f t h e d e a l i f F D A c h a n g e d its t u n e on g r a d u a l recall. B u t n e i t h e r side h a d t h e d a t a to be a b l e to show that the risk from p r o d u c t s h o r t a g e s w o u l d b e g r e a t e r o r l e s s e r t h a n t h e risk from unsafe p r o d u c t . seizure. ' T o o . so. w o u l d afford far g r e a t e r p r o t e c t i o n to p a t i e n t s t h a n would r e s u l t i f t h e c o n s e n s u s b r o k e d o w n t h r o u g h legal a c t i o n b y F D A against the c o m p a n y (e. I r e c o m m e n d e d t h a t the case be not p r o s e c u t e d at all b e c a u s e . t h e r e w a s n o w t h e q u e s t i o n o f criminal p r o s e c u t i o n s .g. 132 . T h e district office s c r e a m e d "Foul. as a w h o l e . injunction.

Ct. a p p . t h e c h a i r m a n o f its b o a r d . T h e d e c i s i o n will m a k e c o n v i c t i o n s i n future c a s e s of t h e s a m e kind e x t r a o r d i n a r i l y difficult. He supported criminal prosecution o f t h e corporation. to get a c o n v i c t i o n for criminally n e g l i g e n t h o m i c i d e . I n t h e e n d . S . t h e c h a r g e s w e r e d i s m i s s e d . T h i s c a s e study will b e d r a w n u p o n later t o illustrate t h e difficult c h o i c e s and p r e s s u r e s w h i c h r e g u l a t o r s m u s t confront in d e c i d i n g for or a g a i n s t legal a c t i o n . and t h e t w o e x e c u t i v e s w h o had b e e n d i s m i s s e d . " w a s a g a i n s t any c r i m i n a l a c t i o n . the m a t t e r was r e s o l v e d i n t h e n e g a t i v e a t t h e h i g h e s t d e c i s i o n . b e c a u s e t h e i m m e d i a t e s o u r c e o f ignition could n o t b e d e t e r m i n e d w i t h c e r t a i n t y after t h e e x p l o s i o n .L a m b e r t . safety p r o b l e m s are not all m a n a g e m e n t ' s fault.m a k i n g levels o f t h e a g e n c y .f i r e in its L o n g Island city c h e w i n g . U n f o r t u n a t e l y . O b v i o u s l y . S . a c c o r d i n g to F D A staff. T h e c o m p a n y . B u t w o r k e r s a s well a s cons u m e r s c a n be v i c t i m s . w o r k e r s as victims is a t o p i c w h i c h h a s b e e n r e l a t i v e l y n e g l e c t e d in this r e s e a r c h . In o t h e r w o r d s . C o u r t o f A p p e a l s for t h e S e c o n d Circuit i n N e w Y o r k dismissed the case ( P e o p l e v. I n t u r n . t h e fault may lie with 133 . if not impossible. . ' Unsafe manufacturing practices affecting workers So far in t h i s c h a p t e r t h e i m p a c t of unsafe m a n u f a c t u r i n g p r a c t i c e s o n c o n s u m e r s h a s b e e n c o n s i d e r e d . and to illustrate t h e real possibilities for a c h i e v i n g significant p r o t e c t i o n for t h e public from d e a l s s t r u c k 'in smoke-filled r o o m s ' . In a p h a r m a c e u t i c a l l a b o r a t o r y in w h i c h it is c o m m o n p r a c t i c e for d a n g e r o u s c h e m i c a l s to be m o u t h p i p e t t e d . U l t i m a t e l y t h e U . Y . It is an a r e a that w o u l d justify d e t a i l e d i n v e s t i g a t i o n . 434 N .g u m plant in w h i c h 6 w o r k e r s w e r e killed a n d 55 o t h e r s seriously i n j u r e d . E v e n t h o u g h the c o m p a n y had virtually ignored a w a r n i n g by its i n s u r a n c e c a r r i e r s that t h e r e w a s a severe e x p l o s i o n h a z a r d a t t h e p l a n t . at 159). has had a g o o d G M P r e c o r d since the i n c i d e n t . but a l s o t h e p r e c i s e c h a i n o f e v e n t s which actually t r i g g e r e d t h e e x p l o s i o n . W a r n e r L a m b e r t . and four of its e x e c u t i v e s w e r e recently the s u b j e c t of a l a n d m a r k i n d i c t m e n t c h a r g i n g t h e m with h o m i c i d e over an e x p l o s i o n . his i m m e d i a t e s u p e r i o r .Unsafe manufacturing practices T h e i m m e d i a t e s u p e r i o r of this officer w h o did the n e g o t i a t i n g d i s a g r e e d . T h e p h a r m a c e u t i c a l g i a n t . t h e p r o s e c u t i o n w a s r e q u i r e d t o p r o v e that t h e d e f e n d a n t s c o u l d f o r e s e e n o t only t h e fact t h a t t h e r e m i g h t b e a n e x p l o s i o n . w h o w a s a p e r s o n a l friend o f t h e c h a i r m a n o f t h e a c c u s e d c o r p o r a t i o n . W a r n e r .

N I O S H i n v e s t i g a t e d the plant i n M a y . m a n a g e m e n t i n s t i t u t e d t h e n e c e s s a r y dust c o n t r o l m e a s u r e s and i m p r o v e d w o r k p r a c t i c e s . A h e a d q u a r t e r s c o m p l i a n c e e x e c u t i v e e x p l a i n e d t h e p r o b l e m : 'It 134 . 1978: 2 2 8 ) . c o m p l a i n e d o f sexual i m p o t e n c e . 0 0 0 . w h i c h a p p e a r t o have r e s o l v e d t h e p r o b l e m ( E p s t e i n . E p s t e i n p o i n t e d o u t that a similar i n c i d e n t i s d o c u m e n t e d from an o r a l c o n t r a c e p t i v e p l a n t in P u e r t o R i c o in 1976.Unsafe manufacturing practices staff w h o c h o o s e to do this to save t i m e . F o l l o w i n g c o m p l a i n t s o f e n l a r g e d b r e a s t s i n male e m p l o y e e s and m e n s t r u a l d i s o r d e r s i n f e m a l e s . I w a s told by s e n i o r m a n a g e m e n t of this A m e r i c a n c o m p a n y t h a t t h e high safety s t a n d a r d s o f its P u e r t o R i c a n p l a n t w e r e not m a t c h e d i n its British o p e r a t i o n . " In 1977 an O c c u p a t i o n a l Safety and H e a l t h A d m i n i s t r a t i o n i n s p e c t i o n r e s u l t e d i n t h e c o m p a r a t i v e l y heavy fine of $46. C o n d i t i o n s a t t h e p l a n t a c c o r d i n g t o E p s t e i n ( 1 9 7 8 : 227) w e r e : "Ventilation w a s p r a c t i c a l l y n o n e x i s t e n t a n d t h e w h o l e i n t e r i o r o f t h e plant w a s c o v e r e d by dust c o n t a i n i n g as high as 10 p e r c e n t D E S [a h o r m o n a l p r o d u c t ] by w e i g h t . which was subsequently reduced under appeal to $ 2 1 . S o m e m e n d e v e l o p e d e n l a r g e d b r e a s t s . An i m p o r t a n t n e e d is for d e t a i l e d i n v e s t i g a t i o n o f t h e health risks t o p e o p l e w h o w o r k with h o r m o n a l p r o d u c t s . 1976. I l l i n o i s . it could be that m a n a g e m e n t is at fault for failure to w a r n t h e m off such a p r a c t i c e . and o t h e r special m e a s u r e s . i n o n e c a s e r e q u i r i n g surgical r e m o v a l . a n d found e v i d e n c e o f e x c e s s i v e o e s t r o g e n e x p o s u r e . I n t h i s c a s e . the m a n a g i n g d i r e c t o r o f t h e British s u b s i d i a r y w a s f i g h t i n g the a t t e m p t b y h e a d q u a r t e r s c o r p o r a t e c o m p l i a n c e staff t o i m p o s e h i g h e r standards. H o w e v e r .000. " 4 0 O n e c o n t r a c e p t i v e m a n u f a c t u r e r c l a i m e d that e x t e n s i v e p r e c a u t i o n s w e r e t a k e n i n t h e i r P u e r t o R i c a n o p e r a t i o n t o r e d u c e t h e risk t o w o r k e r s from o e s t r o g e n i n t h e a t m o s p h e r e . W o r k e r s a r e r o t a t e d i n a n d o u t o f t h a t section o f t h e w o r k e n v i r o n m e n t with the highest risk: t h e c o n t r a c e p t i v e s are m a n u f a c t u r e d in a part of t h e plant w h i c h is p h y s i c a l l y s e p a r a t e d from t h e rest. E q u a l l y . S t r e n g t h e n e d by the a r g u m e n t t h a t his o w n g o v e r n m e n t found the plant safe. B e t w e e n 1968 and 1971 m a n y w o r k e r s a t D a w e s L a b o r a t o r i e s i n C h i c a g o H e i g h t s . E v e n t h o u g h t h e B r i t i s h c o n t r a c e p t i v e p l a n t had b e e n a p p r o v e d b y g o v e r n m e n t i n s p e c t o r s . or e v e n for t r a i n i n g n e w staff i n t o a set of p r a c t i c e s w h i c h a c c e p t s mouth pipetting as normal. t h e c o r p o r a t i o n ' s i n t e r n a t i o n a l c o m p l i a n c e unit w a s not satisfied t h a t it met c o r p o r a t e safety s t a n d a r d s .

t h a n t h e local g o v e r n m e n t official. B e c t o n . By far the g r e a t e s t c o n c e n t r a t i o n o f p h a r m a c e u t i c a l m a n u f a c t u r i n g i n the w o r l d is in t h e s t a t e of N e w J e r s e y in t h e U S . Merck. to w a s t e from t h e c o n c e n t r a t i o n of c h e m i c a l i n d u s t r i e s in N e w J e r s e y is b e y o n d t h e c o m p e t e n c e o f t h i s a u t h o r . as E p s t e i n ( 1 9 7 8 : 4 5 1 ) s u g g e s t s . Ethicon. T h e story is a nice i l l u s t r a t i o n of h o w . t h e possibility t h a t this could be t h e c a s e a d d s a n o t h e r r e a s o n for s y s t e m a t i c r e s e a r c h on t h e effect on the h e a l t h of p e o p l e from the m a k i n g . in addition to the c o n s u m i n g . W h e t h e r this fact can be a t t r i b u t e d . of pharmaceuticals. e v e n in a d e v e l o p e d c o u n t r y . B u t we are building a n e w p l a n t and t h e n w e will b e i n c o m p l i a n c e w i t h t h e r e g u l a t i o n s . ' A further m a t t e r w h i c h r e q u i r e s i n v e s t i g a t i o n is t h e e x t e n t to w h i c h p h a r m a c e u t i c a l m a n u f a c t u r i n g affects the h e a l t h of surr o u n d i n g c o m m u n i t i e s in a d d i t i o n to t h a t of w o r k e r s . 1979). 135 . Squibb. B e e c h a m . P o l i c i e s t o s t r e n g t h e n t h e s e socially r e s p o n s i b l e c o n s t i t u e n c i e s within t h e t r a n s n a t i o n a l c o r p o r a t i o n will b e c o n s i d e r e d later. N e w J e r s e y is the A m e r i c a n manufacturing headquarters of Ciba-Geigy. J o h n s o n and J o h n s o n .D i c k i n s o n and m a n y s m a l l e r p h a r m a c e u t i c a l c o m p a n i e s . H o e c h s t . We do not h a v e e n o u g h vents in t h e roof.' At t h e t i m e I i n t e r v i e w e d c e r t a i n p a r t i e s t o t h e i n t e r n a l s t r u g g l e o v e r safety s t a n d a r d s . Schering-Plough. H o w e v e r . WarnerL a m b e r t .W a l l a c e . industrial safety s t a n d a r d s w e r e unsatisfactory: ' W e do have a bit of dust in t h e air w h i c h can b e d a n g e r o u s w h e n m a k i n g O C s [oral c o n t r a c e p t i v e s ] .R o u s s e l . I n d u s t r i a l safety a r r a n g e m e n t s s u r r o u n d i n g the m a n u f a c t u r e o f c o n t r a c e p t i v e s internationally is an area which warrants detailed p u b l i c i n t e r e s t r e s e a r c h . R o c h e . T h e following s t a t e m e n t b y the quality a s s u r a n c e m a n a g e r o f t h e M e x i c a n subsidiary o f a n o t h e r major t r a n s n a t i o n a l i m p l i e s t h a t . with some c h a n c e that the m a t t e r might be resolved by the r e g i o n a l v i c e . This b e c o m e s even more true in Third World c o u n t r i e s w h e r e t h e r e are n o g o v e r n m e n t i n s p e c t o r s . O r g a n o n . N e w J e r s e y leads all A m e r i c a n s t a t e s i n overall c a n c e r mortality and in the variety of mortal cancers. C a r t e r . at least at that t i m e ( D e c e m b e r . t h e conflict w a s d e a d l o c k e d . w o r k e r s a r e often b e t t e r p r o t e c t e d b y w a t c h d o g s o f corp o r a t e s t a n d a r d s w i t h i n the t r a n s n a t i o n a l t h a n they are b y g o v e r n ment inspectors.p r e s i d e n t for E u r o p e or his s u p e r i o r in the U n i t e d S t a t e s .Unsafe manufacturing practices is h a r d to sell t h e n e e d for t w e n t y i m p r o v e m e n t s in a plant to a m a n a g i n g d i r e c t o r w h e n they have had a n i n s p e c t i o n t h e w e e k b e f o r e by t h e i r local r e g u l a t o r s w h o give t h e m full m a r k s . We can a l w a y s find t h i n g s w r o n g . m o r e i m p o r t a n t t h i n g s w r o n g . S a n d o z .

o p e r a t i o n u n d e r c o u r t o r d e r . R e g u l a t i o n s can e v e n specify t h a t c e r t a i n t y p e s o f c o m p o n e n t s be s a m p l e d for testing from t h e t o p . following a s o c i a l l y r e s p o n s i b l e p a t t e r n o f m a n u f a c t u r i n g o r g a n i s a t i o n . T h e n . w e h a v e s e e n .o p e r a t i v e c o m p a n y i s m o r e able t o t r a c e w h e r e all t h e d r u g s h a v e g o n e t h a n t h e g o v e r n m e n t official w h o h a s t o elicit g r u d g i n g c o . H o w e v e r . It is p e r h a p s for t h e s e r e a s o n s t h a t one s e n i o r F D A official e x p r e s s e d t h e view: ' T h e F e d e r a l j u d i c i a r y has a p r i v a t e c o n t e m p t for a g e n c i e s w h o s e e k i n j u n c t i o n s . m i d d l e and b o t t o m of a c o n t a i n e r to e n s u r e t h a t it is not p u r e in o n e section but i m p u r e in a n o t h e r . for g o v e r n m e n t n e g o t i a t o r s t o h a v e t h e b a c k . T h e y feel t h a t t h e y r e s o r t t o i n j u n c t i o n s w h e n they fail a t d o i n g their own j o b . should a d o p t . In t h e l a t t e r c a s e . I t i s i m p o r t a n t . ' M a n y r e g u l a t o r s h a v e c o m e t o t h e c o n c l u s i o n that they can win m o r e i m m e d i a t e a n d m o r e satisfactory p r o t e c t i o n for the c o n s u m e r t h r o u g h n e g o t i a t i o n r a t h e r t h a n litigation. T h e c o m p a n y which has a socially d a n g e r o u s p a t t e r n of a d m i n i s t r a t i o n has t i m e to rectify specific c o m p l a i n t s before t h e c o u r t h e a r i n g t a k e s p l a c e . o r d e r s to seize d r u g s m i g h t have to be issued to a l m o s t a h u n d r e d different m a r s h a l s from district c o u r t s a r o u n d the U n i t e d S t a t e s . I n t h e first p l a c e . while not d e a l i n g w i t h t h e u n d e r l y i n g m a l a i s e . s e i z u r e and p r o s e c u t i o n as n e g o t i a t i n g t o o l s .r e p e a t e d p r o b l e m o f W e s t e r n law not being geared to deal w i t h a p a t t e r n of c o n d u c t but with specific e g r e g i o u s acts. t h e c o . H o w e v e r . T h e clums i n e s s of law as a c o n t r o l l i n g d e v i c e d o e s not apply only to injunct i o n s . r e g u l a t i o n s c a n n o t r e a s o n a b l y i m p o s e a formal r e q u i r e m e n t t h a t s a m p l e s b e t a k e n from m o r e t h a n t h r e e p a r t s o f t h e c o n t a i n e r w h e n s o m e o n e has a h u n c h t h a t s o m e t h i n g could b e 136 . In part it is t h e b y n o w o f t . S i m i l a r c o n s i d e r a t i o n s a p p l y to t h e limits of p r o s e c u t i o n for v i o l a t i o n s o f G M P r e g u l a t i o n s . n o set o f regulat i o n s can specify all t h e t y p e s o f c o n d u c t t h a t a c o m p a n y . nevert h e l e s s . it is a l s o a p r o b l e m o f t h e slow r e s p o n s e of legal p r o c e s s e s t o m a t t e r s w h i c h r e q u i r e i m m e d i a t e a c t i o n .u p t h r e a t o f i n j u n c t i v e relief. T h e y a r e t h e n a b l e to w a l k softly while c a r r y i n g a big stick.Unsafe manufacturing practices AN INTERPRETATION OFTHE CASE STUDIES The Limits of Law T h e C o r d i s c a s e s t u d y i l l u s t r a t e d s o m e o f the p r o b l e m s with i n j u n c t i v e r e m e d i e s to unsafe m a n u f a c t u r i n g p r a c t i c e s . M o r e o v e r . A n e g o t i a t e d v o l u n t a r y recall of h a z a r d o u s d r u g s will g e n e r a l l y be m o r e effective t h a n s e i z u r e s e n f o r c e d by the c o u r t s . a regul a t o r y r o u n d a b o u t c a n b e g i n .

F D A i n s p e c t o r s c a n n o t give a plant a "clean bill of h e a l t h ' since t h e i r only r e s p o n s i b i l i t y i s t o r e p o r t G M P v i o l a t i o n s w h i c h t h e y n o t i c e . T h e y do not w r i t e a r e p o r t which says that a c e r t a i n a s p e c t of m a n u f a c t u r i n g w a s a p p r o v e d as satisfactory.g r o u p to b l a m e . g o v e r n m e n t i n s p e c t o r s a r e not in as g o o d a p o s i t i o n as i n s i d e r s to d i s c o v e r w h e n r e g u l a t i o n s h a v e b e e n v i o l a t e d . T h e o t h e r a d v a n t a g e i s t h a t i t e n a b l e s t h e g o v e r n m e n t formally t o use b o t h t h e p s y c h o l o g y of p r a i s e and of criticism in i m p r o v i n g standards. T h e y are told that w e are part o f t h e s a m e family a n d . O b v i o u s l y . and not t o a n s w e r any q u e s t i o n s o u t s i d e y o u r a r e a o f c o m p e t e n c e . if a p r o b l e m arises in an o p e r a t i o n w h i c h has j u s t b e e n given a positive g r a d i n g by t h e g o v e r n m e n t . S u c h a p o s s i b i l i t y p e r h a p s d o e s put i n s p e c t o r s on their m e t t l e . ' In fact. not t o p r o v i d e any e x t r a i n f o r m a t i o n . O u r i n s t r u c t i o n s t o officers w h e n d e a l i n g with F D A i n s p e c t o r s i s t o only a n s w e r t h e q u e s t i o n s a s k e d . I n s p e c t i o n s by c o r p o r a t e c o m p l i a n c e staff are also m o r e likely to u n c o v e r p r o b l e m s than g o v e r n m e n t inspections because of the g r e a t e r degree of o p e n n e s s with the former. not t o v o l u n t e e r a n y t h i n g . an a d v e r s e r e p o r t m i g h t have a m o r e 137 . but they c a n n o t e n f o r c e c o m m o n sense and social r e s p o n s i b i l i t y . T h e following s t a t e m e n t from a c o r p o r a t e c o m p l i a n c e e x e c u t i v e w a s not u n c o m m o n : "We've had a s i t u a t i o n w h e r e an F D A i n s p e c t i o n h a s given a plant a clean bill of h e a l t h o n e w e e k . w e are w o r k i n g for t h e s a m e final o b j e c t i v e s . B u t this n e e d not n e c e s s a r i l y b e t r u e . R e g u l a t i o n s c a n e n f o r c e m i n i m u m s t a n d a r d s . t h e n t h e c o m p a n y can defend itself b y p o i n t i n g t o this. B u t a n internal a d v e r s e r e p o r t is less likely to elicit social s u p p o r t from s u p e r i o r s . u n l i k e t h e g o v e r n m e n t . A g a i n t o r e p e a t a c o n c l u s i o n from o t h e r c h a p t e r s . W h e n t h e r e is no o u t . ' An a d v e r s e r e p o r t from a g o v e r n m e n t i n s p e c t o r in m a n y situa t i o n s will be a m a t t e r of g r e a t e r c o n c e r n to a factory m a n a g e r t h a n a n a d v e r s e r e p o r t from a n i n s p e c t o r from c o r p o r a t e h e a d q u a r t e r s .Unsafe manufacturing practices w r o n g . This differs from t h e g r a d i n g s y s t e m used by t h e i n s p e c t o r a t e of the C a n a d i a n H e a l t h P r o t e c t i o n B r a n c h . and o u r i n s p e c t o r s have c o m e i n t h e next w e e k t o p o i n t out a d o z e n t h i n g s w h i c h are not up to s t a n d a r d . T h e m a n a g e r ' s s u p e r i o r s may s y m p a t h i s e w h e n he or she is v i c t i m i s e d by ' t h o s e b a s t a r d s from F D A m a k i n g u n r e a s o n a b l e d e m a n d s ' . O n the o t h e r h a n d w e [the c o r p o r a t e c o m p l i a n c e staff] can ask a n y o n e a n y t h i n g and e x p e c t a n a n s w e r .

O n e q u a l i t y c o n t r o l d i r e c t o r c l a i m e d with p r i d e t h a t his i n f o r m a t i o n s y s t e m w a s so g o o d t h a t ' w h e n a d r u g is p r o d u c e d w h i c h d o e s not m e e t s p e c s . 1978. 1978. T h e r e a r e m a n y i n d i v i d u a l a c t o r s e a c h o f w h o m h a s a partial r e s p o n s i b i l i t y for a w h o l e which no o n e of t h e m fully a d m i t s . It is an o f t . ' ' N o . they can g e n e r a l l y get it. we can find w h o is to b l a m e 95 p e r cent o f t h e t i m e ' . Harvard Law Review. I r e p l i e d : ' T h a t s u r p r i s e s m e . 1 9 7 5 . G r o s s . B r a i t h waite. M a n a g e r s t h e r e f o r e have a c l e a r interest in p r e s e n t i n g t h e s a m e r e a l i t y as o n e of diffused r e s p o n s i b i l i t y to o u t s i d e r s . W h i l e t h i s is u n d e n i a b l e and i n e v i t a b l e . 1978. A n o t h e r i m p o r t a n t difference b e t w e e n g o v e r n m e n t and i n t e r n a l i n s p e c t o r s i s r e l e v a n t h e r e . for t h e i r o w n p u r p o s e s .in a sense e v e r y o n e is to b l a m e . E r m a n n a n d L u n d m a n . F i s s e . it s h o u l d be c o n s i d e r e d t h a t in some m e a s u r e companies conspire to create an impression of diffusion of r e s p o n s i b i l i t y . 1978. Y e t w h e n c o m p a n i e s .r e p e a t e d r e a s o n for the failure of c o n t r o l s on c o r p o r a t e c r i m e t h a t in a large c o r p o r a t i o n r e s p o n s i b i l i t y for any law v i o l a t i o n i s diffused ( S t o n e . have m o r e t a n g i b l e c o n s e q u e n c e s for p a r t i c u l a r i n d i v i d u a l s . Yale Law Journal. H e n c e the impact o f an a d v e r s e g o v e r n m e n t r e p o r t is diffused .Unsafe manufacturing practices n e g a t i v e i m p a c t for the m a n a g e r o n m a t t e r s such a s p r o m o t i o n p r o s p e c t s . T h e m a n a g e r w h o 138 . E v e r y o n e r e c o r d s w h a t t h e y d o a t every s t a g e . p a r t l y b e c a u s e o f their p u r p o s e and p a r t l y b e c a u s e o f t h e i r s u p e r i o r c a p a c i t y t o locate buried b o d i e s . w a n t a c c o u n t a b i l i t y . T h e t w o serve different p u r p o s e s . 1979a. S u c h w o u l d be i n d i c a t i v e of a bad m a n a g e m e n t c o n t r o l s y s t e m . yet one o f c l e a r l y defined r e s p o n s i b i l i t y t o i n s i d e r s . 1979). M c A d a m s . I w o u l d h a v e t h o u g h t t h a t on a p r o d u c t i o n line w i t h such a large n u m b e r of p e o p l e . t h e i n t e r n a l i n s p e c t o r s e e k s t o l o c a t e c u l p a b l e i n d i v i d u a l s for p r o b l e m s and to a s s e s s the p e r f o r m a n c e of i n d i v i d u a l s i n m e e t i n g c o r p o r a t e quality g o a l s . All c o r p o r a t e a c t o r s benefit from the p r o t e c t i o n afforded b y p r e s e n t i n g t o o u t s i d e r s a n a p p e a r a n c e o f g r e a t l y diffused a c c o u n t a b i l i t y . W h i l e t h e g o v e r n m e n t i n s p e c t o r sets out t o find G M P v i o l a t i o n s "by t h e c o m p a n y ' . T h e r e c o r d s are s o good that w e c a n p i n p o i n t w h o i t is. ' C o m p a n i e s have two kinds of records: r e c o r d s d e s i g n e d to a l l o c a t e guilt (such as the a b o v e ) and r e c o r d s d e s i g n e d t o o b s c u r e guilt. 1979. it would be possible for e v e r y i n d i v i d u a l w h o m i g h t b e b l a m e w o r t h y t o find s o m e o n e e l s e w h o t h e y could b l a m e . 1978. S c h r a g e r and S h o r t . We h a v e a m a n full t i m e on t r a c i n g b a c k t h r o u g h t h e r e c o r d s s o u r c e s of p r o b l e m s . I n t e r n a l r e p o r t s . I n t e r n a l a u d i t o r s are n o t p r e s e n t e d w i t h a c o n s p i r a c y o f confusion.

t h e y c o u l d b e dismissed or sanctioned in some other way. and t h r e e m o n t h s i n v e n t o r y o f t h e finished p r o d u c t . a s o n e q u a l i t y c o n t r o l m a n a g e r wryly r e m a r k e d . ' R a t h e r t h a n r e c a l c u l a t e it. this may not be t h e case at all t i m e s . O n e e x e c u t i v e w h o had b e e n r e c e n t l y t r a n s f e r r e d t o the U n i t e d States recalled that when he was in Australia workers on o c c a s i o n w o u l d w r i t e up r e c o r d s a c o u p l e of w e e k s in a d v a n c e of actually doing the w o r k . t h r e e m o n t h s o f i n . in a lot of p r o d u c t s rigid s t o r a g e c o n d i t i o n s m a y be i m p o r t a n t e v e n t h o u g h a p r o d u c t may be s i t t i n g at t h e t i m e of i n s p e c t i o n in c o n d i t i o n s of c o r r e c t t e m p e r a t u r e s t o r a g e .p r o c e s s p r o d u c t s . O n e q u a l i t y a s s u r a n c e m a n a g e r told of c o n c e r n he had that s o m e of his a s s a y staff w e r e so r o u t i n e l y t e s t i n g a p r o d u c t at 99 per cent or 100 p e r c e n t or 101 p e r cent s t r e n g t h . t h o s e o f c o r p o r a t e c o m p l i a n c e staff a r e often a l m o s t u n l i m i t e d . S o t o follow p r o d u c t s t h r o u g h all s t a g e s w o u l d t a k e n i n e m o n t h s a n d this i s i m p o r t a n t b e c a u s e . W h i l e g o v e r n m e n t law e n f o r c e m e n t officers have limited p o w e r s . not t h e q u a l i t y o f y o u r d e e d s ' . G o v e r n m e n t inspectors do n o t h a v e t h e p o w e r to c o m e into a plant and ' s p i k e ' a p r o d u c t i o n run.t h r e e m o n t h s r a w m a t e r i a l . But a m a n a g e r w h o p l e a d e d diffused r e s p o n s i b i l i t y t o insiders w o u l d b e c r i t i c i s e d for not h a v i n g c o n t r o l o f h i s / h e r m a n a g e m e n t s y s t e m . G o v e r n m e n t i n s p e c t o r s ' e n s u r e t h e quality o f y o u r r e c o r d s .Unsafe manufacturing practices successfully p o r t r a y s diffused r e s p o n s i b i l i t y to t h e o u t s i d e r will be p r a i s e d by h i s / h e r s u p e r i o r s for t h e successful s m o k e s c r e e n . for e x a m p l e .t o follow a unit of p r o d u c t t h r o u g h each stage. w h e r e a s g o v e r n m e n t inspectors do not. I f not. t h e y j u s t p u t it d o w n as 101 per c e n t . S o m e industry i n f o r m a n t s a r g u e d t h a t t o d o s o effectively o n e n e e d s to c h e c k right t h r o u g h from the raw m a t e r i a l s to t h e final p r o d u c t s t a g e s . O n e of t h e g r e a t a d v a n t a g e s of i n t e r n a l i n s p e c t i o n s is that t h e internal i n s p e c t o r s h a v e a c c e s s t o p o w e r o v e r o r g a n i s a t i o n a l s y s t e m s for allocating responsibility. T h i s c a n ' t be d o n e in our plant by s o m e o n e c o m i n g from o u t s i d e b e c a u s e at all s t a g e s we have t h r e e m o n t h s i n v e n t o r y . ' The quality assurance m a n a g e r ' s solution was to periodically ' s p i k e ' s a m p l e s w i t h u n d e r s t r e n g t h p r o d u c t s t o see w h e t h e r his q u a l i t y c o n t r o l staff w o u l d pick u p t h e d e f e c t s . t h a t w h e n t h e y found a result of 80 p e r c e n t t h e y w o u l d a s s u m e t h a t t h e y had m a d e a m i s t a k e in t h e a s s a y . It is difficult to s e n d s o m e o n e into an u n f a m i l i a r factory to c h e c k q u a l i t y a s s u r a n c e . 139 .

s t e r i l e (for e x a m p l e . and s i m i l a r a c t i v i t i e s m a d e n e c e s s a r y b y n o n c o n f o r m a n c e p r o b l e m s .t h r o u g h defect p r e v e n t i o n . E x t r a o r d i n a r i l y k n o w l e d g e a b l e p e o p l e are r e q u i r e d for this difficult task. $328 million in 1 9 7 3 . 'Our compliance auditors g e n e r a l l y h a v e P h D s . t h e i n s p e c t o r m u s t certify e q u i p m e n t . $157 m i l l i o n in 1 9 7 1 . B e t w e e n 1967 and 1977. T h e y are s p e c i a l i s t s . T h a t is a g r e a t deal of m o n e y . T h e savings p r o j e c t e d by t h e c o m p t r o l l e r w e r e $30 million in 1968. T h e fact that o n e cont a m i n a n t h a s b e e n t e s t e d for is no a s s u r a n c e that o t h e r types of c o n t a m i n a n t s a r e not p r e s e n t . t h e fact that a final p r o d u c t is found to be sterile at o n e point in t i m e is no g u a r a n t e e t h a t lack of sterility will not d e v e l o p later. in m a n y w a y s . s e r v i c e after s e r v i c e . v a l i d a t e p r o c e s s e s . t h e m a n u f a c t u r i n g cost of q u a l i t y at I T T h a s b e e n r e d u c e d by an a m o u n t e q u i v a l e n t to 5 p e r c e n t of s a l e s . and in 1 9 7 6 .p r o c e s s t e s t s . w a r r a n t y .Unsafe manufacturing practices T e s t i n g t h e sterility o f a s a m p l e of end p r o d u c t gives no g u a r a n t e e t h a t all u n i t s in t h e lot are sterile or that s o m e might not b e c o m e n o n . t h o u g h . 1979: 12). H i g h e r m a n a g e m e n t might choose to ignore inspectors and s u p p o r t p r o d u c t i o n p e o p l e w h o w a n t t o save t i m e and m o n e y b y c u t t i n g c o r n e r s o n q u a l i t y . 1969: 6 8 ) . H o w e v e r . 140 . a n d e n s u r e t h a t p r o p e r i n s t r u c t i o n s and s u p e r v i s i o n are p r o v i d e d t o w o r k e r s . T h e p r o b l e m is. not g e n e r a l i s t s like t h e government people.$ 5 3 0 million! We had e l i m i n a t e d . t h a t t h e r e is no g u a r a n t e e t h a t this p o w e r will be used by the c o m p a n y . On this final c r i t e r i o n of k n o w l e d g e . W h a t costs m o n e y are t h e u n q u a l i t y t h i n g s . A s well a s c h e c k i n g final tests and i n . this w o u l d b e a n u n u s u a l c o u r s e for g o o d m a n a g e m e n t to follow. r e w o r k . It is t h e s c r a p . it is a l s o t y p i c a l l y t r u e t h a t g o v e r n m e n t i n s p e c t o r s do not c o m p a r e favourably with internal experts. E v e n with m o t o r v e h i c l e s . S i m i l a r l y . C r o s b y (1979) is r i g h t w h e n he says t h a t ' q u a l i t y is free'. i n s p e c t i o n . T h e cost of q u a l i t y is t h e e x p e n s e of d o i n g t h i n g s w r o n g . b e c a u s e o f a n i n a d e q u a t e p r e s e r v a t i v e s y s t e m ) : T h e q u a l i t y o f a m e d i c i n a l p r e p a r a t i o n i s built i n and not t e s t e d ' ( P a t e l .' A n u m b e r of a r g u m e n t s h a v e n o w b e e n a s s e m b l e d as to h o w . i n t e r n a l i n s p e c t o r s are b e t t e r able t o find out a b o u t law v i o l a t i o n s a n d are in a b e t t e r p o s i t i o n to h a n d out s a n c t i o n s which will pull i n t o line t h e p e o p l e r e s p o n s i b l e .t h e a c t i o n s t h a t i n v o l v e not d o i n g j o b s right the first t i m e . i t w o u l d not b e sufficient to c h e c k q u a l i t y by seeing if t h e car starts w h e n it e m e r g e s from t h e end o f t h e p r o d u c t i o n line. t e s t s .costs a m o u n t i n g to t h o s e dollar figures ( C r o s b y .

' " W e will discuss s o m e o f t h e s e s i t u a t i o n s later. B u t b y t h e t i m e t h e t e s t i n g has b e e n d o n e and t h e c o m p a n y notified o f t h e failure. T h e y look for d e v i a t i o n s from G M P s t a n d a r d s w h i c h h a v e n o force o f law. I n s p e c t i o n s b y h e a d q u a r t e r s ' c o m p l i a n c e staff w e r e t w i c e y e a r l y . I n spite o f t h i s . government inspectors remain of utmost importance. a n d t h a t t h e r e i s also m o r e h o p e for i n c r e a s i n g the p r o t e c t i o n to c o n s u m e r s in t h e future from s t r e n g t h e n i n g internal r a t h e r t h a n e x t e r n a l i n s p e c t i o n . T h i r d .W o r l d c o u n t r i e s h a v e n o i n s p e c t o r s . E x p a n d i n g g o v e r n m e n t inspection staffs is also of vital i m p o r t a n c e . " G M P s a r e simply v o l u n t a r y g u i d e l i n e s . A s i n B r i t a i n . It should be p o s s i b l e to p e r s u a d e s o m e c o m p a n i e s t o i n s t i t u t e m u c h t o u g h e r i n t e r n a l quality a u d i t i n g s y s t e m s on t h e g r o u n d s t h a t this is in their i n t e r e s t s . W h i l e t h e c o r p o r a t e i n s p e c t i o n s w e r e u n a n n o u n c e d . t h e r e w a s a day o r t w o f o r e w a r n i n g o f g o v e r n ment inspections. M a n y . t h e n . t h e r e will b e o c c a s i o n s w h e n r e p u t a b l e c o m p a n i e s find t h e m s e l v e s in a s i t u a t i o n w h e r e it is e c o n o m i c a l l y r a t i o n a l to t e m p o r a r i l y s u s p e n d t h e i r c o m m i t m e n t to quality and cut a part i c u l a r c o r n e r . I t i s simply b e i n g a r g u e d t h a t c o n s u m e r s get m o r e p r o t e c t i o n now from i n t e r n a l t h a n from g o v e r n m e n t i n s p e c t i o n s o f p h a r m a c e u t i c a l c o m p a n i e s . and n o r m a l l y u n d e r t a k e n b y t h r e e i n s p e c t o r s w h o s p e n t o v e r a w e e k i n t h e plant. T w o p e r cent o f a n t i b i o t i c s a m p l e s t e s t e d fail t o m e e t g o v e r n m e n t s t a n d a r d s . O n e of t h e A u s t r a l i a n s u b s i d i a r i e s I visited r e c e i v e d a n n u a l H e a l t h D e p a r t m e n t i n s p e c t i o n s of half a day to a d a y ' s d u r a t i o n by o n e i n s p e c t o r .Unsafe manufacturing practices T h e r e can b e little d o u b t t h a t m a n a g e m e n t w h i c h d o e s not have a s t r o n g c o m m i t m e n t t o t h e p r i n c i p l e o f c o n f o r m i t y t o quality stand a r d s is u n s o u n d m a n a g e m e n t . n o r any G M P regulations. A t t h e t i m e o f writing t h e r e are only t h r e e i n s p e c t o r s c o v e r i n g the c o n t i n e n t . H o w e v e r . T h e t a s k facing t h e small staff of s c i e n t i s t s w h o test s a m p l e s of d r u g b a t c h e s sent t o t h e A u s t r a l i a n N a t i o n a l Biological S t a n d a r d s L a b o r a t o r y i s similarly i m p o s s i b l e . In c o n s i d e r a b l e m e a s u r e . T h e r e will also be 'fly-by-night' c o m p a n i e s w h o aim for quick profits by o p e r a t i n g on t h e fringe of an i n d u s t r y until such t i m e as cons u m e r s b e c o m e a w a r e of their abysmal standards. p e r h a p s m o s t . For these reasons. t h e n u m b e r of A u s t r a l i a n H e a l t h D e p a r t m e n t G M P i n s p e c t o r s could b e d o u b l e d t o m o r r o w and still b e i n a d e q u a t e . O n e M e d i c a l D i r e c t o r d e s c r i b e d t h e i r i n s p e c t i o n s as ' b e n i g n affairs'. the conflict of i n t e r e s t b e t w e e n c o n s u m e r s and b u s i n e s s on the quality q u e s t i o n is illusory. 141 .

M o s t c o m m e n t a t o r s have a n u n r e a l i s t i c a p p r e c i a t i o n o f the e n o r m i t y o f t h e task facing r e g u l a t o r s and o f t h e practical impossibility o f t h e i r d o i n g a n y t h i n g a p p r o a c h i n g a n e x h a u s t i v e . W h e n finite r e s o u r c e s are a v a i l a b l e to deal w i t h an a l m o s t infinite p r o b l e m . P r o g r a m m e s o f g r e a t cost w h i c h deal with p r o b l e m s o f only m o d e r a t e i m p o r t a n c e m u s t b e p u s h e d aside for m a n y c h e a p e r p r o g r a m m e s t o deal w i t h l a r g e r n e e d s .e f f e c t i v e n e s s q u e s t i o n s is to do less t h a n the best to p r o t e c t t h e public.' T h e r e a s o n i n g s u p p o r t i n g this r e c o m m e n d a t i o n w o u l d u n d e r m i n e any effective F D A p r o g r a m t h a t m i g h t d e v e l o p .b a t c h certification.b y . t h e following s t a t e m e n t i n which T u r n e r ( 1 9 7 6 : 178-9) c o m m e n t s o n t h e K i n s l o w R e p o r t o n the FDA. C o n s i d e r . to fail to ask c o s t . Y e t so vast a r e the u n m e t r e s p o n s i b i l i t i e s of r e g u l a t o r y a g e n c i e s and so limited t h e r e s o u r c e s a v a i l a b l e t h a t c o s t .Unsafe manufacturing practices in t h e m a j o r i t y of c a s e s t h e b a t c h has a l r e a d y b e e n sold or partly sold. in fact. We a r e not sure if it is n e c e s s a r y today. T h i s s o u n d s like a c o m p e l l i n g a r g u m e n t . B a s i c a l l y . We h a v e s e e n from t h e case s t u d i e s i n this c h a p t e r that w e c a n n o t e x p e c t 142 . R E C O M M E N D A T I O N : 2 6 . t h o r o u g h j o b . only 0. Such cost-effectiveness problems must also loom large in d e c i d i n g h o w often p r o s e c u t i o n is used as a m e t h o d of c o n t r o l . t h a t it should be discontinued. T h e r e p o r t ' s g e n e r a l a t t i t u d e o n e n c o u r a g i n g c o m p l i a n c e i n place o f r e g u l a t i o n is i l l u s t r a t e d (in t h e d r u g s e c t i o n o f t h e r e p o r t ) by its r e c o m m e n d a t i o n s for c o n t r o l of insulin and a n t i b i o t i c s : in t h e 1969 fiscal y e a r . for e x a m p l e .e f f e c t i v e n e s s c o n s i d e r a t i o n s m u s t c o m e into p l a y . T h e Study G r o u p b e l i e v e s F D A may b e e x p e n d i n g m o r e r e s o u r c e s i n a s s u r i n g t h e quality o f a n t i b i o t i c s a n d insulin b y b a t c h certification t h a n t h e p r o b l e m d i c t a t e s .3 p e r cent of insulin s a m p l e s and 1 p e r c e n t of a n t i b i o t i c b a t c h e s w e r e rejected as not m e e t i n g specified s t a n d a r d s . C o n s i d e r a p r o g r a m o f statistical s a m p l i n g for a n t i b i o t i c s and insulin r a t h e r t h a n b a t c h . It h a s b e e n so effective. it says t h e r e is a p r o g r a m t h a t has b e e n effective in i n s u r i n g t h e q u a l i t y of all insulin and a n t i b i o t i c s that r e a c h t h e m a r k e t . T h e n e e d for this level of c o n t r o l w a s c e r t a i n l y n e c e s s a r y w h e n a n t i b i o t i c s w e r e first m a r k e t e d .

: Q u a l i t y a s s u r a n c e d i r e c t o r : N o . E v e n in w h a t w o u l d seem on t h e surface like t h e less technical matter o f t h e recent US prosecution of Morton-Norwich c o n c e r n i n g t h e sterility o f b a n d a g e s m a n u f a c t u r e d b y t h e c o m p a n y . W o u l d such a c o n c e n t r a t i o n of r e s o u r c e s on o n e case m a k e for c o s t . I t ' s not w o r t h it for such a small amount. In this case u n t a n g l i n g the c o m p l e x i t y w a s not assisted w h e n t h e j u d g e . T h e costs i n t i m e a n d m o n e y o f p r o s e c u t i o n s i n v o l v i n g highly t e c h n i c a l m a t t e r s can be e n o r m o u s . a c o n s i s t e n t policy of p r o s e c u t i o n of all s e r i o u s G M P offences is a policy w h i c h no g o v e r n m e n t c o u l d afford. Do companies ever contest the fines in court! J. T h e p r e s s u r e might b e particularly strong w h e n certain major c u s t o m e r s are threatening to 143 . O n e t y p e o f c i r c u m s t a n c e is w h e r e a p r o d u c t is in short supply and m a j o r c u s t o m e r s are c o m p l a i n i n g t o t h e m a r k e t i n g m a n a g e r b e c a u s e they c a n n o t get s u p p l i e s .5.Unsafe manufacturing practices G M P p r o s e c u t i o n s t o b e s t r a i g h t f o r w a r d m a t t e r s . T h i s s t a t e m e n t s h o u l d be qualified by p o i n t i n g o u t t h a t i n M e x i c o p r o s e c u t i o n s for G M P offences are fairly r o u t i n e .000 p e s o s ) t h a t the fines a r e effectively a licence fee to v i o l a t e t h e law. 1 2 O n e c o u l d i m a g i n e t h a t if a p r o s e c u t i o n o f a large p h a r m a c e u t i c a l c o m p a n y w e r e e v e r t o t a k e place i n A u s t r a l i a .B. b u t t h e p e n a l t i e s a r e so low (5 . sitting a l o n e . t h e e n t i r e A u s t r a l i a n g o v e r n m e n t G M P i n s p e c t o r i a l force could b e tied u p for m o n t h s . T h e y run t h e risk. The place of quality control in the organisation In t h e last s e c t i o n it w a s p o i n t e d o u t t h a t in any o r g a n i s a t i o n t h e r e are occasions w h e n it is economically rational to temporarily s u s p e n d c o m m i t m e n t t o quality s t a n d a r d s . I f t h e q u a l i t y c o n t r o l m a n a g e r fails to pass a major b a t c h of t h e p r o d u c t b e c a u s e it falls j u s t s h o r t of specifications t h e quality c o n t r o l m a n a g e r m i g h t c o m e u n d e r p r e s s u r e from t h e m a r k e t i n g m a n a g e r t o p a s s t h e b a t c h a s ' n e a r e n o u g h ' . accid e n t a l l y sent y e a r s of his n o t e s on t h e trial to t h e d u m p . O n e M e x i c a n pharmaceutical executive explained: Quality assurance d i r e c t o r : A lot of c o m p a n i e s k n o w i n g l y violate t h e law and pay t h e fine every n o w and t h e n .e f f e c t i v e e n f o r c e m e n t ? P u t s i m p l y . we saw a trial w h i c h lasted t h r e e y e a r s .

People b e c o m e corporation presidents in part because t h e y e x h i b i t a m o d i c u m o f c a u t i o n . Effectively t h e n . In a t r a n s n a t i o n a l c o r p o r a t i o n . have b e e n s e n s i t i v e to t h i s p r o b l e m . No m a t t e r h o w low t h e c h a n c e s of t h i s w e r e p e r c e i v e d to b e . T h e y h a v e an a r r a n g e m e n t w h e r e b y a q u a l i t y c o n t r o l d e c i s i o n can only be o v e r r u l e d by the p r e s i d e n t . it w o u l d be a foolish risk for a c o r p o r a t i o n p r e s i d e n t t o t a k e for t h e s a k e o f o n e b a t c h o f d r u g s . to the president it is a m i n o r m a t t e r . not with perf o r m a n c e i n a s s i s t i n g t h e goals o f t h e s u b s i d i a r y . such a n o r g a n i s a t i o n a l s t r u c t u r e p r e c l u d e s any p o s s i b i l i t y o f quality c o n t r o l b e i n g formally overruled. A failed b a t c h w o u l d place it in j e o p a r d y of not m e e t i n g t h a t t a r g e t . t h e u l t i m a t e p r o t e c t i o n is for quality staff ( a n d all o t h e r t y p e s of a u d i t i n g staff) to have a direct r e p o r t i n g r e l a t i o n s h i p to a h e a d q u a r t e r s c o m p l i a n c e g r o u p a n d only a d o t t e d line r e l a t i o n s h i p w i t h local m a n a g e m e n t .u n i t .Unsafe manufacturing practices s w i t c h to a c o m p e t i n g b r a n d u n l e s s c o n t i n u i t y of s u p p l i e s is g u a r a n teed. 3 O t h e r c o m p a n i e s . A n o t h e r s i t u a t i o n i s o n e i n w h i c h a n o r g a n i s a t i o n a l s u b . sees it as in its i n t e r e s t s to put the quality control m a n a g e r under pressure to reverse a d e c i s i o n . Q u a l i t y c o n t r o l can i g n o r e an i n s t r u c t i o n from t h e c h a i r m a n to cut c o r n e r s on q u a l i t y in v i o l a t i o n of c o r p o r a t e policies. I m a g i n e the c o n s e q u e n c e s for a p r e s i d e n t o f s e r i o u s injuries t o c o n s u m e r s b e c a u s e s/he o v e r r u l e d i n w r i t i n g a q u a l i t y c o n t r o l d e c i s i o n . T h e q u a l i t y c o n t r o l d i r e c t o r m a k e s a n i n d e p e n d e n t w r i t t e n decision o n e a c h b a t c h w h i c h s/he duly signs. but n o t n e c e s s a r i l y t h e w h o l e o r g a n i s a t i o n . A m a n u f a c t u r i n g plant might h a v e a p r o d u c t i o n t a r g e t set by h e a d q u a r t e r s . T h e m a t t e r can be r e p o r t e d over the head o f t h e chairman to headquarters. W h i l e t h e d e s t r u c t i o n of a b a t c h m i g h t be a m a j o r a g g r a v a t i o n to t h e p h a r m a ceuticals m a r k e t i n g or manufacturing m a n a g e r . 144 . I f t h e p r e s i d e n t w i s h e s t o o v e r r u l e a q u a l i t y c o n t r o l d e c i s i o n s/he m u s t do so in writing o v e r h i s / h e r s i g n a t u r e . ' F r o m t h e p u b l i c i n t e r e s t point o f view the s o l u t i o n to this p r o b l e m is to s t r u c t u r e t h e o r g a n i s a t i o n so that the q u a l i t y c o n t r o l m a n a g e r is i n s u l a t e d from p r e s s u r e from m a n u f a c t u r i n g o r m a r k e t i n g . e s p e c i a l l y A m e r i c a n t r a n s n a t i o n a l s . I n M e r c k ' s A u s t r a l i a n s u b s i d i a r y this i s t a k e n e v e n further. T h i s c e r t a i n l y d o e s not h a p p e n i n m a n y p h a r m a c e u t i c a l c o m p a n i e s w h e r e quality c o n t r o l m a n a g e r s a n s w e r to the manufacturing m a n a g e r or to an executive whose primary r e s p o n s i b i l i t y is for m a r k e t i n g and m a n u f a c t u r i n g . T h e i r c a r e e r line is t h e n b o u n d u p with p e r f o r m a n c e i n e n s u r i n g c o m p l i a n c e .

T h e d a n g e r s p r e s e n t h e r e are well i l l u s t r a t e d by t h e following e x c h a n g e with a M e x i c a n plant manager.c h a r g e w h e n I w a s d i r e c t o r of quality a s s u r a n c e . h e a d q u a r t e r s c o m p l i a n c e staff d o n o t g o o u t t o t h e s u b s i d i a r i e s t o a u d i t c o m p l i a n c e w i t h c o r p o r a t e s t a n d a r d s .p r e s i d e n t w h o is similarly u n a b l e to issue d i r e c t i v e s to a m a n u f a c t u r i n g p l a n t . I will do w h a t he s u g g e s t s if it is reasonable. H e a d q u a r t e r s has a c o r p o r a t e c o m p l i a n c e g r o u p with a small staff of six. C o n s i d e r t h e following A m e r i c a n t r a n s n a t i o n a l i n which the corp o r a t e c o m p l i a n c e p o s i t i o n h a s very little c l o u t . t h e n I d o n ' t do it. J.Unsafe manufacturing practices I n a d d i t i o n t o e n s u r i n g t h a t quality m a n a g e r s d o not r e p o r t t o m a r k e t i n g o r p r o d u c t i o n m a n a g e r s . O t h e r s u b s i d i a r i e s a r e g i v e n a u t o n o m y to set their own s t a n d a r d s w i t h i n t h e limits set b y b r o a d c o m p a n y g u i d e l i n e s . t h e f o r m e r must b e i n s u l a t e d from any influence by t h e latter o v e r t h e i r future p r o m o t i o n . Plant manager: T h e q u a l i t y a s s u r a n c e d i r e c t o r d o c s not r e p o r t to m e . o r p e r f o r m a n c e r e p o r t s . O b v i o u s l y the e x t e n t t o w h i c h p e o p l e w i t h r e s p o n s i b i l i t y for quality s t a n d a r d s h a v e o r g a n i s a t i o n a l c l o u t is a c o n t i n u u m . A p a r t from C a n a d a . If he d o e s t h a t and I do not a g r e e with h i m . He used to be my s e c o n d . If he says I should do s o m e t h i n g a n d I d o n ' t w a n t to do it. b e i n g u n a b l e to instruct a manufacturing plant to do anything.i n . but we h a v e a good w o r k i n g r e l a t i o n s h i p . B. H e has n o a u t h o r i t y to do t h a t . What if he wants to stop the production line on quality grounds that you think are not right? H e c a n n o t stop p r o d u c t i o n . E v e n with r e s p e c t t o the 145 .that Social Security n e e d s the product quickly. He reports to a t e c h n i c a l affairs v i c e . T h e d i r e c t o r has only a n a d v i s o r y r o l e . T h e i n t e r n a t i o n a l influence of t h e c o m p l i a n c e g r o u p e x t e n d s only t o C a n a d a . or whatever r e a s o n .: Plant manager: H e r e we h a v e a s i t u a t i o n w h e r e a m u c h m o r e powerful m a n a g e r ' s d e f i n i t i o n o f ' r e a s o n a b l e n e s s ' will a l w a y s hold sway over t h a t of an o r g a n i s a t i o n a l l y w e a k quality a s s u r a n c e d i r e c t o r . He can w i t h h o l d a p p r o v a l o f t h e final p r o d u c t . T h e c o m p l i a n c e d i r e c t o r is a r e l a t i v e l y j u n i o r p e r s o n with little e x p e r i e n c e w i t h i n t h e c o m p a n y . salary i n c r e m e n t s . t h e n I can g o t o t h e g e n e r a l m a n a g e r a n d s h o w w h y he s h o u l d be o v e r r u l e d .

S o l u t i o n s m u s t b e n e g o t i a t e d w i t h t h e p r o d u c t i o n m a n a g e r t h e n and t h e r e .Unsafe manufacturing practices c o m p l i a n c e g r o u p ' s influence i n C a n a d a . T h e i n f o r m a n t .p r e s i d e n t for i n t e r n a t i o n a l r e g u l a t o r y affairs ( a m o r e senior e x e c u t i v e t h a n the c o m p l i a n c e d i r e c t o r ) w a s critical: " W e ' v e got t o teach [the c o m p l i a n c e d i r e c t o r ] t h a t h e c a n ' t try t o i m p o s e U S s t a n d a r d s o n C a n a d a . It's not r e a l l y such a big p r o b l e m b e c a u s e t h e y will all have g o n e in one bin. In a d d i t i o n t o t h e b i g g e r d e c i s i o n s a b o u t a c c e p t i n g o r rejecting w h o l e b a t c h e s . O r g a n i s a t i o n a l clout is crucial at all levels of quality a s s u r a n c e . I n d e e d it is so i n d e p e n d e n t as to be i m p o t e n t . t h e e x e c u t i v e v i c e .p r e s i d e n t . t h e v i c e . If he d e c i d e s t h e r e is a q u a l i t y p r o b l e m i n t h e s a m p l e t h e n e v e r y pill p r o d u c e d o n e a c h side of t a k i n g t h a t o n e s a m p l e will have to be r e t r i e v e d . it's t h e art o f c o m p r o m i s e with the p r o d u c t i o n m a n a g e r .' In ' t r y i n g to m o v e him t o w a r d s y o u r s t a n d a r d s a bit'. T h e goal i s not t o audit c o n f o r m a n c e w i t h i n d e p e n d e n t c o r p o r a t e s t a n d a r d s . or w h e t h e r he w a n t s to anger the p r o d u c t i o n manager by stopping t h e line until t h e p r o b l e m is s o r t e d out. H e ' s g o t t o u n d e r s t a n d that w e c a n ' t spend all that m o n e y t o d o u p t h e r e w h a t t h e F D A w a n t s u s t o d o d o w n h e r e . M o r e will be said later on t h e p r o f e s s i o n a l i s m of quality c o n t r o l staff. c o n t i n u e d : "My quality c o n t r o l d i r e c t o r i s t o o a c a d e m i c . but t o p r o v i d e m a n u f a c t u r ing p l a n t s w i t h a dry run to p r e p a r e t h e m for F D A i n s p e c t i o n s .s i t e q u a l i t y c o n t r o l m a n a g e r s must m a k e and influence many smaller decisions T h e q u a l i t y c o n t r o l d i r e c t o r m a k e s a lot of little d e c i s i o n s e v e r y d a y w h i c h c a n b r i n g him into conflict with the p r o d u c t i o n m a n a g e r . ' W i t h i n the U n i t e d States the inspections u n d e r t a k e n by the compliance g r o u p a r e m o c k F D A i n s p e c t i o n s . In s h o r t . training a n d e x p e r i e n c e a r e i m p o r t a n t for quality c o n t r o l p e r s o n n e l . t h e e x i s t e n c e of t h e c o m p l i a n c e g r o u p fulfils the public r e l a t i o n s function of e n a b l i n g t h e c o m p a n y to claim t h a t it has an i n d e p e n d e n t g r o u p a u d i t i n g quality c o n t r o l staff i n t h e field. H e h a s n ' t realized yet that it's not p u r e s c i e n c e o u t t h e r e . seniority.trying to m o v e him t o w a r d s y o u r s t a n d a r d s a bit. 146 . this c o m p a n y ' s p o l i c y t h a t t h e q u a l i t y c o n t r o l d i r e c t o r ' s d e c i s i o n can only be overr u l e d by t h e p r e s i d e n t is not of g r e a t c o n s e q u e n c e . If a s a m p l e o f t e n pills is t e s t e d from the line every thirty m i n u t e s and o n e of t h o s e pills is o u t s i d e specs he has to d e c i d e w h e t h e r t h a t o n e pill w a s an o d d i t y or t h e result of his m i s t a k e . o n . B e c a u s e o f t h e i m m e d i a c y o f such d e c i s i o n s .

B u t t h e c o m p a n y has s t a n d a r d o p e r a t i n g p r o c e d u r e s c o n c e r n i n g a p o s s i b l e recall. S i m i l a r l y . w h o w a s formerly a quality c o n t r o l d i r e c t o r w i t h a n o t h e r t r a n s n a t i o n a l . and i n c r e a s i n g l y a r e d o i n g s o . s h o w s h o w effective g o v e r n m e n t i n t e r v e n t i o n in t h e o r g a n i s a t i o n a l form of a c o m p a n y is easier said t h a n d o n e . T h e p r o c e d u r e s specify t h a t t h e quality c o n t r o l d i r e c t o r m u s t c o n s u l t c e r t a i n p e o p l e a b o u t his d e c i s i o n . H e n c e . t h a t is. . I w o u l d n ' t tell an F D A i n s p e c t o r t h i s . If y o u l o o k at t h e o r g a n i z a t i o n a l c h a r t of m a n y c o m p a n i e s you will see t h a t t h e q u a l i t y c o n t r o l d i r e c t o r r e p o r t s directly to t h e p r e s i d e n t . t h e quality c o n t r o l d i r e c t o r d o e s m a k e t h e final d e c i s i o n to recall a p r o d u c t a n d only t h e p r e s i d e n t can o v e r r u l e him. A m e e t i n g of m a y b e five p e o p l e will t a k e p l a c e a n d t h e y will m a k e a r e c o m m e n d a t i o n that the quality c o n t r o l d i r e c t o r w o u l d be foolish not to follow . T h e y h a v e m o s t say. O t h e r g o v e r n m e n t s have n o such p o w e r s . b u t I'll tell you [If only all i n f o r m a n t s had s h o w n m e such s o l i c i t u d e . T h e fact t h a t G M P i n s p e c t i o n t e a m s from c o r p o r a t e h e a d q u a r t e r s can p r o b a b l y d o a b e t t e r j o b t h a n g o v e r n m e n t i n s p e c t o r s i m p l i e s t h a t it is g o o d policy for g o v e r n m e n t to r e q u i r e such i n t e r n a l i n s p e c t i o n s and p e r h a p s c o n c e n t r a t e their efforts m o r e on a u d i t i n g t h e a u d i t o r s . t h e fact t h a t a quality control m a n a g e r answering to production or marketing is b o u n d to be c o m p r o m i s e d from t i m e to t i m e i m p l i e s t h a t g o v e r n m e n t s s h o u l d p r o h i b i t such o r g a n i s a t i o n a l s t r u c t u r e s . and w h e n he is told that it's t h e p r e s i d e n t he g o e s a w a y p l e a s e d . I n d e e d . I h a v e b e e n p r e s s u r e d by t h e l a w y e r s n o t to m a k e a recall in this s i t u a t i o n and it w a s t o u g h .Unsafe manufacturing practices T h e a b o v e has p r a c t i c a l i m p l i c a t i o n s for g o v e r n m e n t a c t i o n t o p r o t e c t p a t i e n t s . T h e F D A i n s p e c t o r c o m e s a r o u n d and asks w h o t h e q u a l i t y c o n t r o l d i r e c t o r r e p o r t s t o .s o m e o f t h e m m o r e senior t h a n h i m . m a n y t r a n s n a t i o n a l s w h i c h s c r u p u l o u s l y s t r u c t u r e their A m e r i c a n o r g a n i s a t i o n s o a s t o i n s u l a t e q u a l i t y c o n t r o l m a n a g e r s from e c o n o m i c p r e s s u r e s d o j u s t t h e o p p o s i t e i n o t h e r p a r t s o f t h e w o r l d . . . or m o s t of t h e m . a t least with large c o m p a n i e s . B u t they b e a r n o n e o f t h e r e s p o n s i b i l i t y . T h a t ' s h o r s e s h i t . ] O k a y . G o v e r n m e n t i n s p e c t o r s m u s t look b e l o w the surface t o avoid b e i n g s e d u c e d b y a p p e a r a n c e s . T h e r e will a l w a y s b e s o m e l a w y e r s o n t h e s e c o m m i t t e e s . T h e quality c o n t r o l d i r e c t o r d o e s t h a t .if he w a n t s to k e e p his j o b i n t h e long t e r m . T h e y c o m e at you with h e a r t s and 147 . T h e following s t a t e m e n t b y a r e g u l a t o r y affairs d i r e c t o r . F D A c o m p l i a n c e staff a r e a b l e t o d o this u n d e r G M P r e g u l a t i o n s .

A saving f e a t u r e of a recall d e c i s i o n for e x e c u t i v e s w h o are c o n c e r n e d for t h e i r skins is t h a t t h e r e are an infinity of w a y s t h a t integrity can be c o m p r o m i s e d i n v a r y i n g d e g r e e s . s u c h as in t h e a b o v e s t a t e m e n t . 148 . we have m a d e a recent i m p o r t a n t change in the formulation of our X Y Z tablets. Overlying the organisation chart is an operational structure. In t h e s e t o p .Unsafe manufacturing practices flowers.l e v e l c r i s e s s e l f . H o p e f u l l y it can be seen as in t h e i n t e r e s t s of b o t h the r e g u l a t o r s and t o p m a n a g e m e n t to put in place m a n a g e m e n t systems which ensure t h a t i n t e g r i t y d e c i s i o n s are m a d e i n all o f t h e m o r e r o u t i n e t y p e s o f c r i s e s w h i c h t a k e p l a c e a t t h e l o w e r levels o f t h e o r g a n i s a t i o n . All n e w X Y Z t a b l e t s . D e a r P h a r m a c i s t : I n k e e p i n g with o u r policy o f p r o v i d i n g you w i t h only t h e h i g h e s t q u a l i t y p h a r m a c e u t i c a l s . is a very m a j o r decision in which t o p m a n a g e m e n t is b o u n d to b e c o m e i n v o l v e d . o r 100's. 5 0 ' s . w h e t h e r 3 0 ' s . t h e n it is o b v i o u s l y easy e n o u g h for g o v e r n m e n t i n s p e c t o r s to ask to see t h e r e l e v a n t S O P s .a p p e a l i n g b l u e and w h i t e q u a l i t y seal in a d d i t i o n to t h e required labelling. often f o r m a l i s e d by S O P s . P l e a s e r e t u r n all old s t o c k s o f X Y Z t a b l e t s for i m m e d i a t e c r e d i t or replacement.r e g u l a t i o n b r e a k s down. t h e y say. If t h e o p e r a t i o n a l s t r u c t u r e is f o r m a l i s e d .r e c a l l d e c i s i o n is t h e classic i l l u s t r a t i o n in t h e p h a r m a c e u t i c a l i n d u s t r y of a d e c i s i o n with such d r a m a t i c financial implic a t i o n s that top m a n a g e m e n t might even have to choose between m a k i n g an i n t e g r i t y d e c i s i o n and k e e p i n g t h e i r j o b s . P e r h a p s this o v e r s t a t e s the p r o b l e m a little. I f n o t . T h i s has r e s u l t e d i n g r e a t e r stability o f t h e active i n g r e d i e n t s and r e d u c e d t h e h a z a r d of side effects. b e a r the n e w e y e . Fifty j o b s will g o ' . t h e n g o v e r n m e n t must e i t h e r r e q u i r e t h e S O P s to be w r i t t e n or be satisfied with an i n t e r v e n t i o n of limited e f f e c t i v e n e s s t o i n s u l a t e quality c o n t r o l m a n a g e r s . P a t e l ( 1 9 6 9 : 166-7) gives the f o l l o w i n g e x a m p l e o f a recall n o t i c e w h i c h did not give an i n d i c a t i o n o f t h e dangerous character ofthe goods to be returned. ' T h e c o m p a n y will lose $5 million if you do this. Y o u will r e c o g n i z e the n e w i m p r o v e d p r o d u c t b y t h e c h a n g e o f design i n t h e labels. It is a large step r e m o v e d from a d e c i s i o n to fail a b a t c h still sitting in t h e factory. because a product-recall decision. T h e d r u g . B u t m o s t c o m p a n i e s will w a n t t o k e e p o p e n t h e o p t i o n o f r e v e r s i n g their n o r m a l c o m m i t m e n t t o integrity w h e n $ 5 million could b e k n o c k e d off t h e i r profits.

A c o m p a n y in w h i c h quality c o n t r o l m a n a g e r s are afraid to r e p o r t h o n e s t m i s t a k e s t o s e n i o r m a n a g e m e n t will lose m o n e y t h r o u g h t u r n i n g m i n o r c r i s e s into m a j o r o n e s .p r e s i d e n t s w h o d o not forgive t h e m i s t a k e s o f c o m p e t e n t p e o p l e m a k e a d a n g e r o u s bed t o lie in. A n d u s u a l l y in t h e s e s i t u a t i o n s you can after t h e e v e n t see h o w you c o u l d h a v e p i c k e d it up earlier.p r e s i d e n t t h a t t h e c o m p a n y will h a v e to lose a lot of m o n e y by having p r o d u c t s b r o u g h t back from t h e d o c k . a difference b e t w e e n t h e n e e d for a c o m m i t m e n t t o i n t e g r i t y and q u a l i t y a t o p e r a t i n g levels o f t h e o r g a n i s a t i o n and t h e n e e d for t o p m a n a g e m e n t t o b e able t o s u s p e n d t h a t c o m m i t m e n t for d e c i s i o n s of m a j o r financial i m p o r t . O b v i o u s l y a n i n c o m p e t e n t quality c o n t r o l m a n a g e r will m o r e often e n d u p i n ' t h a t u n c o m f o r t a b l e s i t u a t i o n ' and t h e r e f o r e b e m o r e t e m p t e d t o c o v e r u p t h e m i s t a k e . c o m p e t e n c e a n d t r a i n i n g o f q u a l i t y c o n t r o l staff t o e q u i p t h e m t o resist p r e s s u r e s to c o m p r o m i s e their standards was emphasised. We all try to avoid it. No quality c o n t r o l p e r s o n w a n t s t o g o i n and e x p l a i n t o t h e v i c e . it is this difference w h i c h is e s s e n t i a l for u n d e r s t a n d i n g the limits of self-regulation. so t h e m i s t a k e s of c o m p e t e n t m a n a g e r s will b e f o r g i v e n . As will be a r g u e d in C h a p t e r 9. but it s o m e t i m e s h a p p e n s that we only d i s c o v e r t h a t a b a t c h is unsafe w h e n it is on t h e d o c k . e x p e c i a l l y w h e n it is the fault of q u a l i t y c o n t r o l t h a t it w a s n ' t p i c k e d up earlier. C r o s b y (1979: 84) has e x p r e s s e d this c o m m o n sense forcefully: 149 . Just a s the j u d g m e n t o f c o m p e t e n t q u a l i t y c o n t r o l m a n a g e r s will b e h e e d e d i n crises w h i l e t h a t of i n c o m p e t e n t s will be i g n o r e d .e s t e e m to face t h e m u s i c w h e n e v e r integrity d e m a n d s .Unsafe manufacturing practices The integrity decision here is obviously to prominently mark I M P O R T A N T : D R U G R E C A L L ' o n b o t h t h e e n v e l o p e and l e t t e r . t h e n . A c o m p e t e n t quality c o n t r o l m a n a g e r w h o r a r e l y slips up is m o r e likely to h a v e t h e s e l f . No o n e w a n t s to be in that uncomfortable situation. the importance of seniority. C e r t a i n l y v i c e . T h e r e is. The importance of c o m p e t e n c e is e v e n m o r e d r a m a t i c a l l y i l l u s t r a t e d by a p a r t i c u l a r k i n d of c i r c u m s t a n c e w h i c h w a s a s o u r c e of a n g u i s h to several quality control managers interviewed.h e a d of a n o t i c e w h i c h fully d i s c l o s e s t h e facts. Towards professionalism in quality control In the previous section.

The quality control m a n a g e r s in a pharmaceutical c o m p a n y r e a l l y h a v e only o n e m a s t e r o n e t h i c a l s t a n d a r d s i n their w o r k . P r o f e s s i o n a l a s s o c i a t i o n s are n o t n o t e d for t h e s t r i n g e n c y w i t h w h i c h t h e y enforce their ethical c o d e s . H a r d l y any o f t h o s e t h i n g s o c c u r r e d because o f t h e original incident. N o t all difficult s i t u a t i o n s which a q u a l i t y c o n t r o l m a n a g e r must face c a n be c o v e r e d by r e g u l a t i o n s . Society recognises law. but it helps. real or p o t e n t i a l . G r a d u a t e s would h o p e f u l l y be socialised into c e r t a i n i d e a l s of scientific indep e n d e n c e .Unsafe manufacturing practices D o n ' t b e u n n e r v e d b y all t h e h o r r o r s t o r i e s a b o u t i r r a t i o n a l j u r y v e r d i c t s a n d t h e i n t r i c a c i e s o f t h e law. T h e o t h e r r a t i o n a l e for q u a l i t y c o n t r o l being g r a n t e d p r o f e s s i o n a l s t a t u s c o n c e r n s t h e kind o f p r o f e s s i o n a l s o c i a l i s a t i o n w h i c h might go on w i t h a u n i v e r s i t y d e g r e e in q u a l i t y c o n t r o l . m e d i c i n e . e n g i n e e r i n g . They occurred because s o m e o n e w h o had c o n t r i b u t e d t o t h e p r o b l e m d i d n ' t h a v e e n o u g h s e n s e or c o u r a g e to face up to it early and get a r e a s o n a b l e settlement. So t h e l a w y e r can r e m o n s t r a t e : 'If I w e r e to do t h a t . B u t t h e m o r e i m p o r t a n t value o f s t a n d a r d s o f professional e t h i c s i s t h a t t h e y give t h e e m p l o y e e w h o w a n t s t o act w i t h integrity a source of support against the superior p o w e r o f t h e employer. W h y s h o u l d not quality c o n t r o l be r e c o g n i s e d as a p r o f e s s i o n ? P r o f e s s i o n a l i s m is no g u a r a n t e e of i n t e g r i t y . I could be struck off by t h e B a r A s s o c i a t i o n . T h e y must a n s w e r to t h e i r p r o f e s s i o n a l a s s o c i a t i o n s as well . a n d t h a t w o u l d be good for n e i t h e r me n o r t h e c o m p a n y .g r e y s i t u a t i o n s they m u s t confront. o n e is e n c o u r a g e d by Q u i n n e y ' s (1963) classic study in which he f o u n d t h a t p h a r m a c i s t s w i t h a p r o f e s s i o n a l i d e o l o g y w e r e less likely to violate laws regulating their work than were pharmacists with a b u s i n e s s i d e o l o g y . I n t h i s . and t h a t i s t h e i r e m p l o y e r . Q u a l i t y c o n t r o l p e o p l e m u s t be s o c i a l i s e d in a p r o f e s s i o n a l c u l t u r e w h i c h e q u i p s t h e m to deal with p r o b i t y w i t h t h e m a n y s h a d e s . I h a v e n e v e r seen a p r o d u c t safety p r o b l e m .o f . Of c o u r s e it is difficult not to be cynical a b o u t h o w m u c h p r o t e c t i o n t h e p u b l i c i s afforded b y c o m m i t m e n t t o the 150 .the bar associa t i o n o r t h e m e d i c a l a s s o c i a t i o n . t h a t d i d n ' t get itself h a n d l e d with a n a b s o l u t e m i n i m u m o f e x p e n s e w h e n i t w a s faced m a t u r e l y . L a w y e r s and p h y s i c i a n s i n t h e s a m e c o m p a n i e s h a v e t w o m a s t e r s o n s t a n d a r d s o f e t h i c s . o f p u t t i n g p r o f e s s i o n a l s t a n d a r d s a h e a d o f profit. ' T h e quality c o n t r o l m a n a g e r has n o such recourse. p h a r m a c y . as prof e s s i o n s .

G o o d p e o p l e also l e a v e b e c a u s e t h e y get fed up w i t h a w o r k s i t u a t i o n in w h i c h s o m e o n e i s a l w a y s l o o k i n g o v e r y o u r s h o u l d e r . In short. M a n y o p e r a t i o n s c a n n o t b e d o n e w i t h o u t t h e direct s u p e r v i s i o n of a s e c o n d p e r s o n w h o signs off to i n d i c a t e t h a t t h e o p e r a t i o n was c o m p l e t e d as recorded. R e g u l a t i o n t h e r e f o r e has a social cost on t h e quality o f t h e lives of these people. t h e p r o f e s s i o n a l i s a t i o n o f o c c u p a t i o n a l safety would be a d e s i r a b l e d e v e l o p m e n t . H e r e c e r t a i n social costs of G M P r e g u l a t i o n will b e d i s c u s s e d . ' a s o n e e x e c u t i v e e x p l a i n e d . It is n o t his r e s p o n s i b i l i t y . M o s t t h i n g s t h e y do a r e limited by a r u l e . T h e a l i e n a t i o n e n g e n d e r e d can also r e b o u n d o n t h e effectiveness of r e g u l a t i o n . t h e r e is a d a n g e r in m a k i n g w o r k e r s into rulefollowing a u t o m a t o n s rather than responsible. b u t it is a m e a s u r e w h i c h has m e r i t . N e v e r t h e l e s s . C o m p a r e d with o t h e r w o r k s i t u a t i o n s . G i v i n g q u a l i t y c o n t r o l p r o f e s s i o n a l s t a t u s and a p r o f e s s i o n a l i d e o l o g y is no p a n a c e a . it is t r u e t h a t it would be i m p o s s i b l e to w r i t e r u l e s to c o v e r all t h e difficult ethical j u d g m e n t s w h i c h d o c t o r s m u s t face. The social costs of over-regulation T h e financial c o s t s o f r e g u l a t i o n g e n e r a l l y i n t h e p h a r m a c e u t i c a l i n d u s t r y will be c o n s i d e r e d in C h a p t e r 9. c h e c k i n g y o u r every action. M o s t m u s t be r e c o r d e d . concerned people w h o feel t h a t t h e e x e r c i s e of their p e r s o n a l d i s c r e t i o n m a k e s a d i f f e r e n c e . if a w o r k e r h a p p e n e d to n o t i c e a red pill in a b o t t l e full of g r e e n o n e s he w o u l d r e p o r t it. p e r h a p s . pharmaceutical w o r k e r s h a v e little a u t o n o m y and often a r e e x c e e d i n g l y a l i e n a t e d . T h e m i n u t i a e of r e g u l a t i o n has r e a c h e d its height in t h e U n i t e d S t a t e s . a u t o m a t i o n h o l d s o u t s o m e h o p e o f partially 151 . p e o p l e w o r k i n g with d r u g s have relatively little disc r e t i o n . f u r t h e r m o r e . T h e only p r o t e c t i o n w h i c h p a t i e n t s can rely on in m o s t s i t u a t i o n s is t h e p r o f e s s i o n a l e t h i c s o f t h e d o c t o r . O n e q u a l i t y c o n t r o l e x e c u t i v e w h o had e x p e r i e n c e b o t h i n t h e A u s t r a l i a n and A m e r i c a n w o r k e n v i r o n m e n t d e s c r i b e d t h e p r o b l e m in t h e following t e r m s : 'In A u s t r a l i a . T h e p r o b l e m is. t h a t t h e latter k i n d s o f p e o p l e q u i c k l y m o v e o u t o f t h e j o b . ' G o o d p e o p l e get fed u p w i t h b e i n g slaves t o r u l e s . I n t h e U S t h e p h a r m a c e u t i c a l w o r k e r w o u l d j u s t let i t g o . F o r t h e s a m e r e a s o n .Unsafe manufacturing practices i d e o l o g y of a p r o f e s s i o n . I r o n i c a l l y . T h i s h a p p e n e d o n c e w h e n I w a s w o r k i n g i n A u s t r a l i a . ' W h e t h e r or not this is an o v e r s t a t e m e n t (it p r o b a b l y i s ) .

" A b b o t t likes t o k e e p its w o r k e r s ' p a r t i c i p a t i o n within r e a s o n a b l e l i m i t s . T h e y b e c o m e a g g r a v a t e d w h e n forced t o c o m p l y w i t h r e g u l a t i o n s w h i c h seem petty t o t h e m . this h a p p e n s in s o m e factories a l r e a d y . M a y b e he w a s t r y i n g to get back at [the c o m p a n y ] . A l i e n a t e d w o r k e r s are c a r e l e s s w o r k e r s . In a small w a y .h o w " ' ( M o d y . B u t t h e r e a r e limits t o w h i c h h u m a n c h e c k s can b e r e p l a c e d with m e c h a n i c a l surveillance. for e x a m p l e . W o r k e r s m u s t b e p e r s u a d e d a s t o t h e d e s i r a b i l i t y o f rule-following a n d d o c u m e n t a t i o n . but t h e c o m p a n y did not notify F D A for fear of a d v e r s e p u b l i c i t y a r i s i n g from his p r o s e c u t i o n . F o r their second s u g g e s t i o n t h e y a r e g i v e n a g r e e n s t o n e for the p i n . A n o t h e r c o n s e q u e n c e o f a l i e n a t i o n i s industrial s a b o t a g e ( D u b o i s . R u l e s which g e n u i n e l y a r e petty should b e e l i m i n a t e d . a n d s o o n . W h e n h e a d q u a r t e r staff saw o n t h e n o t i c e b o a r d of o n e p l a n t t h a t a w o r k e r had b e e n given a special 152 . b u t t h e y m u s t also b e given r e a s o n t o b e l i e v e t h a t t h e y h a v e s o m e influence o v e r t h o s e r u l e s . D e v i c e s for r e a d i n g c o d e s p r i n t e d on b o t t l e s or t u b e s for o i n t m e n t can a u t o m a t i c a l l y c h e c k and eject t u b e s w h i c h h a v e b e e n m i s t a k e n l y l a b e l l e d . for t h e i r third a red s t o n e . T h e w o r k e r w a s d i s m i s s e d . A d e g r e e o f w o r k e r p a r t i c i p a t i o n i n r u l e . ' T h e F D A did not find o u t a b o u t t h e p r o b l e m . W o r k e r s w h o c o m e forward with a useful quality alert s u g g e s t i o n a r e p r e s e n t e d w i t h a pin. 1969: 4 7 ) . h o w e v e r .m a k i n g m a y b e t h e p r i c e that m a n a g e m e n t and g o v e r n m e n t m i g h t h a v e t o a c c e p t for w o r k e r c o m m i t m e n t t o t h e rules. 1979). W o r k e r s a b r o g a t e social r e s p o n s i b i l i t y t o u n e n t h u s i a s t i c rule following. T h e r e a r e s o l u t i o n s . E x a s p e r a t i o n o v e r the p e r c e i v e d p e t t i n e s s o f t h e r e g u l a t i o n s l e a d s t o less d i l i g e n c e w h e n the following o f r e a l l y i m p o r t a n t r e g u l a t i o n s i s r e q u i r e d .Unsafe manufacturing practices a l l e v i a t i n g t h e l a t t e r p r o b l e m s . " k n o w w h y " i s m o r e i m p o r t a n t t h a n " k n o w . ' F r o m t h e p o i n t o f view o f m o t i v a t i o n . a n d r u l e s w h i c h only s e e m p e t t y t o t h e u n i n f o r m e d s h o u l d b e e x p l a i n e d . w h e n t h e y are r e p r i m a n d e d for only initialling a record w h i c h r e q u i r e s t h e i r full s i g n a t u r e . U n d e r A b b o t t ' s Q u a l i t y A l e r t A w a r d s c h e m e w o r k e r s can suggest new S O P s . O n e t r a n s n a t i o n a l p h a r m a c e u t i c a l c o m p a n y has faced a s i t u a t i o n w h e r e w o r k e r s a t t e m p t e d to set fire to o n e of its A m e r i c a n f a c t o r i e s . A n e x e c u t i v e from a n o t h e r c o m p a n y d e s c r i b e d an e x t r a o r d i n a r i l y m a l i c i o u s act of s a b o t a g e w h i c h could have ( p e r h a p s d i d ) cost lives: "We had a n industrial s a b o t a g e p r o b l e m w h e r e a w o r k e r w a s p u t t i n g q u a r t e r s inside t h e lids o f t h e c o n t a i n e r s [of an i n j e c t a b l e p r o d u c t ] .

B. T h a t c o m p l e t e l y c h a n g e d his a t t i t u d e t o his w o r k . ' W h a t e v e r t h e s t r a t e g i e s u s e d . U n d e r t h e J a p a n e s e m o d e l . W h e n a q u a l i t y failure o c c u r s . T h e e n t i r e w o r k f o r c e i s asked to c o n t r i b u t e their ideas to ways of making an experimental d a y u n i q u e l y free of d e f e c t i v e o u t p u t . w h i c h i s n o w b e i n g a d o p t e d b y G e n e r a l M o t o r s . q u a l i t y c o n t r o l s t a n d a r d s are not being m e t ( L o h r . P r o b l e m s a r e put d o w n t o post-operative shock. t h e quality p e r f o r m a n c e of t h a t day b e c o m e s a b e n c h m a r k for future i m p r o v e m e n t . I n this r e g a r d .Unsafe manufacturing practices c o m m e n d a t i o n for finding seven v i o l a t i o n s o f F D A r e g u l a t i o n s i n t h e p l a n t . t h e r e i s m u c h it c o u l d learn from t h e a u t o m o b i l e i n d u s t r y . for w h a t e v e r r e a s o n . t h e i m p o r t a n t thing i s t o a c h i e v e s o m e real w o r k e r p a r t i c i p a t i o n t o m a k e e m p l o y e e s b e l i e v e t h a t i t i s i m p o r t a n t t h a t t h e y s h o w initiative o n t h e j o b . t h e n o t i c e w a s o r d e r e d d o w n lest i t p r o v i d e a m m u n i t i o n for an F D A i n s p e c t o r . b o t h t h e o p e r a t i v e r e s p o n s i b l e and t h e q u a l i t y c o n t r o l staff s h o u l d be called to a c c o u n t .m a k i n g p o w e r t o w o r k e r s . ' O n e old lady g r a b b e d t h e a r m of o n e of o u r s u p e r v i s o r s and said h o w m u c h she a p p r e c i a t e d w h a t h e w a s d o i n g for her. C i b a . 1981).: Production manager: Are there ever product recalls [in Guatemala]? N a h . E v e r y w o r k e r s h o u l d be a c c o u n t a b l e for t h e q u a l i t y of his or her o w n task. If t h e z e r o defects day is successful in i m p r o v i n g q u a l i t y .G e i g y in 1971 also s t a r t e d its ' Q u a l i t y S e a l ' p r o g r a m m e t o foster e m p l o y e e p a r t i c i p a t i o n i n m e t h o d s o f error reduction. International variations in GMP compliance J. A n o t h e r idea for g e n e r a t i n g shopfloor c o m m i t m e n t t o quality w h i c h h a s b e e n w i d e l y i m p l e m e n t e d b y quality p r o f e s s i o n a l s i n m a n y i n d u s t r i e s i s t h e ' z e r o defects d a y ' . O n e s t r a t e g y for g e n e r a t i n g c o m m i t m e n t t o quality w o r k m a n s h i p f o l l o w e d by B a x t e r . 153 . T h e p h a r m a c e u t i c a l i n d u s t r y can g o m u c h further i n h a n d i n g o v e r d e c i s i o n .T r a v e n o l in A u s t r a l i a is to t a k e w o r k e r s to t h e local W e s t m e a d H o s p i t a l t o see their i n t r a v e n o u s s o l u t i o n s i n u s e . p a r t i c u l a r l y t h e J a p a n e s e car m a n u f a c t u r e r s . w o r k e r s are given t h e a u t h o r i t y to shut d o w n t h e a s s e m b l y line if they t h i n k t h a t . T h e m o s t d a n g e r o u s b e l i e f t h a t can p e r m e a t e a p h a r m a c e u t i c a l c o m p a n y is t h a t quality is t h e r e s p o n s i b i l i t y o f t h e quality a s s u r a n c e d e p a r t m e n t .

E u r o p e a n c o m p a n i e s w h o also s u b s c r i b e t o this p h i l o s o p h y t e n d not to be so tightly c e n t r a l l y c o n t r o l l e d . S o m e h a v e a p h i l o s o p h y t h a t t h e c o m p a n y has a c e r t a i n s t a n d a r d w h i c h m u s t be followed w h e n e v e r a p r o d u c t is sold u n d e r t h e c o m p a n y n a m e . O t h e r companies attempt to imbue Third-World m a n a g e r s with ' c o r p o r a t e s t a n d a r d s ' b y p e r i o d i c a l l y b r i n g i n g t h e m i n t o h e a d q u a r t e r s for t r a i n i n g . S o m e m a n u f a c t u r i n g for t h e A s i a n m a r k e t t a k e s place i n A u s t r a l i a n p l a n t s . but also b e c a u s e m a n u f a c t u r i n g s t a n d a r d s do not h a v e to be as high as in the U n i t e d S t a t e s . w h i c h might be e i t h e r d e t a i l e d or g e n e r a l . while p a y i n g lip s e r v i c e t o a u n i f o r m c o r p o r a t e G M P s t a n d a r d . N e v e r t h e l e s s . G e r m a n y or Great Britain. t h e costs o f c h a n g i n g r o u t i n e d o not justify i n t e n t i o n a l l y m a n u f a c t u r i n g i t e m s for t h e A s i a n m a r k e t to lower s t a n d a r d s t h a n for A u s t r a l i a n c o n s u m e r s . C o n v e r s e l y .W o r l d subsidiaries. T h e r e are many c o u n t r i e s like G u a t e m a l a w h e r e t h e r e are n o G M P i n s p e c t i o n s . T r a n s n a t i o n a l c o m p a n i e s vary g r e a t l y in the e x t e n t to which they follow different G M P s t a n d a r d s i n different p a r t s o f the w o r l d .t e s t i n g l a b o r a t o r y . O n e o f t h e a d v a n t a g e s o f this a r r a n g e m e n t i s t h a t m a n u f a c t u r i n g is not only c h e a p e r by virtue of the nonu n i o n i s e d w o r k f o r c e and tax c o n c e s s i o n s . i f b a t c h e s e m e r g e w h i c h h a p p e n t o fail t o m e e t A u s t r a l i a n s t a n d a r d s . T r a n s n a t i o n a l c o m p a n i e s are able t o t a k e a d v a n t a g e o f this s i t u a t i o n . Such a g e s t u r e m i g h t or m i g h t not be c o m b i n e d with a r e q u i r e m e n t for s u b s i d i a r i e s t o p e r i o d i c a l l y send s a m p l e s o f final p r o d u c t t o h e a d q u a r t e r s for t e s t i n g . i m p l e m e n t the p o l i c y simply by s e n d i n g a set of c o r p o r a t e s t a n d a r d s . S o m e t r a n s n a t i o n a l s . M a n y A m e r i c a n c o m p a n i e s regularly send c o m p l i a n c e a u d i t o r s to all s u b s i d i a r i e s to c h e c k t h a t this is h a p p e n i n g . but c l a i m they a c h i e v e t h e s a m e e n d b y p o s t i n g h e a d office E u r o p e a n s t o m a n a g e T h i r d . n o n a t i o n a l d r u g . t h e n t h e r e is an obvious t e m p t a t i o n to d u m p these batches on the Asian m a r k e t . e x p o r t s t o t h e J a p a n e s e m a r k e t might have to meet higher standards than in Australia on certain criteria. At t h e e x t r e m e are t r a n s n a t i o n a l s which m a k e a virtue o f local a u t o n o m y and e m p h a s i s e t h e s o v e r e i g n r i g h t o f e a c h n a t i o n to set its o w n G M P s t a n d a r d s .a t e m p t a t i o n w h i c h s o m e i n f o r m a n t s c o n c e d e d is not a l w a y s r e s i s t e d .Unsafe manufacturing practices G M P s t a n d a r d s vary g r e a t l y b e t w e e n c o u n t r i e s . G e n e r a l l y . T h e s i t u a t i o n is m o r e c o m p l i c a t e d w h e n m a n u f a c t u r i n g in a part i c u l a r c o u n t r y i s for b o t h d e v e l o p e d and T h i r d . M a n y o f t h e major t r a n s n a t i o n a l s h a v e m a n u f a c t u r i n g p l a n t s t o serve the C e n t r a l A m e r i c a n r e g i o n i n G u a t e m a l a . to all s u b s i d i a r i e s . E a c h of its s u b s i d i a r i e s is e n c o u r a g e d 154 .W o r l d m a r k e t s .

P o r t u g a l . The m a n a g i n g d i r e c t o r s p o k e t o m e first and g a v e g l o w i n g a c c o u n t s o f h o w m u c h t o u g h e r their c o r p o r a t e s t a n d a r d s w e r e w h e n c o m p a r e d w i t h g o v e r n m e n t s t a n d a r d s . ' E v e n t h e t r a n s n a t i o n a l s w h i c h e n f o r c e t h e strictest o f international auditing systems cannot achieve c o m p l e t e uniformity of s t a n d a r d s a r o u n d t h e w o r l d . the internationalisation of capital. by default. only a n i n t e r n a t i o n a l a u d i t i n g p r o g r a m m e i m p o s e d from h e a d q u a r t e r s e n s u r e s a m o d i c u m o f u n i f o r m i t y .W o r l d countries the G M P standards o f t h e transn a t i o n a l s . n o m a t t e r h o w m u c h l o w e r t h a n a t h e a d q u a r t e r s .Unsafe to m a x i m i s e work. M a n y a r e e n a c t i n g G M P s a n d s e n d i n g i n s p e c t o r s t o t h e F D A for t r a i n i n g . N e v e r t h e l e s s . T h u s . 1975). are g e n e r a l l y h i g h e r t h a n t h o s e o f m o s t locally o w n e d m a n u f a c t u r e r s . Spain and T u r k e y ) w h o h a v e b e e n e x p l o r i n g t h e possibility o f m e m b e r s h i p i n t h e E u r o p e a n E c o n o m i c C o m m u n i t y h a v e b e e n told t h a t they w o u l d have t o t i g h t e n their 155 .W o r l d c o u n t r i e s . A n d c o m p a n i e s w h i c h m a k e only t o k e n efforts to a c h i e v e such a policy a l l o w . C o u n t r i e s w i t h l o w e r s t a n d a r d s are forced t o c o m e i n t o line b y u p g r a d i n g t h e i r s t a n d a r d s . Third-World countries a r e e s t a b l i s h i n g n a t i o n a l t e s t i n g l a b o r a t o r i e s for d r u g s ( N y l e n . Increasingly. it is undoubtedly true that in T h i r d . T h e fact t h a t d e t a i l e d c o r p o r a t e s t a n d a r d s m e a n little on t h e i r o w n w a s g r a p h i c a l l y i l l u s t r a t e d w h e n I visited the A u s t r a l i a n s u b s i d i a r y o f a major A m e r i c a n c o m p a n y . T h e r e a r e [ c o r p o r a t e s t a n d a r d s ] which are p r o b a b l y t o u g h e r i n s o m e w a y s . T h e y see this as a way of p u t t i n g ' b a t h t u b ' c o m p e t i t o r s o u t o f b u s i n e s s . both because of the e c o n o m i c i n t e r e s t s i t b r i n g s t o t h e T h i r d W o r l d and b e c a u s e o f t h e t r a n s f e r of q u a l i t y c o n t r o l t e c h n o l o g y . is a force for the upgrading of G M P standards. F o u r M e d i t e r r a n e a n c o u n t r i e s ( G r e e c e . I w a s t h e n i n t r o d u c e d t o the quality a s s u r a n c e d i r e c t o r w h o told m e : ' W e follow H e a l t h D e p a r t m e n t r e g u l a t i o n s . but t o b e h o n e s t I've n e v e r read t h e m . its c o m m e r c i a l advantage manufacturing within that legal practices frame- O f t h e a b o v e a p p r o a c h e s . vast disparities in G M P s to continue. C e r t a i n l y this s e e m e d t o b e t h e effect o f t h e d e c i s i o n o f t h e P o r t i l l o g o v e r n m e n t i n M e x i c o t o c l o s e d o w n 300 o f t h e 600 p h a r m a c e u t i c a l c o m p a n i e s o p e r a t i n g i n t h e c o u n t r y in 1977. T h e i n c r e a s i n g l y i n t e r n a t i o n a l c h a r a c t e r of t h e industry is also having an impact on the equalisation of standards between d e v e l o p e d c o u n t r i e s . T r a n s n a t i o n a l s a r e s o m e t i m e s a l o b b y i n g force for u p g r a d i n g the G M P s t a n d a r d s in T h i r d .

156 . D e n m a r k . B o l i v i a . Romania. Liechtenstein. Austria. Spain.Unsafe manufacturing practices d r u g r e g u l a t o r y p r a c t i c e s before b e i n g a d m i t t e d . J a p a n . L u x e m b u r g ) and t h e A n d e a n P a c t c o u n t r i e s ( P e r u . United Kingdom. G L P s and t h e s t r i n g e n c y o f t h e drug a p p r o v a l p r o c e s s p r e c i s e l y so t h e y can b e t t e r c o m p e t e for t h e d e v e l o p e d c o u n t r y m a r k e t s . Syria. P a r t i c i p a n t c o u n t r i e s i n t h e s c h e m e certify o n r e q u e s t from a n o t h e r p a r t i c i p a n t c o u n t r y t h a t specified p h a r m a c e u t i c a l e x p o r t s m e e t t h e G M P s t a n d a r d s set d o w n u n d e r t h e s c h e m e . C o l o m b i a and V e n e z u e l a ) h a v e b o t h m a d e p r o g r e s s o n e s t a b l i s h i n g s o m e u n i f o r m i t y i n d r u g r e g u l a t i o n within t h e i r g r o u p s . S w e d e n . U n i t e d S t a t e s . S w i t z e r l a n d and G r e a t B r i t a i n ) now have a " C o n v e n t i o n for t h e M u t u a l R e c o g n i t i o n o f I n s p e c t i o n s i n R e s p e c t o f t h e M a n u f a c t u r e o f P h a r m a c e u t i c a l P r o d u c t s . Iceland. Cyprus. Egypt. P a r t i c i p a n t c o u n t r i e s are Argentina. but t h e y are n a r r o w i n g . that t h e p l a n t s a r e subject to p e r i o d i c i n s p e c t i o n . B r i t i s h c o n t r a c t l a b o r a t o r i e s w r i t e to the F D A asking for G L P i n s p e c t i o n s s o t h a t t h e y can tell c u s t o m e r s t h a t they are a p p r o v e d u n d e r A m e r i c a n G L P s . Netherlands. Senegal. Hungary. Poland. Finland. The Benelux countries (Belgium. C o u n t r i e s i n the E u r o p e a n Free Trade Association (Ireland. N e w Z e a l a n d . that t h e i n t e r n a t i o n a l i s a t i o n of capital i s . ' T h i s has b e e n a c h i e v e d t h r o u g h a d e g r e e of a g r e e m e n t on u n i f o r m i t y of i n s p e c t i o n stand a r d s . F r a n c e . in a g g r e g a t e . The F r e n c h have been most anxious in recent years to improve G M P s . S w e d e n . U n d e r t h e a g r e e m e n t i n s p e c t o r s from o n e c o u n t r y can g o into a n o t h e r to check the manufacturing standards of products to be imported. Norway. Portugal. Italy. Belgium. a force to u p g r a d e t h e s t a n d a r d s o f t h o s e w h o lag b e h i n d . E c u a d o r . Portugal. Iceland. V a s t d i s p a r i t i e s r e m a i n . J o r d a n . T h e m o s t significant force of all for h a r m o n i s a t i o n of s t a n d a r d s h a s b e e n t h e W o r l d H e a l t h O r g a n i s a t i o n ' s Certification S c h e m e o n the Quality of Pharmaceutical Products Moving in International C o m m e r c e . N a t i o n s with h i g h e r s t a n d a r d s h a v e not i n p r a c t i c e r e d u c e d their r e q u i r e m e n t s t o a lowest c o m m o n denominator. To t h e e x t e n t t h a t such s c h e m e s have an effect it is in r a i s i n g t h e s t a n d a r d s o f t h e less s t r i n g e n t c o u n t r i e s . N o r w a y . United A r a b E m i r a t e s . t h e n . Republic of Korea. Australia. and that the p r o d u c t is a u t h o r i s e d for sale i n t h e e x p o r t i n g c o u n t r y . Finland. T h e r e can b e n o d o u b t . T h e p l a n t m a n a g e r o f t h e M e x i c a n subsidiary of an A m e r i c a n company was p r e p a r e d to give w h a t s e e m e d an h o n e s t a s s e s s m e n t of h o w far his factory had c o m e and h o w far it had to g o . Mauritius.

t h e foregoing discussion i m p l i e s t h a t t r a n s n a t i o n a l c o r p o r a t i o n s are a force for h i g h e r s t a n d a r d s in the Third W o r l d . n e e d a s s u r a n c e s t h a t s t a n d a r d s are b e i n g m a i n t a i n e d . w h i l e t h e l a t t e r i s s u b j e c t e d t o only o n e t y p e .b u t no m o r e t h a n a c o u p l e . I k n o w h o w m a c h i n e s s h o u l d be c l e a n e d . F D A i n s p e c t i o n s are likely to be m u c h less frequent. T h e t r a n s n a t i o n a l plant m a n a g e r i s j u s t a s i n t o u c h with t h e s h o p floor a s t h e small c o m p a n y plant m a n a g e r . F u r t h e r m o r e . S o m e t i m e s this i n v o l v e s c u t t i n g c e r t a i n quality c h e c k s w h i c h . w h i c h d o e s not enjoy t h e m o n o p o l i s t i c profits of large c o m p a n i e s with p r o d u c t s on p a t e n t . B e f o r e w e had n o t h i n g i n w r i t i n g . w i t h i n the U n i t e d S t a t e s t h e t r a n s n a t i o n a l c o m panies have much more sophisticated G M P compliance systems m a n a g e d b y m o r e qualified p e r s o n n e l t h a n t h e s m a l l e r A m e r i c a n c o m p a n i e s . p e r h a p s t h o u g h not r e q u i r e d b y g o v e r n m e n t r e g u l a t i o n s .Unsafe manufacturing practices It t a k e s t i m e for us to c a t c h up to US s t a n d a r d s . far r e m o v e d from t h e s h o p floor. t h e f o r m e r i s s u b j e c t e d t o t w o t y p e s o f i n s p e c t i o n s (from h e a d q u a r t e r s a n d t h e F D A ) . In a small c o m p a n y it m i g h t be a practical impossibility to have decisions on the approval of batches m a d e by 1 5 157 . P e r h a p s s o . A g e n e r i c m a n u f a c t u r e r . Possibly t h e r e are a c o u p l e of c o m p a n i e s ( p e r h a p s Lilly i s o n e ) w h o g o close t o i n t e r n a t i o n a l u n i f o r m i t y of q u a l i t y s t a n d a r d s . Certainly their standards exceed those of most of their indigenous competitors. and i f i t is a small p l a n t . H o w e v e r . The malevolent multinationals? T r a n s n a t i o n a l c o r p o r a t i o n s d e s e r v e to be criticised for a l l o w i n g m u c h m o r e lax G M P s t a n d a r d s t o apply i n t h e p o o r p a r t s o f the w o r l d t h a n in t h e rich n a t i o n s .p l a n t quality c o n t r o l staff. are n e v e r t h e l e s s d e s i r a b l e . In spite o f t h e i r b l a m e w o r t h i n e s s o n this s c o r e . S m a l l p l a n t s s o m e t i m e s do not h a v e the e c o n o m i e s of scale to justify s o m e of t h e q u a l i t y r e f i n e m e n t s of t h e t r a n s n a t i o n a l . O n e small c o m p a n y e x e c u t i v e a r g u e d t h a t t h e y d o not need a n a u d i t f u n c t i o n as m u c h as a large c o m p a n y in w h i c h t o p m a n a g e m e n t . M a n y s m a l l e r o p e r a t i o n s c a n n o t afford a quality a u d i t f u n c t i o n s u p e r i m p o s e d a b o v e t h e i n . but e a c h plant o w n e d b y a t r a n s n a t i o n a l is s i m i l a r in size to m a n y a small c o m p a n y c o n s i s t i n g o f a single p l a n t . survives by cost c u t t i n g . N o w w e are b e g i n n i n g t o w r i t e t h i n g s down. B u t t h e y say we should h a v e i n s t r u c t i o n s i n w r i t i n g o n h o w t o clean m a c h i n e s .

m o r e p r o d u c t s being c o n s i d e r e d for a p p r o v a l b y t h e a g e n c y . 158 .Unsafe manufacturing practices s o m e o n e w h o has n o i n t e r e s t i n t h e o u t c o m e . T h e F D A and p u b l i c .n a m e p r o d u c t s a t t a c k e d the Lilly s t u d y on a n u m b e r of m e t h o d o l o g i c a l g r o u n d s . 0 0 0 is as n o t h i n g c o m p a r e d to t h e costs of t h e a d v e r s e publicity a r o u n d t h e w o r l d should the b a t c h c a u s e s e r i o u s a d v e r s e r e a c t i o n s . 1979). T h e r a t e o f F D A c o u r t a c t i o n s ( p r o s e c u t i o n s .i n t e r e s t g r o u p s w h o w e r e k e e n t o defend t h e q u a l i t y o f g e n e r i c a l l y m a n u f a c t u r e d d r u g s a s e q u a l t o t h a t o f b r a n d .m i n d e d o b s e r v e r has to find t h e existing e v i d e n c e c o n v i n c i n g t h a t e v e n i n the A m e r i c a n m a r k e t t h e t r a n s n a t i o n a l s h a v e a q u a l i t y r e c o r d s u p e r i o r t o t h a t o f t h e rest o f t h e industry. M o r e o v e r . A Lilly c o r p o r a t i o n study ( P a u l s and K l o e r . O n l y recalls w h i c h w e r e classified b y t h e F D A a s i n v o l v i n g a risk to h e a l t h w e r e i n c l u d e d . T h e i n c i d e n c e of recalls w a s found to be s e v e n t i m e s h i g h e r by v o l u m e of sales in the s m a l l e r c o m p a n i e s . H o w e v e r . T h e t e m p t a t i o n to c o m p r o m i s e s t a n d a r d s is much g r e a t e r t h a n in a t r a n s n a t i o n a l w h e r e $ 5 0 . T h e large c o m p a n y also has m o r e t o lose by falling o u t of favour with the F D A . injunct i o n s . a f a i r . in a small c o m p a n y the c o s t s of r e j e c t i n g o n e b a t c h ( p e r h a p s $50. All e m p l o y e e s may effectively a n s w e r to t h e p r e s i d e n t and e v e r y o n e is intimately i n v o l v e d in t h e p r o d u c t i o n of every b a t c h of p r o d u c t . H o w e v e r . and so o n . Lilly w e r e a b l e to field t h e s e o b j e c t i o n s c o n v i n c i n g l y (Eli Lilly and C o m p a n y . m o r e p l a n t s w h i c h can b e h a r a s s e d by i n s p e c t o r s . s e i z u r e s ) w a s 4 3 t i m e s h i g h e r for the s m a l l e r c o m p a n i e s c o m p a r e d w i t h t h e t r a n s n a t i o n a l s . U n d o u b t e d l y ail t h e e v i d e n c e is not yet in on this d e b a t e .i n t e n s i v e ' c o m p a n i e s (all t r a n s n a t i o n a l ) and the h u n d r e d s o f s m a l l e r A m e r i c a n c o m p a n i e s . 1978) c o m p a r e d t h e i n c i d e n c e o f p r o d u c t recalls and F D A e n f o r c e m e n t action b e t w e e n t h e 2 3 ' r e s e a r c h .000) m i g h t c a u s e t h e e n t e r p r i s e to run at a loss for the m o n t h . T h e d a t a w e r e from F D A E n f o r c e m e n t R e p o r t s for t h e p e r i o d J a n u a r y 1974 t h r o u g h D e c e m b e r 1977.

it will be a r g u e d . some c o m p a n i e s . and S e a r l e . In some y e a r s . C e r t a i n l y a n t i t r u s t law can be r e f o r m e d to focus m o r e on m o n o p o l i s t i c and o l i g o p o l i s t i c s t r u c t u r e s and less o n c o n s p i r a t o r i a l c o n d u c t . S c h e r i n g . A m e r i c a n H o m e P r o d u c t s . H o w e v e r . O ' M a l l e y . Profits in the pharmaceutical industry Since the Second W o r l d W a r p h a r m a c e u t i c a l s have been one o f t h e m o s t a t t a c t i v e a r e a s o f i n v e s t m e n t . a n t i t r u s t law will r e m a i n less i m p o r t a n t t h a n g o v e r n m e n t e c o n o m i c policies for r e s t r a i n i n g m o n o p o l i s t i c pricing.including Sterling. B u t n o m a t t e r h o w far such reform g o e s . 1980). 1976. I t a s s u r e s p e o p l e t h a t t h e m y t h o l o g y of c o m p e t i t i o n and free e n t e r p r i s e is r e a l . B e f o r e c o n s i d e r i n g t h e n a t u r e of a n t i t r u s t offences in t h e pharm a c e u t i c a l i n d u s t r y w e must first c o m e t o grips with the e c o n o m i c structure o f t h e industry. D r u g s have r a n k e d first o r s e c o n d in profitability a m o n g all i n d u s t r i e s in most y e a r s since 1955. N o r w i c h . t h e r e are m o r e effective s t r u c t u r a l r e m e d i e s for a c h i e v i n g t h i s t h a n a r e a v a i l a b l e u n d e r a n t i t r u s t law. T h i s is not to say t h a t a n t i t r u s t law is not d e s i r a b l e and n e c e s s a r y . it will be a r g u e d that if capitalist s o c i e t i e s are s e r i o u s a b o u t r e s t o r i n g c o m p e t i t i o n to an industry like p h a r m a c e u t i c a l s . A n i m p r e s s i o n o f m o n o p o l i s a t i o n u n r e s t r a i n e d b y law u n d e r m i n e s t h e l e g i t i m a t i o n o f capitalist r e l a t i o n s o f p r o d u c t i o n ( P e a r c e .5 Antitrust A n t i t r u s t l a w . fulfils m a i n l y a s y m b o l i c function in c a p i t a l i s t s o c i e t i e s r a t h e r t h a n c r i m e c o n t r o l functions.have r e c o r d e d 159 .

1977. 1975. d r u g s r a n k s e c o n d o n a n index o f m a r k e t 160 . It is. T h e c e n t r a l t h r u s t o f their a r g u m e n t i s that " d i s c o v e r y i n t e n s i v e * i n d u s t r i e s such as p h a r m a c e u t i c a l s are in a u n i q u e s i t u a t i o n . S i l v e r m a n . A . Stauffer. a r i s i n g from t h e fact t h a t r e s e a r c h and d e v e l o p m e n t e x p e n d i t u r e s a r e not c a p i t a l i s e d a s a n i n v e s t m e n t asset. Lall. t h e y say. 1979. 1976: 2 0 .9 ) . M a e s d a y . B e e c h a m and G l a x o in 1972 e a r n e d 45 p e r c e n t . R o h r e r . h o w e v e r . 1974: 3 0 ) . E c o n o m i s t s d e f e n d i n g t h e i n d u s t r y have a r g u e d that r e c o r d e d profit figures in t h e p h a r m a c e u t i c a l industry artificially inflate t h e t r u e r a t e o f r e t u r n o n i n v e s t m e n t ( A y a n i a n . t h a t t h e p r a c t i c e of not t r e a t i n g r e s e a r c h as a capital i n v e s t m e n t can r e s u l t in e i t h e r an u n d e r s t a t e m e n t or an overs t a t e m e n t o f t h e ' r e a l ' o r e c o n o m i c rate o f r e t u r n . L a b o u r P a r t y . 1976: 1 2 1 .8 . Gereffi (1979) p o i n t s o u t . 1976. 41 per cent and 22 per cent r e s p e c t i v e l y o n c a p i t a l e m p l o y e d . P h a r m a c e u t i c a l M a n u f a c t u r e r s A s s o c i a t i o n . E v e n d u r i n g t h e s e v e r e d e p r e s s i o n years of 1930 to 1935 U p j o h n r e p o r t e d profits of at least 30 per cent ( S i l v e r m a n a n d L e e . 1977). 1975. but r a t h e r a r e set a g a i n s t c u r r e n t i n c o m e . M a n y millions can be spent on a p r o d u c t w h i c h p r o v e s to be unsafe or ineffective. In a list of t w e n t y i n d u s t r y g r o u p s . C a r t e r . 1 9 7 9 .Antitrust net [after tax] profits of 30 to 39 per cent per year. H . R a n k X e r o x w a s t h e only c o m p a n y w h i c h w a s m o r e p r o f i t a b l e t h a n B o o t s and B e e c h a m i n that year a m o n g t h e top 100 B r i t i s h firms (Gereffi. s h o w s t h a t this risk e l e m e n t p r o d u c e s wild v a r i a t i o n s in t h e s h a r e o f t h e m a r k e t held by different c o m p a n i e s . E x c e s s i v e profits i n t h e industry are a n a c c o u n t i n g i l l u s i o n .1 . U n i t e d N a t i o n s C e n t r e o n T r a n s n a t i o n a l C o r p o r a t i o n s . B u r a c k . S l a t t e r . 1979: 5 4 .B o o t s . 1978.i n d u s t r y e c o n o m i s t s o n t h e q u e s t i o n o f profits have been calculatingly misleading. C o c k s ( 1 9 7 5 ) .W a l l a c e . T h e t h r e e l e a d i n g B r i t i s h c o m p a n i e s . 1975. 1978. R o b i n s . Gereffi. 6 6 . M a r i o n L a b o r a t o r i e s . S c h w a r t z m a n . 1973. C l a r k s o n . 1979: 6 0 ) . I n d u s t r y d e f e n d e r s tell us t h a t drug d e v e l o p m e n t is a risky b u s i n e s s . and S y n t e x have r e p o r t e d net profits of 51 to 54 per cent in s o m e y e a r s . 1977: 2 7 6 . 1977. S u b c o m m i t t e e o n H e a l t h . the Lilly e c o n o m i s t . S o m e o f the s t a t e m e n t s o f p r o . I n d e e d . and Smith K l i n e & F r e n c h have a c h i e v e d profits o f 4 0 t o 4 7 per c e n t . A g a r w a l . 1977. A m y r i a d of r e s e a r c h e r s from different p a r t s of the w o r l d have s h o w n h o w r e c o r d e d profits in the p h a r m a c e u t i c a l industry are far i n e x c e s s o f m a n u f a c t u r i n g i n d u s t r y a v e r a g e s ( N a d e r .

In fact only 9 per cent of their sales d o l l a r s a r e s p e n t o n r e s e a r c h . 1974: 2 8 . The United Nations Centre on Transnational C o r p o r a t i o n s ( 1 9 7 9 : 5 7 . A m o n g t h e n o n .8 ) s h o w s t h a t t h i s is not so. Oligopoly in the pharmaceutical industry E x c e s s i v e profits in t h e p h a r m a c e u t i c a l i n d u s t r y arise in c o n s i d e r a b l e m e a s u r e from t h e p e c u l i a r f e a t u r e s o f t h e m a r k e t which s h e l t e r p r o d u c e r s from p r i c e c o m p e t i t i o n . e q u i t y c a p i t a l in d r u g s i n c r e a s e d 584 per c e n t . E q u i t y c a p i t a l for t h e w h o l e m a n u f a c t u r i n g sector i n c r e a s e d only 183 per c e n t d u r i n g t h e s a m e p e r i o d . ' The Kefauver hearings revealed that in many situations 161 . 6 per cent o f e x . w e find t h a t t o p of t h e list for m a r k e t . t h e s e c o n d h i g h e s t figure for any i n d u s t r y g r o u p .3 p e r cent o f t h e w h o l e s a l e price a t w h i c h t h e m a n u f a c t u r e r s sold their p r o d u c t .3 0 ) . h o w e v e r . T h e d r u g i n d u s t r y c l a i m e d t h a t t h e r e a s o n for this w a s the a m o u n t s they had to s p e n d on r e s e a r c h . N o t o n e o f fifty c o m p a r i s o n c o m p a n i e s from o t h e r i n d u s t r i e s had p r o d u c t i o n costs l o w e r t h a n the highest p r o d u c t i o n costs a m o n g the 15 drug companies. D o c t o r s have no r e a s o n to be p r i c e . but t h e p h y s i c i a n . C o n s u m e r s o v e r e i g n t y i s a b s e n t i n t h e p r e s c r i p t i o n d r u g m a r k e t b e c a u s e i t i s not t h e c o n s u m e r w h o m a k e s a d e c i s i o n to p u r c h a s e .s h a r e instability is that struggling i n d u s t r y . If actual profits m e r e l y b a l a n c e d risk. I n o t h e r w o r d s . F r o m 1953 to 1967 in t h e U n i t e d S t a t e s .c o n s c i o u s .C o l a w a s the l o w e s t .Antitrust s h a r e i n s t a b i l i t y . a n d m o r e t h a n twice t h e r e s e a r c h e x p e n d i t u r e i s a c c o u n t e d for b y p r e . drug profits h a v e a t t r a c t e d new m o n e y at more than three times the average rate. m o r e t h a n twice t h a t i s s p e n t o n a d v e r t i s i n g .d r u g f i r m s . t h e n o n e w o u l d e x p e c t capital t o b e i n v e s t e d in t h e p h a r m a c e u t i c a l i n d u s t r y at t h e same rate as t h e all-industry average.t a x profits ( S i l v e r m a n and L e e .m a n u f a c t u r e r sales. K e f a u v e r ' s staff found t h a t t h e a v e r a g e p r o d u c t i o n costs for fifteen m a j o r d r u g firms w e r e 32. W h e n w e look a t t h e r a w d a t a . t h e need for effective m e d i c a l c a r e is relatively price inelastic in affluent s o c i e t i e s . T h e i n c r e d i b l e i m p e r v i o u s n e s s o f t h e p h a r m a c e u t i c a l industry t o m a r k e t forces b e c a m e a p p a r e n t i n t h e K e f a u v e r h e a r i n g s before the U S S e n a t e S u b c o m m i t t e e o n A n t i t r u s t a n d M o n o p o l y i n the early 1960s. with p r o d u c t i o n c o s t s b e i n g only 4 2 . M o r e o v e r . C o u l d i t b e t h a t c e r t a i n i n d u s t r i e s are b o t h h i g h l y risky a n d highly p r o f i t a b l e ? T h e s m o k e s c r e e n from i n d u s t r y e c o n o m i s t s c a n n o t d i s p l a c e the r e a l i t y t h a t p h a r m a c e u t i c a l profits are e x t r a o r d i n a r i l y high. C o c a . ' p e t r o l e u m * .

T h e r e a r e not t h e c o m p e t i t i v e forces t o m a k e price b e a r any relation to c o s t s . R o u s s e l . a s c o r b i c acid ( V i t a m i n C) in d o s a g e forms is sold by m o r e t h a n a h u n d r e d c o m p a n i e s . In B r i t a i n . t r a n q u i l l i s e r s (oral a t a r a c t i c s ) . T h e b o t t l e s . M a n y b u l k p r o d u c e r s a r e m o n o p o l i s t s . N e a r l y 500 o f t h e 650 bulk m e d i c i n a l c h e m i c a l s sold in the U n i t e d S t a t e s in 1975 w e r e a v a i l a b l e 162 .98 per c e n t .77 p e r c e n t . a n t i b i o t i c s ( t o t a l ) .69 p e r c e n t . For e x a m p l e . 1977: 4 8 .66 p e r c e n t . F o r e x a m p l e .7 c e n t s w o r t h o f t h e d r u g . a m a r k . 1977: 4 7 ) . h o w e v e r . a n t i h i s t a m i n e s . and R o c h e ( U N C e n t r e o n T r a n s n a t i o n a l C o r p o r a t i o n s . a n t i a r t h r i t i c s . for e x a m p l e . t h e results w e r e : s e d a t i v e s .14) d a t a e n a b l e u s t o e x a m i n e t h e p e r c e n t a g e o f t h e US m a r k e t c o n t r o l l e d by t h e leading four firms for n i n e m a j o r t h e r a p e u t i c c a t e g o r i e s i n 1973. H o w e v e r . a F r e n c h firm.6 1 p e r c e n t . 4 0 . p s y c h o s t i m u l a n t s . t h e p r o d u c t s o f o n e drug m a n u f a c t u r e r which m a k e s a n t i b i o t i c s c a n n o t b e s u b s t i t u t e d for t h o s e o f a n o t h e r which p r o d u c e s tranq u i l l i s e r s o r c o n t r a c e p t i v e s .u p o f 7079 p e r cent ( M i n t z .96 per c e n t . S c h e r i n g did no r e s e a r c h on t h e d r u g . and antid i a b e t i c s (oral h y p o g l y c e m i c s ) . oral d i u r e t i c s . T h i s is b e c a u s e F o r d s o r C h r y s l e r s c a n b e s u b s t i t u t e d for G e n e r a l M o t o r s c a r s . t h e t o p five firms a c c o u n t e d for o n l y 2 6 . 1979: 3 8 ) . Pfizer.86 p e r c e n t .9 ) . sold a d r u g used for m e n o p a u s a l d i s o r d e r s ( e s t r a d i o l p r o g y n o n ) to S c h e r i n g in bulk form. T h e e n t i r e o u t p u t o f t h e v i t a m i n itself. A g a i n t h e p e o p l e w h o point to such statistics put up a misl e a d i n g s m o k e s c r e e n . it is m e a n i n g f u l to talk a b o u t c o n c e n t r a t i o n in t h e a u t o m o b i l e m a r k e t b y o b s e r v i n g w h a t p r o p o r t i o n o f t h e m a r k e t i s cont r o l l e d by t h e five l e a d i n g car m a n u f a c t u r e r s . It is only meaningful to talk a b o u t d e g r e e of c o n c e n t r a t i o n in a m a r k e t for p r o d u c t s which are s u b s t i t u t a b l e . i s p r o d u c e d b y M e r c k . C o n c e n t r a t i o n is e v e n m o r e p r o n o u n c e d at t h e level of bulk drug p r o d u c t i o n .76 p e r c e n t . 6 p e r c e n t of p h a r m a c e u t i c a l sales for 1973 ( S l a t t e r .Antitrust c o m p a n i e s c h a r g e a l m o s t w h a t e v e r t h e y c h o o s e for a p r o d u c t . 1967: 3 5 9 ) . w e r e sold for S 8 . W h e n o n e l o o k s a t the c o n c e n t r a t i o n w i t h i n t h e r a p e u t i c c a t e g o r i e s . T h e y simply put t h e p r o d u c t into tablet form in b o t t l e s of 60 u n d e r their o w n label. which c o n t a i n e d 11. t h e p h a r m a c e u t i c a l industry e m e r g e s as a highly o l i g o p o l i s t i c m a r k e t ( S l a t t e r . a n a l g e s i c s (ethical s y s t e m i c ) . B e g i n n i n g with the l o w e s t four-firm c o n c e n t r a t i o n r a t i o . S c h w a r t z m a n ' s ( 1 9 7 6 : T a b l e 6. D e f e n d e r s o f t h e p h a r m a c e u t i c a l i n d u s t r y c o r r e c t l y point out that t h e o v e r a l l s t r u c t u r e of the i n d u s t r y is not m o n o p o l i s t i c or o l i g o p o l i s t i c . B y their selling policies b u l k p r o d u c e r s are a b l e t o c o n t r o l t h e e x t e n t o f c o m p e t i t i o n .83 per c e n t .

D a h o m e y . Senegal. the N e t h e r l a n d s . w h e n a d r u g is still u n d e r p a t e n t price c o m p e t i t i o n is precluded. V e n e z u e l a . Sweden. Colombia. Federal R e p u b l i c o f G e r m a n y . It is a legal m o n o p o l y . O n l y 4 of the 650 medicinal c h e m i c a l s w e r e sold b y m o r e t h a n four m a n u f a c t u r e r s ( U S Intern a t i o n a l T r a d e C o m m i s s i o n . Chad. I n d i a . A r g e n t i n a . A t t h e end o f t h a t p e r i o d t h e d i s c o v e r e r w o u l d h a v e t o m a k e t h e p r o d u c t a v a i l a b l e u n d e r licence t o all c o m p e t i t o r s for a r o y a l t y fee of up to 8 p e r cent. M a n y c o u n t r i e s will not p a t e n t m e d i c i n a l p r o d u c t s .Antitrust from only a single d o m e s t i c s o u r c e . Yugoslavia). Upper Volta. T h e h o l d e r of a p r o d u c t p a t e n t has e x c l u s i v e r i g h t s o v e r t h e m a n u f a c t u r e and sale of the p r o d u c t until t h e p a t e n t e x p i r e s . Denmark. H i g h profits i n t h e p h a r m a c e u t i c a l i n d u s t r y are t h e r e f o r e t h e p r o d u c t o f m i n i m a l price competition. Spain. Ghana. 2 Of c o u r s e the rationale for p a t e n t s is t h a t they provide an 163 . but grant t h e m u c h w e a k e r p r o t e c t i o n o f p a t e n t s for a p a r t i c u l a r m e t h o d of p r o d u c i n g a d r u g (e. Legal monopolies T h e f u n d a m e n t a l m e c h a n i s m which g u a r a n t e e s limited price c o m p e t i t i o n in t h e p h a r m a c e u t i c a l i n d u s t r y is t h e g r a n t i n g of p a t e n t s to t h e d i s c o v e r e r s of n e w m e d i c i n e s for a p e r i o d of 16. G r e a t B r i t a i n ( r e p e a l e d i n 1977). Egypt. 1977: 9 3 . Gabon.1 0 6 ) . A n u m b e r of countries which r e c o g n i s e b o t h p r o d u c t and p r o c e s s p a t e n t s have a d o p t e d p r o v i s i o n s for c o m p u l s o r y licensing of c o m p e t i n g firms to p r o d u c e t h e p r o d u c t in the public interest (e.g. t h e p e r i o d d e p e n d i n g on the c o u n t r y . U r u g u a y .g. C o n g o . A dwindling number of countries grant neither product nor process patents (e. G r e e c e . R e p u b l i c of K o r e a . Italy. A m o s t v o c i f e r o u s o p p o n e n t of legal m o n o p o l i e s on m e d i c i n e s w a s S e n a t o r K e f a u v e r w h o a d v o c a t e d "the long-held m o r a l belief t h a t no o n e s h o u l d h a v e the right to w i t h h o l d from t h e p u b l i c p r o d u c t s w h i c h r e l i e v e suffering and may spell the difference b e t w e e n life a n d d e a t h ' . M a d a g a s c a r . Brazil. Iran.g. By definit i o n . I s r a e l ) . Austria. C e n t r a l African E m p i r e . Chile. Cameroon. N a t i o n s differ in the e x t e n t to w h i c h they p e r m i t legal m o n o p o l i e s o v e r m e d i c i n e s . Ivory Coast. C a n a d a . S e n a t o r K e f a u v e r o n c e w e n t close i n t h e U n i t e d States t o w i n n i n g s u p p o r t for a p r o p o s a l to r e d u c e t h e p e r i o d of p a t e n t p r o t e c t i o n for d r u g s t o t h r e e y e a r s . T u r k e y ) . Switzerland. Australia. 17 or 20 y e a r s . Pakistan.

S c a r c e r e s e a r c h t a l e n t and m o n e y are directed at me-too research precisely because of the p a t e n t s y s t e m . In a letter to an A r m y A i r C o r p s c o n s u l t a n t . Y e t h o w m u c h m o r e o f v a l u e m i g h t t h e s e scientists have d i s c o v e r e d i f their goal had b e e n t h e m a x i m u m a d v a n c e m e n t of m e d i c i n e i n s t e a d of finding a l o o p hole a r o u n d a patent? Former 164 Squibb medical director.Antitrust i n c e n t i v e for i n n o v a t i o n . Dr Dale Console. w a s r e s p o n s i b l e for g e t t i n g t h e d r u g c o m p a n i e s t o m a k e t h e new w o n d e r d r u g .o r d i n a t o r o f t h e W a r P r o d u c t i o n B o a r d ' s special penicillin p r o g r a m m e . Elder. D r V . . T h e p r o b l e m w a s t h a t ' t h e firms w e r e t o o busy trying t o c o r n e r p a t e n t s o n v a r i o u s p r o c e s s e s in t h e p r o d u c t i o n of penicillin to p r o d u c e much of it' ( H a r r i s .t o o p r o d u c t which is m o l e c u l a r l y d i s t i n c t but t h e r a p e u t i c a l l y i d e n t i c a l . testified . T h e q u e s t i o n that K e f a u v e r w a s a s k i n g . wrote in a January 1944 m e m o r a n d u m : T h e v a l u e of penicillin in saving t h e lives of w o u n d e d soldiers has b e e n so t h o r o u g h l y d e m o n s t r a t e d t h a t I c a n n o t w i t h a c l e a r c o n s c i e n c e a s s u m e t h e r e s p o n s i b i l i t y for c o o r d i n a t i n g this p r o g r a m any l o n g e r w h i l e a t the s a m e t i m e b e i n g h a n d i c a p p e d b y b e i n g u n a b l e t o m a k e a v a i l a b l e i n f o r m a t i o n w h i c h w o u l d result i n t h e o u t p u t of m o r e penicillin and t h e r e b y save the lives of our s o l d i e r s ( M i n t z . this is the p r o b l e m ' ( M i n t z .t o o r e s e a r c h has o c c a s i o n a l l y s t u m b l e d u p o n significant t h e r a p e u t i c a d v a n c e s ( e .o p e r a t e d "after a f a s h i o n ' . a v a i l a b l e in q u a n t i t y for the war effort. Albert L. I n a d d i t i o n t o u n d e r m i n i n g c o m p e t i t i o n t h e r e are o t h e r w a y s that t h e quest for p a t e n t s can run c o u n t e r t o t h e p u b l i c i n t e r e s t .t o o ' drugs rather than therapeutic advances. g . h o w e v e r . D u r i n g the S e c o n d W o r l d W a r . T h e c o . In C h a p t e r 3 we saw t h a t t h e g r e a t m a j o r i t y of n e w p r o d u c t s which c o m e o n t h e m a r k e t are m o l e c u l a r m a n i p u l a t i o n s o f p r o d u c t s a l r e a d y u n d e r p a t e n t . In A p r i l 1943 B u s h r e p o r t e d t h a t t h e c o m p a n i e s had c o . i s h o w m u c h i n c e n t i v e i s sufficient. 1964). M e . p e n i c i l l i n . 1967: 366). p r e d n i s o n e from c o r t i s o n e . 1967: 3 6 6 ) . Dr B u s h c o m p l a i n e d : ' T h e y h a v e n o t m a d e their e x p e r i m e n t a l results and their d e v e l o p m e n t of manufacturing processes generally available. T h o r a z i n e from t h e e a r l y a n t i h i s t a m i n e s ) . B u s h . T h e y are a t t e m p t s t o get a r o u n d t h e legal m o n o p o l y by p a t e n t i n g a m e . . d i r e c t o r o f t h e U S Office o f Scientific R e s e a r c h . A n o t h e r w a y t h a t t h e p a t e n t m e c h a n i s m r e b o u n d s against the p u b l i c i n t e r e s t is t h r o u g h c r e a t i n g i n c e n t i v e s for r e s e a r c h effort to be directed at ' m e . h o w e v e r .

T h e i m p o r t a n t fact a b o u t p a t e n t s i s t h a t t h e r e i s s t r o n g e v i d e n c e t h a t t h e i r r e s t r i c t i v e effect on c o m p e t i t i o n c o n t i n u e s long after the p a t e n t s c o n c e r n e d h a v e e x p i r e d ( S l a t t e r . A c o m p a n y w h i c h h a s h a d e x c l u s i v e m a r k e t i n g o f a n e w p r o d u c t for a n u m b e r o f y e a r s g e t s c o n s u m e r s ( d o c t o r s ) i n the habit o f using ( p r e s c r i b i n g ) t h a t p r o d u c t ( W h i t t e n . it is clear w h i l e t h e y are on t h e d r a w i n g b o a r d t h a t t h e y p r o m i s e no utility. A F e d e r a l T r a d e C o m m i s s i o n study ( B o n d and L e a n . M e l m o n . It is not a q u e s t i o n of p u r s u i n g t h e m b e c a u s e s o m e t h i n g may c o m e of it. C o n s o l e testified that 'with m a n y of t h e s e p r o d u c t s . T o d o s o m i g h t e n d a n g e r t h e secrecy o f a p a t e n t a b l e i n n o v a tion. H e n c e t h e r a t i o n a l e for t h e policy a d v o c a t e d b y m a n y r e f o r m e r s o f a b o l i s h i n g b r a n d n a m e s .2 0 . 3 T h e e x t e n t t o w h i c h t h e early m a r k e t e n t r a n t with a n e x p i r e d p a t e n t can resist p r i c e r e d u c t i o n s w h i l e m a i n t a i n i n g m a r k e t 165 . a n d 7 5 p e r c e n t t o the d e v e l o p m e n t o f m e . P a r t 2 : 6 8 5 ) . 7 2 . Professor K e n n e t h L. P a t e n t laws also restrict the c a p a c i t y o f i n d u s t r y r e s e a r c h e r s t o c o n s u l t w i t h o u t s i d e scientists o n t h e p r o g r e s s o f t h e i r w o r k . . . O n e of A m e r i c a ' s most eminent pharmacologists. 1974.t o o d r u g s a n d u n i m p o r t a n t c o m b i n a t i o n p r o d u c t s . 1974: 4 0 ) . so that choices between c o m p e t i n g suppliers would be made m o r e on t h e b a s i s of p r i c e and quality and less on t h e s t r e n g t h of habits c o n d i t i o n e d by early entry. L a t e e n t r a n t s t o t h e m a r k e t after the p a t e n t has e x p i r e d have to struggle a g a i n s t this a d v a n t a g e . 1977) i n d i c a t e s t h a t late e n t r a n t s g e n e r a l l y fail to do t h i s . at least in t h e oral d i u r e t i c s and a n t i a n g i n a l m a r k e t s w h i c h w e r e t h e subject o f the s t u d y . 0 0 0 b r a n d n a m e s for t h e 700 different d r u g s on t h e m a r k e t in t h e U n i t e d States .3 ) .m e a n s t h a t t h e d o c t o r is d o i n g well if s/he can r e m e m b e r the b r a n d n a m e of t h e first v e r s i o n w h i c h a p p e a r s . testified before t h e S e n a t e : i k n o w for a fact t h a t t h e p r e s e n t p a t e n t laws have p r e v e n t e d m y scientific c o o p e r a t i o n w i t h i n d u s t r y ' ( S u b c o m m i t t e e o n H e a l t h . T h e y p r o m i s e s a l e s . 1979). N e i t h e r h e a v y p r o m o t i o n n o r p r i c e c u t t i n g w a s successful i n p e r s u a d i n g d o c t o r s t o select t h e s u b s t i t u t e b r a n d s o f t h e e n t r a n t s i n g r e a t v o l u m e . O n e m u s t s y m p a t h i s e with t h e a p p a r e n t l y irrational i n t r a n s i g e n c e o f t h e p r e s c r i b i n g p h y s i c i a n . T h e d o c t o r has e n o u g h t o learn w i t h o u t b o t h e r i n g w i t h t h e b r a n d n a m e s o f late m a r k e t e n t r a n t s . 1977.it is p u r s u e d s i m p l y b e c a u s e t h e r e is a profit in it' ( S i l v e r m a n and L e e . T h e b e w i l d e r i n g array o f b r a n d n a m e s w h i c h c o n f r o n t s t h e d o c t o r .Antitrust b e f o r e a S e n a t e s u b c o m m i t t e that d u r i n g his t e n u r e at S q u i b b an e s t i m a t e d 25 per cent of r e s e a r c h funds w e r e d e v o t e d to ' w o r t h w h i l e ' p r o j e c t s . E a c h p r o d u c t w o u l d h a v e a single g e n e r i c n a m e .

T h e m o s t e x p e n s i v e p r o d u c t often h a s t h e g r e a t e s t s h a r e o f t h e m a r k e t . sold for S 3 8 . C i b a . In t h e c a s e o f a n t i t r u s t laws t h e p u r p o s e i s t o i n c r e a s e e c o n o m i c efficiency t h r o u g h e n s u r i n g u n f e t t e r e d c o m p e t i t i o n . 1979: 4 9 . 1 3 6 ) .25 m g . M o r e t h a n l e g a l . T h e m o r a l a u t h o r i t y of a n t i t r u s t law rests in a s s u m p t i o n s a b o u t t h e v a l u e o f free c o m p e t i t i o n . F r e q u e n t l y the leading b r a n d sells at five to ten t i m e s t h e price o f t h e c h e a p e s t s u p p l i e r s . t h e r e is little m o r a l difference b e t w e e n legal and illegal p r i c e fixing. g . t a b l e t s ) . P o s n e r .G e i g y ' s S e r p a s i l . it is affirmatively s a n c t i o n e d i n law t h r o u g h p a t e n t s . has i m p o r t a n t i m p l i c a t i o n s for c r i m e . w h y d e t e r m o n o p o l i s t i c p r a c t i c e s i n c i r c u m s t a n c e s w h e r e m o n o p o l y i s efficient? S o m e t i m e s l a w y e r s d o t a k e t h e 166 . and that they a l l o w a r b i t r a r y p r i c e differentials t o c o n t i n u e e v e n after t h e y e x p i r e .000 0. 1 7 (1. 5 T h e e x i s t e n c e of legal m o n o p o l y p o i n t s up t h e a m b i g u i t y felt by t h e e x e c u t i v e a b o u t t h e i m p r o p r i e t y o f illegal m o n o p o l y . 1976). P h a r m a c e u t i c a l execut i v e s find difficulty in e s t a b l i s h i n g t h e r e l e v a n c e of this m o r a l a u t h o r i t y t o t h e i r w o r k s i t u a t i o n i n which e s c h e w i n g price c o m p e t i t i o n is n o r m a l a n d legal. more than 30 times as much (UN Centre on Transnational C o r p o r a t i o n s . ' P r i c e fixing saves lives' is a c a r i c a t u r e of this p o s i t i o n . the a v e r a g e price c h a r g e d i n t h e U n i t e d S t a t e s by t h e four lowest cost s u p p l i e r s w a s S I . p h a r m a c e u t i c a l e x e c u t i v e s a r e socialised t o p e r c e i v e moral virtue i n a n t i c o m p e t i t i v e p r i c i n g p r a c t i c e s . B u t i f t h e goal i s g r e a t e r efficiency. 'Price c o m p e t i t i o n i s t h e s t r e n g t h o f t h e free e n t e r p r i s e s y s t e m ' has n o moral a u t h o r i t y b e c a u s e it is r e c o g n i s e d for the h u m b u g it is with r e s p e c t to t h e i r industry.Antitrust d o m i n a n c e c a n b e s t a g g e r i n g . I n d e e d . In t h e c a s e o f t h e r e s e r p i n e m a r k e t . 4 T h e fact t h a t p a t e n t s c r e a t e legal m o n o p o l i e s . b u t t h e c a r i c a t u r e g r a s p s t h e e s s e n c e o f t h e stance w h i c h has real m o r a l a u t h o r i t y t o p h a r m a c e u t i c a l e x e c u t i v e s . R e p e a t e d l y m y i n f o r m a n t s would a d m o n i s h t h a t such pricing p r a c t i c e s w e r e a way of e n s u r i n g that p r o p e r r e w a r d s and incentives went to the innovators of healthg i v i n g d r u g s . Advantages of oligopoly E c o n o m i s t s s o m e t i m e s c a s t i g a t e l a w y e r s w h o wish t o litigate antit r u s t m a t t e r s e v e n w h e n t h e illegal c o n d u c t c o n c e r n e d i s i n the n a t i o n a l e c o n o m i c i n t e r e s t ( e . 7 1 . T h e l e a d i n g b r a n d . I n t h e m i n d o f t h e p h a r m a c e u t i c a l e x e c u t i v e . T h e y claim that c o u r t s t o o often lose sight of the o r i g i n a l p u r p o s e of legislation.

and (d) r e s e a r c h and d e v e l o p m e n t ( G e r e f f i . 1979). and the c o s t s o f t h e c u s t o m e r c o m p l a i n t d e p a r t m e n t r e s p o n s i b l e for l o c a t i n g and r e c a l l i n g defective p r o d u c t s . e c o n o m i s m a d v o c a t e s t h e d i r e c t i o n o f scarce enf o r c e m e n t resources to m o n o p o l i e s which have the most adverse structural implications." L e g a l i s m t e n d s to focus a t t e n t i o n on t h o s e t y p e s of a n t i t r u s t offences w h i c h are m o s t c o n s p i r a t o r i a l . E c o n o m i e s of scale pharmaceuticals.o u t 167 in p r o d u c t i o n are of limited . The e c o n o m i e s of scale in d o s a g e . c o s t s t h a t i n c r e a s e less t h a n p r o p o r t i o n a l l y w i t h sales. In t h e last c h a p t e r it w a s a r g u e d t h a t the large t r a n s n a t i o n a l do have superior performance in ensuring drug quality. and dosage-form fabrication. T h e r e a r e t w o s t a g e s i n drug m a n u f a c t u r e : raw m a t e r i a l o r active i n g r e d i e n t p r o d u c t i o n . The UN C e n t r e on Transnational C o r p o r a t i o n s (1979: 3 5 ) a r g u e t h a t t h e r e are e x p l a n a t i o n s for this i n t e r m s o f e c o n o m i e s of s c a l e : T h e r e are two major sources of scale-economies in controlling d r u g q u a l i t y : l a r g e o v e r h e a d costs w h i c h d o not vary w i t h o u t p u t a n d t h e n e e d t o e m p l o y p e r s o n s with highly specialized skills w h i c h w o u l d be i n c o m p l e t e l y utilized by firms t h a t p r o d u c e d a small q u a n t i t y o r r a n g e o f d r u g s . (b) p r o d u c t i o n . t r a n s n a t i o n a l s will r e l e v a n c e to f u r t h e r i m p r o v e t h e i r quality p e r f o r m a n c e . T h e r e have been a r g u m e n t s that oligopoly in the pharmaceutical i n d u s t r y p r o d u c e s socially beneficial e c o n o m i e s of scale in (a) q u a l i t y c o n t r o l . t h e d e c l i n i n g cost o f s a m p l i n g a n d t e s t i n g p e r unit o f o u t p u t w i t h i n c r e a s e s i n b a t c h size.Antitrust v i e w t h a t m o n o p o l y isperse evil and e x h i b i t an i n c l i n a t i o n to apply a n t i t r u s t law t o a r e a s w h e r e t h e costs o f m o n o p o l y pricing are o u t w e i g h e d by t h e e c o n o m i e s of c e n t r a l i s i n g p r o d u c t i o n in o n e or a very few firms.f o r m f a b r i c a t i o n are small and t h e r e f o r e do n o t b a r e n t r y . (c) p r o m o t i o n . T h e latter i n c l u d e c o n t r o l s y s t e m s w h i c h utilize c o m p u t e r s for t h e entry of test results and t h e m a i n t e n a n c e o f b a t c h r e c o r d s . m o s t p r e d a t o r y i n t h e i r i n t e n t . O f c o u r s e t h e a b o v e a r g u m e n t s and t h e d a t a o f t h e last c h a p t e r s u g g e s t i n g t h e s u p e r i o r q u a l i t y p e r f o r m a n c e o f the t r a n s n a t i o n a l s do n o t imply t h a t by b e c o m i n g e v e n larger. t h e staffing and o p e r a t i n g costs o f t h e q u a l i t y c o n t r o l l a b o r a t o r y . T h e t e c h n o l o g y calls for relatively s i m p l e e q u i p m e n t a n d t h e following o f well s p e l l e d .

M o r e o v e r .n a m e m a r k e t . O n e e x a m p l e d e a l s with t h e b a t c h f e r m e n t a t i o n p r o c e s s e s that c h a r a c t e r i z e t h e p r o d u c t i o n o f a n t i b i o t i c s and s y n t h e t i c c o r t i c o s t e r o i d s . B e t w e e n 168 . T h o s e significant scale e c o n o m i e s t h a t d o exist are p r e s e n t only in the manufacture of active ingredients.a c i r c u m s t a n c e c o n d u c i v e to c o n s t a n t r e t u r n s t o scale (Gereffi. G r a b o w s k i and V e r n o n ( 1 9 7 9 : 4 7 ) s h o w t h a t w h i l e t h e s h a r e of d r u g sales of the largest four firms r e m a i n e d fairly c o n s t a n t b e t w e e n 1957 and 1 9 7 1 . uses from ten to fifty f e r m e n t a t i o n v e s s e l s . w h e n they w a n t t o i n c r e a s e t h e i r o u t p u t . t o t a k e o u t full-page a d v e r t i s e m e n t s i n leading m e d i c a l j o u r n a l s . C l e a r l y . L a r g e firms spend almost as much on p r o m o t i o n as they do on production. and d o all the o t h e r t h i n g s n e c e s s a r y for e n t r y t o t h e b r a n d .Antitrust d i r e c t i o n s . T h e s e s c a l e .i n t e n s i v e . H a n s e n (1979) f o u n d t h e a v e r a g e c u r r e n t cost of d e v e l o p i n g a new c h e m i c a l entity to t h e s t a n d a r d s r e q u i r e d for m a r k e t i n g as a drug in t h e U n i t e d S t a t e s to be $54 m i l l i o n . I n c r e a s i n g l y . 1979: 4 0 . 1969). T h e t e c h n o l o g y in this case is s o p h i s t i c a t e d and c a p i t a l . s p o n s o r c o n f e r e n c e s i n A c a p u l c o . T h e y c o n s t i t u t e a m a j o r b a r r i e r for e n t r y of n e w c o m p e t i t o r s . for i n s t a n c e .1 ) . this is b e y o n d the r e s o u r c e s of s m a l l c o m p a n i e s . T h e O E C D c o n s i d e r e d t h a t 'for a r e s e a r c h .b a s e d p h a r m a c e u t i c a l c o m p a n y t o have r e a s o n a b l e p r o s p e c t s o f g r o w t h . and only large m a n u f a c t u r e r s can use it efficiently. they i n c r e a s e t h e n u m b e r r a t h e r t h a n t h e c a p a c i t y of i n d i v i d u a l vats .e c o n o m i e s in p r o m o t i o n are not a justification for o l i g o p o l y . T h e r e is a t h r e s h o l d to o u t p u t v o l u m e . the question of w h e t h e r p r o m o t i o n is on b a l a n c e a social benefit will be c o n s i d e r e d critically in t h e next chapter. t h e p r o p o r t i o n o f i n n o v a t i o n a l o u t p u t ( n e w c h e m i c a l e n t i t i e s ) a c c o u n t e d for b y t h e four l a r g e s t firms i n c r e a s e d from 24 p e r cent to 49 p e r c e n t . i t is u s u a l l y c o n s i d e r e d t h a t at least 300 r e s e a r c h w o r k e r s should be e m p l o y e d ' ( O E C D . T h e r e a r e c e r t a i n l y e c o n o m i e s o f scale i n p r o m o t i o n . b u t o n e o f t h e c a u s e s of it. b e y o n d w h i c h t h e r e are n o further gains i n p r o d u c t i o n e c o n o m i e s from size. T h e s t r o n g e s t i n d u s t r y justification for o l i g o p o l y c o n c e r n s e c o n o m i e s o f scale i n r e s e a r c h and d e v e l o p m e n t . p r o d u c t i n n o v a t i o n s are c o n c e n t r a t e d i n t h e r e s e a r c h d i v i s i o n s o f t h e largest c o m p a n i e s b e c a u s e o f e s c a l a t i n g r e g u l a t o r y r e q u i r e m e n t s and t e c h n i c a l d e m a n d s for n e w b r e a k t h r o u g h s . E a c h o f t h e large a n t i b i o t i c s m a n u f a c t u r e r s . h o w e v e r . S m a l l firms find it i m p o s s i b l e to r e t a i n a large t e a m of d e t a i l e r s for d o c t o r v i s i t s .

R e e k i e .1 9 6 0 s it w a s t h e case t h a t t h e very largest firms w e r e n o t t h e m o s t i n n o v a t i v e . L i l l y ' s m u s t a r d gas kit. P r i o r to t h e m i d . F o r e x a m p l e . but for w h i c h t h e r e is such a small m a r k e t t h a t t h e costs of p r o d u c t i o n . I n c o n c l u s i o n .i n t e n s i v e firms is t h e p r o d u c t i o n o f ' s e r v i c e drugs'. o r A b b o t t ' s r a d i o a c t i v e i s o t o p e s . O n e s u s p e c t s t h a t p h a r m a c e u t i c a l c o m p a n i e s m o r e often t h a n not d e c i d e a g a i n s t m a r k e t i n g a beneficial yet u n p r o f i t a b l e p r o d u c t . . safety t e s t i n g . M o n o p o l i e s C o m m i s s i o n . . g o v e r n m e n t p r o d u c t i o n o f service d r u g s ) . These are products of great medical v a l u e . to dismiss as mere public relations Mead J o h n s o n ' s drug which cures a rare mental disorder occurring in p e r h a p s four h u n d r e d infants i n this c o u n t r y . w h e t h e r t h e public w o u l d be b e t t e r s e r v e d by direct p u b l i c funding for t h e s e benefits (for e x a m p l e . w h i c h M e r c k i n t r o d u c e d i n 1963 to r e m o v e c o p p e r in t r e a t i n g W i l s o n ' s d i s e a s e . s o t h a t t h e r e w e r e c e r t a i n dise c o n o m i e s o f scale ( C o m a n o r . 1968. 1 9 6 9 . 169 . 1 9 7 1 . 1972). . 1965.1 9 6 0 s r e s e a r c h and d e v e l o p m e n t effort and o u t p u t n o w i n c r e a s e p r o p o r t i o n a t e l y w i t h firm size. M a n s f i e l d e t a l . N e v e r t h e l e s s . t h e r e are c e r t a i n i m p o r t a n t p u b l i c benefits from o l i g o p o l y i n t h e p h a r m a c e u t i c a l i n d u s t r y . R o s e n t h a l (1960) points out that it would b e c y n i c a l .Antitrust 1957 a n d 1961 t h e r e w e r e 51 firms w h o d e v e l o p e d a n e w c h e m i c a l e n t i t y . H o w e v e r . while subs i d i s i n g such f u n d i n g from t h e savings which w o u l d follow from breaking oligopolistic power. social benefit of t h e o l i g o p o l i s t i c s h e l t e r i n g of t h e r e s e a r c h . A f r e q u e n t l y o v e r s t a t e d . G r a b o w s k i . W y e t h ' s A n t i v e n i n a g a i n s t s n a k e b i t e .8 ) . and d o c u m e n t a t i o n for g o v e r n m e n t r e g i s t r a t i o n e x c e e d r e t u r n s from sales. T o t h e e x t e n t t h a t s e r v i c e d r u g s d o e x i s t . t h e y are m a d e p o s s i b l e b y t h e oligop o l i s t i c s t r u c t u r e o f t h e m a r k e t . R e e k i e and W e b e r ( 1 9 7 9 : 146-51) have r e v i e w e d the c o n s i d e r a b l e e v i d e n c e w h i c h p o i n t s t o t h e c o n c l u s i o n t h a t since t h e m i d . an often fatal c o m p l a i n t w h i c h afflicts only 1.000 p e r s o n s in t h e US ( M i n t z . in a perfectly c o m p e t i t i v e m a r k e t . c o m p a n i e s could n o t afford t h e l u x u r y o f a n y lines w h i c h c a u s e losses. b e t w e e n 1967 a n d 1971 t h e r e w e r e only 2 3 . 1967: 3 4 7 . b u t n e v e r t h e l e s s r e a l . T h e q u e s t i o n is. h o w e v e r . t h e n . T h e s e a r e c e r t a i n l y not p r o f i t a b l e . t h e r e i s t h e story o f C u p r i m i n e ( p e n i c i l l a m i n e ) .

F o r a l m o s t e v e r y p r e s c r i p t i o n d r u g . realising that t h e p r i c e s t h e i r p e o p l e are asked t o pay t r a n s n a t i o n a l d r u g c o m p a n i e s b e a r little r e l a t i o n t o m a r k e t f o r c e s . I n m a n y c a s e s t h e n e g o t i a t e d prices are b a s e d on a formula which i n c o r p o r a t e s costs of raw materials. T h e g o v e r n m e n t might not allow a p r o d u c t into its s u b s i d i s e d p h a r m a c e u t i c a l benefits s c h e m e unless the c o m p a n y is w i l l i n g to a g r e e to t h e g o v e r n m e n t ' s d e c i s i o n on the price at which t h e p r o d u c t will be sold within t h e c o u n t r y . one c a n o b s e r v e t h e identical p r o d u c t p r o d u c e d b y t h e same c o m p a n y selling at grossly d i s p a r a t e p r i c e s in different p a r t s o f t h e world Lilly's D a r v o n . In m o s t c o u n t r i e s the price at w h i c h a d r u g is to be sold is n e g o t i a t e d w i t h t h e g o v e r n m e n t at t h e t i m e it is first allowed on the m a r k e t and may not b e c h a n g e d w i t h o u t g o v e r n m e n t a p p r o v a l .Antitrust Government price controls M o s t g o v e r n m e n t s . S o m e c o u n t r i e s such as A u s t r a l i a do q u i t e d e t a i l e d a n a l y s i s o f v a r i o u s c o s t s o f m a r k e t i n g the p r o d u c t .02 per h u n d r e d c a p s u l e s in t h e U n i t e d S t a t e s a n d S I . T h e l a t t e r is g e n e r a l l y not an a t t r a c t i v e p r o p o s i t i o n to c o m p a n i e s b e c a u s e d r u g s u n a p p r o v e d b y g o v e r n m e n t subsidy s c h e m e s are less likely to be p r e s c r i b e d by d o c t o r s . 170 . M a n y T h i r d . e v e n w h e r e t h e free m a r k e t o p t i o n is o p e n . sold for S7. B r i t a i n d e t e r m i n e s price i n c r e a s e s or d e c r e a s e s on t h e basis of w h a t a m o u n t of i n c o m e will a l l o w t h e c o m p a n y a p r e d e t e r m i n e d level of profit. T h e U n i t e d S t a t e s is t h e only large p h a r m a c e u t i c a l m a r k e t in the w o r l d w h e r e p r i c e s a r e not p r i m a r i l y c o n t r o l l e d b y g o v e r n m e n t . r e s e a r c h . h a v e i n t r o d u c e d m o r e or less effective g o v e r n m e n t control o f p h a r m a c e u t i c a l p r i c e s . I t a l y . 6 6 i n I r e l a n d . effective p r i c e c o n t r o l is generally possible. T h e r e is no a n a l y s i s o f c o m p o n e n t c o s t s . in c o n t r a s t .W o r l d c o u n t r i e s which c a n n o t afford m o r e d e t a i l e d i n v e s t i g a t i o n base their decisions o n the prices prevailing in the country of origin. simply a w a r d s a price w h i c h is a multiple o f t h e r a w m a t e r i a l s and p r o d u c t i o n c o s t s . for e x a m p l e . T h e y a r e a reflection of political choices r a t h e r than purchasing choices. H e n c e . a n d a profit m a r g i n . But the c o m p a n y can d e c i d e not to h a v e its p r o d u c t on the p h a r m a c e u t i c a l benefits s c h e m e a n d sell it on t h e o p e n m a r k e t at w h a t e v e r price it c h o o s e s . W i d e s p r e a d price controls on d r u g s h a v e b e e n a r e s p o n s e to t h e reality that prices b e a r m o r e r e l a t i o n to w h a t p u b l i c o p i n i o n will b e a r t h a n to what the m a r k e t will b e a r . production. distribution. In s o m e c o u n t r i e s a 'free m a r k e t ' o p e r a t e s alongside a pricec o n t r o l l e d m a r k e t .

H a l f the r a w m a t e r i a l s w e r e i m p o r t e d from h e a d q u a r t e r s at. f i n d i n g l o o p h o l e s t o get a r o u n d price c o n t r o l laws i s t h e p r e f e r r e d s t r a t e g y . a s w e saw i n C h a p t e r 2 . W h i l e the real cost of t h e s h i p m e n t w a s $5 a g r a m . t h e c o m p a n y s u b m i t s a n e w r e g i s t r a t i o n a p p l i c a t i o n for t h e s a m e d r u g u n d e r a n e w n a m e .(XX) p e s o s ( S U S 2 . I had had an a b s o l u t e l y fruitless discussion with four A u s t r a l i a n e x e c u t i v e s of an A m e r i c a n c o m p a n y .for e x a m p l e . o n e w o u l d e x p e c t t h e m to e l i m i n a t e o t h e r s . P a t e n t s c r e a t e p a t e n t p i r a t e s . 7 1 5 ) on forty companies for increasing prices without government a p p r o v a l .d i r e c t o r o f his t r a n s n a t i o n a l had a s c h e m e for s h o w i n g the A u s t r a l i a n H e a l t h D e p a r t m e n t t h a t its t r a n s f e r prices for r a w m a t e r i a l s i m p o r t e d from c o r p o r a t e h e a d q u a r t e r s w e r e twice w h a t they i n fact w e r e . T h e following r e v e l a t i o n from o n e o f t h e most indiscreet o f t h e executives I interviewed brought h o m e t h e fact t h a t g o v e r n m e n t c o n t r o l o v e r p r i c e s d o e s not eliminate price-fixing c o n s p i r a c i e s . S10 a g r a m a n d half sent free of c h a r g e 'for use in c o n d u c t i n g trials'. G e n e r a l l y . M o r e t y p i c a l l y . a t e n n i s r a c q u e t u n d e r his a r m . As I w a i t e d d e j e c t e d l y in t h e foyer for a taxi to t a k e me to my h o t e l .t o o version o f t h e original. b r i b e s for e m p l o y e e s t o disclose c o m m e r c i a l s e c r e t s . c a m e o v e r and 171 . a n d . c o m p a n i e s w h o h a v e had a price of say 100 p e s o s a p p r o v e d for a b o t t l e o f 2 0 t a b l e t s m a n o e u v r e a r o u n d t h e law by m a r k e t i n g a n e w pack of 24 t a b l e t s for 150 p e s o s . one o f t h e four e x e c u t i v e s . P r i c e c o n t r o l s c r e a t e illegal price i n c r e a s e s . S o m e o f t h e g o v e r n m e n t price r e g u l a t o r s t o w h o m I s p o k e had little d o u b t that c o m p a n i e s often p r o v i d e d t h e m with false and m i s l e a d i n g i n f o r m a t i o n on costs in o r d e r to get a price i n c r e a s e . price-fixing c o n s p i r a c i e s . W h i l e t h e g o v e r n m e n t price c o n t r o l s b r i n g into play n e w forms o f c r i m i n a l i t y . if it has o n e . I found t h a t in c o l l e c t i v e i n t e r v i e w s . a m e . t h e H e a l t h D e p a r t m e n t c o u l d be s h o w n an i n v o i c e to i n d i c a t e t h a t t h e transfer price w a s S10. In 1977 the M e x i c a n g o v e r n m e n t i m p o s e d fines of up to 5(). p r e s s u r e s and o p p o r t u n i t i e s for c r i m e w h i c h a r e u n i q u e t o it. A m o r e w i d e l y used s t r a t e g y is t h e ' r e g i s t r a t i o n l o o p h o l e ' . or. W h e n t h e price of o n e of its d r u g s is fixed at an unsatisfactorily low l e v e l . O n e c o m p a n y i n f o r m a n t told m e t h a t t h e m a n a g i n g . it m e r e l y c h a n g e s their form. say. I n M e x i c o . e x e c u t i v e s w h o w e r e frank i n private j o i n e d t h e o t h e r s i n a t t e m p t s t o o u t d o each o t h e r with displays o f c o m p a n y l o y a l t y a n d o r a t i o n s a b o u t t h e evils of r e g u l a t i o n .Antitrust A f u n d a m e n t a l reality of any e c o n o m i c i n s t i t u t i o n is t h a t it c r e a t e s n e w t e m p t a t i o n s .

t h e Swiss p a t e n t . initiated by the attorney general of that country. It costs $87 per kilo (2. t h e y are p r o b a b l y less. To put t h e r a w m a t e r i a l into final d o s a g e form and to label a n d p a c k a g e t h e t a b l e t s b r i n g s t h e cost up to $487. T h e final retail p r i c e is $11. . T h e H o f f m a n . V a l i u m a n d L i b r i u m h a v e b e e n b e t t e r t h a n gold for H o f f m a n .a t a u t o l o g o u s q u e s t i o n t h a t still rings in my e a r s .L a R o c h e case s t u d y D r .t h r o a t c o m p e t i t o r s w h o are a l w a y s a t e a c h o t h e r ' s t h r o a t s ? ' . . k n o w n by its g e n e r i c c h e m i c a l n a m e as d i a z e p a m . h e s a i d . R o c h e sales o f V a l i u m in t h e U n i t e d S t a t e s a l o n e a p p r o a c h e d $200 million for 1972 m a k i n g i t t h e t o p .h o l d e r s o f t h e t r a n q u i l l i s e r s . T h i s w a s r e v e a l e d in a p a t e n t h e a r i n g in C a n a d a . B u t t h a t said n o t h i n g a b o u t t h e profit to R o c h e . t o sit a r o u n d t h e table t o g e t h e r and w o r k o u t p r i c e s t h a t we could all a g r e e on in t h e s u b m i s s i o n s that w e m a k e t o t h e H e a l t h D e p a r t m e n t . Intern a t i o n a l p r i c e v a r i a t i o n s for V a l i u m reflect t h e c a p a c i t y of the t r a n s n a t i o n a l w i t h a legal m o n o p o l y to c h a r g e w h a t e v e r t h e traffic 172 . we w o u l d all p u t d o w n r o u g h l y the s a m e price for the costs of d i s t r i b u t i n g a d r u g s o t h a t the H e a l t h D e p a r t m e n t c o u l d n ' t c o m e to o n e of us and say: ' L o o k . 1973: 8 1 ) . W h y . R i c h a r d B u r a c k c o m p a r e s t h e cost o f V a l i u m t o the price o f g o l d . o t h e r c o m p a n i e s are c o s t i n g this at a lot less t h a n y o u a r e . He d i s c o v e r e d t h a t t h e w h o l e s a l e price of V a l i u m is t w e n t y . .000 t e n . for e x a m p l e .2 p o u n d s ) for the raw m a t e r i a l for V a l i u m . T h i s is a g e n e r o u s e s t i m a t e o f p r o d u c t i o n c o s t s . all o f t h e a c c o u n t a n t s a n d f i n a n c e d i r e c t o r s . T h e selling p r i c e is 140 t i m e s t h e original cost of m a t e r i a l s and t w e n t y t i m e s t h e t o t a l p r o d u c t i o n cost ( P e k k a n e n . W i t h c a l c u l a t e d naivety I said: ' O h a r e n ' t you c u t . t h e y got o n well t o g e t h e r . . d e s p i t e my e m b a r r a s s m e n t at the driver's presence. In t h e c o u r s e of an a m i a b l e c o n v e r s a t i o n he m e n t i o n e d t h a t he w a s off to play t e n n i s on the c o u r t s of a n o t h e r p h a r m a c e u t i c a l c o m p a n y l o c a t e d n e a r b y .s e l l i n g p r e s c r i p t i o n d r u g ( N a d e r . j u s t r e c e n t l y w e got t o g e t h e r a b o u t 3 0 o f u s . . 1973). S o t h a t . N o .f i v e t i m e s t h e price o f g o l d .m i l l i g r a m t a b l e t s . ' I furtively b l u r t e d this into my t a p e r e c o r d e r in t h e b a c k o f t h e t a x i .L a R o c h e . H e r e ' s w h a t w a s f o u n d .Antitrust b e g a n to c h a t .000 for t h a t s a m e original kilo w h i c h h a s n o w p r o d u c e d 100. h e c o n t i n u e d .

and young doctors would acquire the habit of p r e s c r i b i n g t h e d r u g d u r i n g their h o s p i t a l t r a i n i n g . O u t . T h e B r i t i s h M o n o p o l i e s C o m m i s s i o n r e p o r t o n L i b r i u m and V a l i u m focused i n t e r n a t i o n a l a t t e n t i o n o n m o n o p o l i s t i c d r u g p r i c i n g . H a v i n g carefully i n v e s t i g a t e d R o c h e ' s c o s t s . T h e D e p a r t m e n t o f H e a l t h and S o c i a l S e c u r i t y d e c i d e d t o p r o c e e d a g a i n s t t h e c o m p a n y b y referring t h e m a t t e r o f t h e s u p p l y o f L i b r i u m and V a l i u m t o the M o n o p o l i e s C o m m i s s i o n ." R o c h e petitioned the H o u s e o f L o r d s Special O r d e r s C o m m i t t e e against t h e o r d e r w i t h o u t s u c c e s s . N e v e r t h e l e s s . F o r H o f f m a n .c a r t e l c o u r t a c t i o n s followed i n W e s t G e r m a n y and t h e N e t h e r l a n d s t o r e d u c e t h e p r i c e s o f L i b r i u m and V a l i u m . N e g o t i a t i o n s with t h e c o m p a n y led t o p a y m e n t s o f S I .Antitrust will b e a r . A n t i . R o c h e r e g a r d e d p a y i n g s o m e o f their profits t o t h e g o v e r n m e n t a s p r e f e r a b l e to c u t t i n g t h e i r p r i c e s for fear t h a t t h e l a t t e r w o u l d lead t o d e m a n d s from o t h e r c o u n t r i e s for e q u i v a l e n t price r e d u c t i o n s .L a R o c h e . 1978: 9 3 ) . 1 9 7 8 b ) .o f . the a d v e r s e publicity o f t h e British report o p e n e d the floodgates of 173 . T h e P a p u a N e w G u i n e a g o v e r n m e n t has b e e n offered V a l i u m a t o n e t e n t h t h e price c h a r g e d t o the n e i g h b o u r i n g A u s t r a l i a n g o v e r n m e n t ( G o r r i n g . T h e r e w e r e c o m p e n s a t i n g benefits from this e x p e n s e . R o c h e h a s q u o t e d t h e Sri L a n k a n g o v e r n m e n t a price for V a l i u m 70 t i m e s higher than the price charged by an Indian company ( A g a r w a l . I n t h e late 1960s t h e B r i t i s h g o v e r n m e n t d e c i d e d t h a t H o f f m a n L a R o c h e w a s a b u s i n g m o n o p o l y p o w e r b y its pricing o f V a l i u m a n d L i b r i u m . and for t h e p h a r m a c e u t i c a l i n d u s t r y g e n e r a l l y .75 million in e x c e s s profits. E v e n w i t h i n t h e E E C . It w a s also a g r e e d t h a t p r i c e s for L i b r i u m a n d V a l i u m be r o u g h l y half the 1970 levels. t h e M o n o p o l i e s C o m m i s s i o n r e c o m m e n d e d that t h e price o f L i b r i u m be r e d u c e d to 40 p e r c e n t o f t h e 1970 price and V a l i u m to 25 per c e n t o f t h e 1970 f i g u r e . i n G e r m a n y R o c h e sells V a l i u m a t a l m o s t four t i m e s t h e p r i c e i t c h a r g e s i n B r i t a i n (1976 p r i c e s ) . ' Then the c o m p a n y c o m m e n c e d High Court proc e e d i n g s c h a l l e n g i n g t h e validity o f b o t h t h e M o n o p o l i e s C o m m i s sion r e p o r t and t h e price-fixing o r d e r . 6 m i l l i o n to t h e g o v e r n m e n t for excess profits b e t w e e n 1967 and 1969. ' A n o r d e r u n d e r t h e m o n o p o l i e s legislation fixing these prices was m a d e on 12 April 1973. P a t i e n t s started on Valium in hospital would continue on it w h e n d i s c h a r g e d . in 1971 R o c h e refused to m a k e any r e p a y m e n t s for e x c e s s i v e profits for t h e y e a r 1970. V a l i u m w a s also g i v e n free of c h a r g e to h o s p i t a l s in the N a t i o n a l H e a l t h S e r v i c e .c o u r t n e g o t i a t i o n s s e t t l e d t h e m a t t e r i n N o v e m b e r 1975 w h e n R o c h e a g r e e d t o pay the g o v e r n m e n t S3.

again u n d e r c u t t i n g p r i c e s o n t h e local m a r k e t . T h e C e n t r a f a r m victory w a s s h o r t lived. F o l l o w i n g the M o n o p o l i e s C o m m i s s i o n r e p o r t B r i t a i n had c h e a p e r d r u g prices t h a n t h e rest o f the E E C . by failing to realise that w h i l e t h e m a r k e t could i m p o s e no u p p e r limit on its p r i c e s . C e n t r a f a r m e v e n b o u g h t a p r o d u c t ( N e g r a m ) i n B r i t a i n w h i c h had b e e n m a n u f a c t u r e d i n H o l l a n d . W h e n C e n t r a f a r m b r o k e t h e n e w l a w . T h e y b r o u g h t i t back t o resell i n H o l l a n d . W h i l e it had violated no a n t i t r u s t l a w s . sued C e n t r a f a r m for b r e a c h o f p a t e n t a n d t r a d e m a r k r i g h t s .L a R o c h e L i b r i u m and V a l i u m from British w h o l e s a l e r s and t h e n reselling the drugs in the N e t h e r l a n d s . t h e D u t c h g o v e r n m e n t b a s e d its c a s e for d e m a n d i n g t h e d o c u m e n t s o n the p o t e n t i a l d a n g e r t o public h e a l t h . R o c h e refused t o issue such d o c u m e n t s t o C e n t r a f a r m . t h e S u p r e m e C o u r t i n t h e H a g u e .h o l d e r s for N e g r a m . W h i l e they w o n i n t w o D u t c h c o u r t s . w h e r e t h e P M A lobby p r o v e d a s s t r o n g a s ever. Centrafarm.L a R o c h e had d o n e a disservice to the industry by p u s h i n g t o o h a r d . undercutting Roche p r i c e s on sales of its o w n p r o d u c t . S t e r l i n g and W i n t h r o p . T h e D u t c h g o v e r n m e n t e n a c t e d a law r e q u i r i n g i m p o r t e r s t o s u b m i t d o c u m e n t s from t h e m a n u f a c t u r e r giving full d e t a i l s o f t h e d r u g s i m p o r t e d .t h e only g r o u n d s t h e R o m e t r e a t y allows for r e s t r i c t i n g 174 . b e c a u s e t h e D u t c h g o v e r n m e n t d e c i d e d t o back R o c h e and t h e o t h e r t r a n s n a t i o n a l i n t h e i r a t t e m p t s t o s t o p C e n t r a f a r m ' s price c u t t i n g . ruling t h a t t h e E E C t r e a t y forbids firms from d o i n g a n y t h i n g that has t h e effect o f r e s t r i c t i n g t r a d e w i t h i n t h e E E C . O b v i o u s l y . p u b l i c o p i n i o n c o u l d . C e n t r a f a r m ' s d e f e n c e that t h e new D u t c h law w a s i n conflict with the N e t h e r l a n d s ' E E C o b l i g a t i o n s resulted in the m a t t e r being referred to the E E C Court again. H o f f m a n . a n d i n d o i n g s o d e m o n s t r a t e d t h e limited r e l e v a n c e o f antit r u s t law t o t h e p r o t e c t i o n o f d r u g c o n s u m e r s . T h e n t w o D u t c h l i c e n c e . B e f o r e t h e L u x e m b o u r g C o u r t . An enterprising Dutch firm.Antitrust t o u g h e r g o v e r n m e n t a l price c o n t r o l s a l m o s t e v e r y w h e r e except t h e U n i t e d S t a t e s . The Court of Justice o f t h e E u r o p e a n Communities in Luxemb o u r g d e c i d e d in favour of C e n t r a f a r m on 31 O c t o b e r 1974. it had b r e a c h e d t h e c o m m u n i t y ' s sense of fair p l a y . i t w a s p r o s e c u t e d . began buying H o f f m a n . for t h e first t i m e e v e r . The Centrafarm case study T h e logical u p s h o t of a r b i t r a r y i n t e r n a t i o n a l price v a r i a t i o n in p h a r m a c e u t i c a l s o c c u r r e d i n 1973. w e n t t o t h e E E C C o u r t for a r u l i n g .

s p e c t r u m antib i o t i c s saw Pfizer a n d C y a n a m i d d o m i n a t e this m a r k e t with p a t e n t s on chlortetracycline and oxytetracycline. This patent protection e n a b l e d t h e m t o m a i n t a i n high p r i c e s and m a s s i v e profits. P e n i c i l l i n w a s t h e first of the a n t i b i o t i c w o n d e r d r u g s . B u t t h e a d v a n c e s t o t h e b r o a d . F o r t u n e s w e r e not m a d e o n p e n i c i l l i n . T h e British and D a n i s h g o v e r n m e n t s w e i g h e d i n o n t h e side o f t h e D u t c h a u t h o r i t i e s : T h e w i d e l y a c c e p t e d m o t i v a t i o n for t h e U K p o s i t i o n w a s straight s e l f . C e n t r a f a r m p o i n t e d out that the p r o d u c t s it b o u g h t in B r i t a i n w e r e m a d e in t h e s a m e S w i s s . low p r i c e s for t e t r a c y l i n e w o u l d force d o w n t h e p r i c e s of c h l o r t e t r a c y c l i n e and o x y t e t r a c y c l i n e . R o c h e w a s n o t k e e n for the D u t c h g o v e r n m e n t t o a r g u e that t h e p r o d u c t s it sold in B r i t a i n w e r e inferior to t h o s e it sold in t h e N e t h e r l a n d s .s p e c t r u m a n t i b i o t i c has a l w a y s b e e n c o m p e t i t i v e since n o c o m p a n y had a p a t e n t . T h e r e w a s a real d a n g e r t h a t t e t r a c y c l i n e w o u l d not b e r e g a r d e d a s p a t e n t a b l e b y e i t h e r Pfizer or C y a n a m i d and t h a t t e t r a c y c l i n e w o u l d go the way of p e n i c i l l i n .i n t e r e s t . t h e y will a r g u e t h a t they can no l o n g e r hold to t h e low p r i c e s c h a r g e d in B r i t a i n and t h e cost to t h e N H S will g o u p ( L a m b e r t . T h e s e profits w e r e t h r o w n i n t o j e o p a r d y i n 1953 w h e n t h e t h e r a p e u t i c a l l y s u p e r i o r t e t r a c y c l i n e c a m e o n t h e s c e n e . B u t t h e tiny D u t c h i m p o r t e r w o n a g a i n s t t h e legal might o f t h e t h r e e g o v e r n m e n t s and t h e i n t e r n a t i o n a l p h a r m a c e u t i c a l lobby.and not with the importer.Antitrust t r a d e . The tetracycline case study The market for antibiotics A n t i b i o t i c s a r e a m a j o r g r o u p of d r u g s w h i c h are effective against a v a r i e t y of i n f e c t i o n s . I n any c a s e . M o r e o v e r . Pfizer and C y a n a m i d w i s h e d t o avoid this c o m p e t i t i v e m a r k e t s t r u c t u r e a t all c o s t s . T h e E u r o p e a n C o u r t r u l e d t h a t any a d m i n i s t r a t i v e r e q u i r e m e n t not b a s e d strictly on c o n c e r n for p u b l i c h e a l t h w a s against the T r e a t y . a n d t h r o u g h a series of d e a l s w h i c h will be discussed later. t h e y h u m i l i a t e d t h e D u t c h g o v e r n m e n t with t h e further r u l i n g t h a t t h e o n u s for s u p p l y i n g d o c u m e n t s r e l a t i n g to a p h a r m a c e u t i c a l p r e p a r a t i o n lies s q u a r e l y with t h e m a n u f a c t u r e r .G e r m a n plant from w h i c h R o c h e ' s D u t c h sales o r i g i n a t e d . M o r e o v e r . 175 . T h e m a r k e t for this n a r r o w . If B r i t i s h c o m p a n i e s are forced to sell c h e a p e r e l s e w h e r e in E u r o p e . 1976).

In 1957. F r o m 1954 t h e five c o m p a n i e s m a n a g e d t o m a i n t a i n uniform and high p r i c e s for t e t r a c y c l i n e .s p e c t r u m a n t i b i o t i c s b e t w e e n 1954 a n d 1961 w e r e $ 3 2 6 . t h e high prices for t e t r a c y c l i n e m a d e t h e s e c o m p a n i e s into t h e m a s s i v e t r a n s n a t i o n a l s they are t o d a y . 0 0 0 .s p e c t r u m a n t i b i o t i c s . a c o u n t r y w h i c h did not r e c o g n i s e t h e p a t e n t .886. F o r s o m e y e a r s in t h e early 1950s all of C y a n a m i d ' s p h a r m a c e u t i c a l profits c a m e from b r o a d .'" H o w e v e r .Antitrust m a n a g e d to r e s t r i c t t e t r a c y c l i n e sales to five c o m p a n i e s . C y a n a m i d . t h e t h r e a t o f real c o m p e t i t i o n b e g a n t o build u p . $ 2 0 . 0 0 0 of w h i c h w a s a c c o u n t e d for by profits from b r o a d s p e c t r u m a n t i b i o t i c s . the r e m a i n d e r of the c o m p a n y ' s pharmaceutical d i v i s i o n r u n n i n g at a loss. and pricing uniformity b e g a n t o fall a p a r t . o n e n e w c o m p e t i t o r . T h i s w a s b e c a u s e S q u i b b a n d U p j o h n did n o t m a n u f a c t u r e t h e r a w m a t e r i a l t h e m s e l v e s . T h e i n f r i n g e m e n t suit against M c K e s s o n and R o b b i n s w a s settled in 1966 w h e n t h e c o m p a n y s h o w e d that it was m o r e t h a n w i l l i n g to go t h r o u g h with a legal c h a l l e n g e to the shaky Pfizer p a t e n t .r e l a t i o n s r e a c t i o n t o K e f a u v e r ' s S e n a t e i n v e s t i g a t i o n o f t h e a l l e g e d cons p i r a c y . T a b l e 5. T h e i r sales of b r o a d . p r i m a r i l y from t e t r a c y c l i n e i m p o r t e d from I t a l y .all of w h o m r e c o g n i s e d Pfizer as t h e p a t e n t . W h a t e v e r the s o u r c e s . t h e first year for which such figures are a v a i l a b l e . had the r e s o u r c e s t o resist. 176 .1 t h a t t h e first n o t a b l e price cuts o c c u r r e d in 1961 a n d 1962. The evidence for price fixing T h e U S g o v e r n m e n t ' s p r i m a r y e v i d e n c e against the five c o m p a n i e s w a s t h e e x t r a o r d i n a r y uniformity o f p r i c e s s u m m a r i s e d i n T a b l e 5 .h o l d e r .Pfizer. B r i s t o l . It c a n be seen from T a b l e 5. h o w e v e r . S q u i b b and U p j o h n . T h e s e w e r e largely a p u b l i c .(KK).2 indicates how S q u i b b a n d U p j o h n p r o d u c t i o n costs w e r e a l w a y s a t least t h r e e times a s high a s t h o s e o f t h e o t h e r c o m p a n i e s . T h e y b o u g h t in b u l k from Bristol and did t h e i r o w n e n c a p s u l a t i o n . M c K e s s o n and R o b b i n s . 0 0 0 . Pfizer L a b o r a t o r i e s r e p o r t e d an o p e r a t i n g profit of S23. 1 . B y 1964. 0 0 0 . T h i s u n i f o r m i t y existed in spite o f t h e fact that t h e p r o d u c t i o n costs of t h e five c o m p a n i e s w e r e widely d i s p a r a t e . M c K e s s o n w a s licensed by Pfizer and C y a n a m i d to sell t h e i r o w n b r a n d o f t e t r a c y c l i n e . T h e s e i m p o r t e r s w e r e g e n e r a l l y driven out o f t h e A m e r i c a n m a r k e t by patent infringement suits. We shall see t h a t t h e uniformity w a s so s t r i k i n g as to be e i t h e r t h e result of price fixing or c o i n c i d e n c e w h i c h defies belief.

05 11.36 3.95 4.00 4.51 17.94 4.82 22.60 30.95 14.75 5.35 17.86 3.22 9.60 30.47 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 ' E x t r a c t e d f r o m US v Pfizer et aL.60 29.50 4. Following the introduction of tetracycline. U p j o h n a n d S q u i b b had d i s s i m i l a r d i s c o u n t s c h e d u l e s t o w h o l e s a l e r s and c u s t o m e r s b u y i n g u n d e r p u r c h a s i n g plans and agency a g r e e m e n t s .60 30.60 30.25 3.36 17. 4 0 3 .88 23.31 22.50 3. t h e s e d i s p a r a t e s c h e d u l e s w e r e a l t e r e d t o bring all retail p r i c e s exactly i n t o line. US D i s t r i c t C o u r t . 4 .17 3.Antitrust T A B L E 5. T h e best kind o f e v i d e n c e c o n c e r n i n g c o m m u n i c a t i o n s a b o u t prices w h i c h c o u l d b e found w a s i n t h e n a t u r e o f t h e following i n s t r u c t i o n s e n t to S q u i b b ' F i e l d M a n a g e r s ' on 12 N o v e m b e r 1954. c o m p a n i e s like C y a n a m i d .31 Cyanamid (Achromycin) Upjohi (Panm $ 30.15 26.36 25. 100 c a p s u l e s ' Bristol (Polycycline & Brislacycline) S 30.00 19.25 4.74 15.25 4.75 22. 2 5 0 m g .62 2.60 29.80 22.02 8.60 28.60 30.60 30.25 4. t h e g o v e r n m e n t did not h a v e d i r e c t e v i d e n c e of m e e t i n g s which t o o k place to illegally fix p r i c e s .87 25.90 $ 30.7 1 C i v .60 30.81 22.25 4.60 28. C l e a r l y t h e m o s t difficult a r e a in w h i c h to hold t h e line in a price-fixing c o n s p i r a c y is the secret bid m a r k e t s 177 .60 29.60 30.79 8.57 4.' W h i l e t h e d i r e c t p r o o f o f c o n s p i r a c y w a s w e a k .31 25.01 23.60 16.60 30. M i n n e s o t a .88 23.46 4.60 30.60 30.60 30. 4 . 4 3 5 .25 $ 30.22 11.50 4.60 15. 9 O c t o b e r .52 2.60 30.25 3.00 19.60 30.25 4.00 13.41 4.43 17.88 14.25 4.41 7.60 30. A m e n d m e n t a n d S u p p l e m e n t t o P r e t r i a l D a m a g e B r i e f for U S .02 4.60 30. it is our fixed policy not only to avoid price c u t t i n g on Steclin b u t to a v o i d any p r a c t i c e w h i c h might lay us o p e n to such an accusation.7 1 C i v .08 6.60 15.23 4.60 30.25 4.67 26. the c i r c u m s t a n t i a l e v i d e n c e w a s c o m p e l l i n g .00 19. D i s t r i c t of 1975.37 11.60 30. P r i o r t o t h e m a r k e t i n g o f t e t r a c y c l i n e . h o w e v e r .08 3.00 23.25 4.60 30. T h e r e w a s o t h e r e v i d e n c e c o n s i s t e n t with a price-fixing cons p i r a c y .60 30.1 W e i g h t e d a n n u a l a v e r a g e price t o r e t a i l e r s o f t e t r a c y c l i n e .17 4.95 23.25 Squibb (Steclin & Tetracycline) Pfizer (Tetracyn) J 30.26 6.62 11. ' A s you h a v e b e e n i n f o r m e d . N e v e r t h e l e s s .25 3.00 19.

Pfizer a n d C y a n a m i d all bid S I .VSCoun of A p p e a l s for the S e c o n d Circuit. 100's (Unit cost)* Pfizer Tetracyn Capsules.2 T e t r a c y c l i n e p r o d u c t i o n costs 250 m g . 7 9 ( A u g u s t ) .74 $3.50 $9. D o e s not include royalty p a y m e n t s .67 $1. $ 4 7 . 17. t h a t is. $ 2 9 . $ 2 3 .87 S3. B r i s t o l . 7 3 ( S e p t e m b e r ) .01 S3. $ 3 9 .08 (January •57) $1.08 (December) $9. 1 9 5 4 B r i s t o l ' s r e a v e r a g e d unit c o s t s w e r e : $ 6 0 .92 $1.24 $2. s a l e s t o h o s p i t a l s and o t h e r p u b l i c i n s t i t u t i o n s . 100's ( U n i t factory cost)* Upjohn Panmycin Capsules. 2 5 0 m g . 0 0 0 c o n t r a c t w i t h t h e M i l i t a r y M e d i c a l S u p p l y A g e n c y i n 1957.86 NA NA $9.26 SI. 4 1 ( J u n e ) .64 $1.59 $7.86 Squibb Steclin Capsules.24t NA SI. O n e i l l u s t r a t i o n w a s with a n $ 8 3 0 .01 ( O c t o b e r ) . 100's (Reaveraged unit c o s t ) * arter '111. c a p s u l e s 100's *th qu 1954 Cyanamid Achromycin Capsules.56 S3. p.Antitrust TABLE 5. $6.98 NA t In = not available. $9.28 $9. B u t Pfizer had bid on t h e w r o n g 178 .61 (October) $12. 2 5 0 m g . 2 5 0 m g . 2 5 ( M a y ) . 6 1 ( J u l y ) . 2 5 0 m g . 100's ( A c t u a l unit cost) Bristol Polycycline Capsules. 8 3 a b o t t l e .58 $9. B r i e f for t h e A p p e l l e e .59 $1. $4. (December).39 NA $7. q U 4th qu arter 1956 4th qu arter 1957 4th qu arter 1958 4th qu arter 1959 4th qu arter 1960 arter 1955 S2. T h e r e w a s c o n s i d e r a b l e e v i d e n c e t h a t t h e t e t r a c y c l i n e c o m p a n i e s did hold the line o n s e c r e t b i d s .70 S6.71 $14.91 From US\PfizerelaL.77 $1. 2 5 0 m g .47 $9.57 SI.94 $1.91 $1.24 ( N o v e m b e r ) . 100's (Unit finished goods cost) NA $11.08 $2.52 $1.

t h e r e w a s no q u e s t i o n in his mind or m i n e t h a t we e x p e c t e d you to q u o t e the 2% as a c a s h d i s c o u n t . 2 5 0 m g . I. w o n the c o n t r a c t with a bid of SI. w h o s e t u r n i t w a s .49 price has b e e n b r o k e n b y S q u i b b . On the P a n m y c i n it l o o k s like S q u i b b scuttled o u r ship. which may not be good. W h e n I got J a c k ' s p e r m i s s i o n t o q u o t e 2 % cash d i s c o u n t . u n d e r t h r e a t from t h e A g e n c y to switch the c o n t r a c t to Pfizer unless a lower bid w e r e f o r t h c o m i n g for the s m a l l e r a m o u n t . I w o n d e r if B r i s t o l will c o m p l a i n to t h e m as t h e y did w i t h us.49 2% 15th P r o x i m s S q u i b b S22. . ) in 1955 w a s S22. m a n a g e r of S q u i b b ' s m a r k e t i n g d e p a r t m e n t t o L . L . H e r b e r t . H e b e r g e r . B u t B r i s t o l . L o s A n g e l e s regional sales m a n a g e r . H o w e v e r . . It is nice to get a Steclin o r d e r finally from L o s A n g e l e s C o u n t y .49 p e r 100 less 2% d i s c o u n t . w e are e n c l o s i n g the r e s u l t s o f t h e bids a t Los Angeles County Hospital: 864 T e t r a c y c l i n e C a p s . U p j o h n ' s d i s p l e a s u r e at this is i n d i c a t e d b y the following i n t e r n a l c o r r e s p o n d e n c e . T h e M e d i c a l Military Supply A g e n c y d e c i d e d t o use this o p p o r t u n i t y t o p u s h the price d o w n and r e i s s u e d the call for bids at 70cc a m o u n t s . 179 . a s e v i d e n c e d by a l e t t e r from A. but I have my fingers c r o s s e d . 8 3 a g a i n .Antitrust size b o t t l e (70cc i n s t e a d of 7 5 c c ) . in A p r i l 1955 S q u i b b b r o k e r a n k s w i t h the offer o f a 2 p e r cent d i s c o u n t .49 n e t H o m e r H a m m o n d feels S q u i b b will get the bid with an o p e n 2% no t i m e limit. d a t e d 2 7 A p r i l 1955: I w a s d i s t u r b e d to l e a r n t h a t we w e r e the successful b i d d e r to L o s A n g e l e s C o u n t y b e c a u s e w e bid o n t e t r a c y c l i n e 2 5 0 m g . . c a p s u l e s S22. Pfizer and C y a n a m i d b o t h bid S I . A s r e q u e s t e d . T h e s t a n d a r d bid p r i c e to C C S h o s p i t a l s for 100 c a p s u l e s ( 2 5 0 m g .49 net [Cyanamid] B r i s t o l S22. w e n t a s follows: Pfizer S22.49.828. ' S q u i b b m a n a g e m e n t w a s i n d e e d w o r r i e d a b o u t w i n n i n g this bid. T h e r e w a s also e v i d e n c e o f Pfizer d i s q u i e t that S q u i b b ' s d i s c o u n t m i g h t m e a n ' t h a t t h e S22. a n t i c i p a t i n g c e r t a i n r e a c t i o n s to w h a t we did.49 2 % o p e n L e d e r l e S22.

Pfizer. S q u i b b and U p j o h n s e e m e d to display a c e r t a i n willingn e s s to ' t u r n t h e o t h e r c h e e k ' and m a i n t a i n a f i x e d . C o n s i d e r t h e following internal Squibb m e m o r a n d u m : Y o u r e p o r t e d on a r e c e n t bid m a d e to M i l w a u k e e C o u n t y . B r i s t o l w a s successful and has r e c e i v e d t h e award. 0 8 p e r 100. o r w h e t h e r t h e bid w a s m a d e t h r o u g h a d e a l e r . L e d e r l e ' s p r o d u c t w a s offered at $ 2 1 . I n f o r m a t i o n I p r e v i o u s l y r e c e i v e d and as w a s r e p o r t e d to you in my l e t t e r of 4 .Antitrust As I s a y . 4 9 . W i t h i n a few w e e k s . In y o u r l e t t e r to me you r e p o r t t h e fact t h a t Pfizer q u o t e d Steclin to t h e K i n g C o u n t y H o s p i t a l at t h e r e g u l a r price and also offered 180 . On t h e basis of this i n f o r m a t i o n . B r i s t o l and L e d e r l e w e r e e q u a l i n b i d d i n g the $ 2 2 . w h i c h m e a n t that the 2% w o u l d not be a l l o w e d . as i n d i c a t e d by t h e following i n t e r n a l C y a n a m i d m e m o r a n d u m of 6 M a y 1955. Z i e g l e r . .2 7 . M r . In o r d e r to p r o p e r l y record t h i s v i o l a t i o n I m u s t k n o w w h e t h e r this w a s a direct bid by L e d e r l e .5 5 stated that S q u i b b w a s to get the a w a r d in N e w a r k b e c a u s e o f t h e fact that t h e y did a l l o w a 2% discount. T h e following c o r r e s p o n d e n c e from S q u i b b m a n a g e m e n t to o n e of their field officers illustrates this policy of d e t e n t e . as a r e p r e s e n t a t i v e of L e d e r l e . A c e n t r a l r e q u i r e m e n t for a n y c a r t e l is a s y s t e m for r e c o r d i n g ' v i o l a t i o n s ' and p u n i s h i n g ' d e l i n q u e n t s ' . S q u i b b p e r h a p s m a d e a m e n d s to its ' c o m p e t i t o r s ' . for which we thank you. T h e i r 2 p e r c e n t d i s c o u n t w a s d r o p p e d on a N e w a r k bid. If such a s y s t e m did exist a m o n g the t e t r a c y c l i n e p r o d u c e r s . its form h a s not b e e n d i s c o v e r e d . it w o u l d be nice to get t h e o r d e r but I am h o p i n g t h e r e are no serious results. H o l d i n g a c a r t e l t o g e t h e r is not easy. N e v e r t h e l e s s . On Bid N o . It n o w d e v e l o p s from further r e p o r t that S q u i b b called the a t t e n t i o n o f t h e P u r c h a s i n g Office in N e w a r k to the fact that t h e r e w a s an a s t e r i s k on t h e i r bid. B r i s t o l . t h e r e i s e v i d e n c e s u g g e s t i n g t h a t s o m e sort of s y s t e m did exist. I w o u l d very m u c h a p p r e c i a t e y o u r setting me straight.b i d price d e s p i t e a p p a r e n t p r o v o c a t i o n from Pfizer. w a s called in for a d r a w i n g out o f a hat. 635 for 100's of T e t r a c y c l i n e 2 5 0 M g . O n May 4 t h . S q u i b b .

L e d e r l e .o f f fund to " f a c i l i t a t e " sales to g o v e r n m e n t a l p u r c h a s e r s in V e n e z u e l a . A n u n p r o n o u n c e a b l e ' b r s t l h s t c h l d r l l p t t p f z r ' d e n o t e d five c o m p a n i e s .w o w ' w a s a pricefixing m e e t i n g . I t i s u n f o r t u n a t e b u t for t h e t i m e b e i n g we are h e l p l e s s . A ' d i s t u r b e d family' m e a n t that s o m e o n e had cut p r i c e s .B r i s t o l . I guess h o w e v e r . I k n o w w h y we m u s t o b s e r v e o u r s c h e d u l e and can not h e l p but a g r e e t h a t w e have n o o t h e r r e c o u r s e .t h e a l l e g e d c o d e n a m e for Rafael N. S o m e data support the conclusion that outside the United States t e t r a c y c l i n e may h a v e b e e n a classic i n t e r n a t i o n a l price c a r t e l . K e f a u v e r ' s S e n a t e i n v e s t i g a t i o n and s u b s e q u e n t follow-up r e v e a l e d an i d e n t i t y of t e t r a c y c l i n e p r i c e s in 13 c o u n t r i e s for which d a t a w e r e a v a i l a b l e ( C o s t e l l o . H o e c h s t . If I w e r e free to m a k e my own d e c i s i o n s on m e e t i n g Pfizer c o m p e t i t i o n . ' ' P l u t o ' noted that 'our friend s q b b [ S q u i b b ] could not a t t e n d b u t w a s no p a r t y to any 181 . T h e letter w a s w r i t t e n p a r t l y in c o d e . for e x a m p l e . I n e x p l a i n i n g the l e t t e r t o t h e S e n a t e . 1968: 3 7 ) . Pfizer's p r i c i n g m a n a g e r i n N e w Y o r k . ' A ' s i n n e r ' d e n o t e d a v i o l a t o r of a price-fixing a g r e e m e n t .and w a s a d d r e s s e d t o F r a n k P . s o m e o f t h e m m a r k e d ' p e r s o n a l a n d c o n f i d e n t i a l ' and ' p l e a s e d e s t r o y ' . I w o u l d c e r t a i n l y m a t c h a n y t h i n g they give but u n d e r t h e c i r c u m s t a n c e s w e can not r e t a l i a t e . S e n a t o r L o n g d e s c r i b e d o n e l e t t e r a s 'the most startling price-fixing d o c u m e n t I h a v e ever s e e n ' . you really m e a n t to ask me w h e t h e r we w o u l d m a t c h this Pfizer price on future b i d s . L o n g h a d to use a g l o s s a r y .V e n e z u e l a ' s " p a y . t h a t 'Special G . D a t e d 7 N o v e m b e r 1958. T h e l e t t e r told of an a n t i b i o t i c s ' p o w w o w ' r e c e n t l y ' c o n v o k e d i n o u r office with b r s t l h s t c h l d r l l p t t p f z r i n a t t e n d a n c e . t h e Italian firm licensed b y Pfizer to m a k e t e t r a c y c l i n e . P a r t i c u l a r l y d a m a g i n g i n the S e n a t e w e r e L a t i n A m e r i c a n c o m m u n i c a t i o n s a m o n g t h e five c o m p a n i e s . W i l s o n . and Pfizer. A n y c o m m e n t I m i g h t m a k e a b o u t this and s o m e o t h e r Pfizer m a n e u v e r s w o u l d n o t be fit to print. Y o u stated t h a t you w o u l d like to h e a r my c o m m e n t s . H e s a i d .1 3 ' d e n o t e d ' P f i z e r . L e p e t i t . A ' p o w . Pfizer's m a n a g e r i n V e n e z u e l a . Silva. W e have i n s t r u c t i o n s and t h e s e c a m e directly from t h e t o p and t h e r e f o r e u n d e r n o c i r c u m s t a n c e s can w e d e v i a t e from o u r regular s c h e d u l e . t h e G e r m a n firm it licensed to m a k e t e t r a c y c l i n e .Antitrust 2 0 0 on a no c h a r g e b a s i s . it w a s signed in C a r a c a s by ' P l u t o ' .

t o m o s t o f t h e U S p r i c e fixing c a s e s .Antitrust offense [ c o m p e t i t i v e price v a r i a t i o n ] a n d w a s fully d e s i r o u s of o t h e r s r e . h o w could it be p r o v e d that this w a s d o n e to p o l i c e a c o n s p i r a c y ? The criminal cases T h e J u s t i c e D e p a r t m e n t s o u g h t t o p r o s e c u t e all five c o m p a n i e s and a n u m b e r of i n d i v i d u a l s w i t h i n t h e m . o f c o u r s e . ' T h e letter r e c o u n t s that t h e "powwow* s u c c e e d e d in r e s t o r i n g "the p r e v i o u s c o n f i d e n c e ' in a spirit o f ' l e t ' s try a g a i n ! ' . . T h e i n d i c t m e n t s a g a i n s t t h e i n d i v i d u a l d e f e n d a n t s had b e e n d i s m i s s e d i n 1965. .4 decision. B r o a d y . B r i s t o l . E v e n i f B r o a d y w a s b u g g i n g the Bristol and S q u i b b e x e c u t i v e s u i t e s at Pfizer's b e h e s t . P f i z e r ' s g e n e r a l c o u n s e l had paid B r o a d y $ 6 0 . T h e l a t t e r w a s not r e l e v a n t . . t h a t Tdrl w a s a t i t again. this w a s highly c i r c u m s t a n t i a l . r e v e r s e d t h e c o n v i c t i o n s . On 7 A u g u s t 1961 a g r a n d jury i n d i c t e d Pfizer. but w e r e not i n d i c t e d . . Idrl [ L e d e r l e ] had followed suit w i t h o u t c o n s u l t i n g t h e r e m a i n i n g p a r t n e r s . 1967: 184d-e). M o s t d r a m a t i c o f t h e c i r c u m s t a n t i a l e v i d e n c e w a s the c o n v i c t i o n in N e w Y o r k state in D e c e m b e r 1955 of J o h n G.(XX) a p i e c e on e a c h c o u n t . .e s t a b l i s h i n g the p r e v i o u s a t m o s p h e r e o f c o n f i d e n c e . had m a d e a n i m p r o p e r c h a r g e t o the j u r y stressing ' i n f l a m m a t o r y issues". " T h e C o u r t of A p p e a l s opinion was that the District J u d g e . C y a n a m i d . In 1970 t h e US C o u r t of A p p e a l s .but only a day later t h e r e c a m e a r e p o r t . ." A n o t h e r ' p o w w o w ' w a s s c h e d u l e d "to t h r a s h o u t this [ n e w ] v i o l a t i o n ' ( M i n t z . A N e w Y o r k j u r y found e a c h c o r p o r a t e d e f e n d a n t guilty of all t h r e e c o u n t s on 29 D e c e m b e r 1967. for w i r e . it b e c a m e e v i d e n t t h a t brstl [ B r i s t o l ] w a s e n g a g e d in a n a t i o n w i d e p r i c e c u t t i n g s c h e m e . S e c o n d C i r c u i t .t a p p i n g n u m e r o u s telep h o n e s . r e m a n d i n g t h e c o r p o r a t e d e f e n d a n t s for a new t r i a l . M a r v i n F r a n k e l . L i k e so m u c h o f t h e e v i d e n c e for c o n s p i r a c y . S q u i b b and U p j o h n w e r e n a m e d a s c o . 0 0 0 t o m a k e c e r t a i n i n v e s t i g a t i o n s a n d his illegal a c t i o n s s t e m m e d from t h o s e investig a t i o n s . ' P l u t o ' said. i n c l u d i n g t h o s e o f Bristol and S q u i b b ' s e x e c u t i v e offices. A g o v e r n m e n t a p p e a l to the S u p r e m e C o u r t u p h e l d t h e A p p e a l C o u r t d e c i s i o n for retrial on a split 4 .c o n s p i r a t o r s .'" 182 . a l a w y e r a n d p r i v a t e i n v e s t i g a t o r . T h e y w e r e fined S50.M y e r s and t h r e e e x e c u t i v e s c h a r g i n g c o n s p i r a c y t o m o n o p o l i s e and r e s t r a i n t r a d e u n d e r s e c t i o n s o n e and t w o o f t h e S h e r m a n A c t .

All d e f e n d a n t s w e r e a c q u i t t e d . e x c l u s i o n o f c o m p e t i t o r s o r licensing r e s t r i c t i o n s o c c u r r e d a t t h e N o v e m b e r m e e t i n g s and t h e i n d i v i d u a l s p r e s e n t have v i g o r o u s l y d e n i e d any illegal m o t i v e for their c o n d u c t . ' Difficulty of p r o o f is no s u b s t i t u t e for a c t u a l i t y of p r o o f and an a c c u s e d is p r e s u m e d to be i n n o c e n t until p r o v e d guilty as c h a r g e d b e y o n d a r e a s o n a b l e doubt. w i t h o u t a j u r y . . W h i l e c o n c e d i n g that t h e d e f e n d a n t s had m a i n t a i n e d substantially similar prices over a n u m b e r of years. 1 T h e r e c o r d . . M o r e o v e r . Judge Canclla felt t h a t t h e g o v e r n m e n t ' s c i r c u m s t a n t i a l e v i d e n c e w a s insufficient for p r o o f b e y o n d r e a s o n a b l e d o u b t . h e a p p r o v i n g l y cited J u d g e M e d i n a ' s s t a t e m e n t in t h e Investment Bankers' c a s e " on d e t e r m i n i n g t h e e x i s t e n c e of c o n s p i r a c y : ' T h e a n s w e r m u s t not be f o u n d in s o m e crystal ball or v a g u e l y s e n s e d by s o m e p r o c e s s of i n t u i t i o n . J u d g e Canella q u o t e d Judge C h a s e in US v.Antitrust In 1 9 7 3 . many s u s p i c i o u s c i r c u m s t a n c e s t o lead t o t h e c o n c l u s i o n t h a t [the d e f e n d a n t ] w a s guilty but t h e r e w a s n o s u b s t a n t i a l e v i d e n c e t o o v e r c o m e t h e p r e s u m p t i o n of i n n o c e n c e . w h i c h is fully d e v e l o p e d by e x t e n s i v e direct and cross e x a m i n a t i o n . indeed. t w e n t y y e a r s after t h e c o n s p i r a c y w a s alleged to have b e g u n . price f i x i n g . The history of the tetracycline patent J u d g e C a n e l l a ' s o v e r t u r n i n g o f t h e criminal convictions was a severe 183 . b a s e d u p o n a c h a n c e p h r a s e used h e r e or t h e r e . t h e J u d g e c o n c l u d e d : i n t h e face o f t h e g o v e r n m e n t ' s c i r c u m s t a n t i a l p r o o f and a r g u m e n t . a n d not a s c o n s p i r a t o r s .' To c o n c l u d e . ' W h i l e t a k i n g p a i n s t o point out t h a t c i r c u m s t a n t i a l e v i d e n c e could b e highly r e l e v a n t . H e r e there w e r e . . . Buchalter: ' N o t h i n g this c o u r t might n o w say could b e t t e r summ a r i z e t h e r a t i o n a l e of its o p i n i o n in t h e i n s t a n t c a s e . d o e s n o t reveal that any d i s c u s s i o n o f p r i c e s . s t a n d s t h e d e f e n d a n t s ' v i g o r o u s and c o m p l e t e d e n i a l s o f t h e e x i s t e n c e o f any a g r e e m e n t o r cons p i r a c y to e n g a g e in t h e illegal acts c h a r g e d in t h e i n d i c t m e n t . a r e t r i a l c o m m e n c e d before J u d g e C a n e l l a o n t h e basis o f t h e p r e v i o u s trial r e c o r d . ' T h e w a n t o f direct e v i d e n c e for c o n s p i r a t o r i a l m e e t i n g s w a s the g o v e r n m e n t ' s d o w n f a l l . . T h e t e s t i m o n y given s t r e s s e s t h e b u s i n e s s r e a s o n s for t h e a c t i o n s t a k e n a n d t h e a c t o r s * e x e r c i s e o f b u s i n e s s j u d g m e n t a s free a g e n t s .

H e y d e n C h e m i c a l C o r p o r a t i o n . was probable. L e t u s t h e n r e t r a c e t h e history o f t h e t e t r a c y c l i n e p a t e n t . w a s a small c o m p a n y in t h o s e d a y s . B r i s t o l w a s t h e last to file on 19 O c t o b e r 1953. T h e a g r e e m e n t further p r o v i d e d for a p r i v a t e a d j u d i c a t i o n t o d e t e r m i n e w h i c h o f t h e two w a s t h e first i n v e n t o r . ruled t h a t 'on t h e e x a m i n e r ' s 184 . i n dissolving the interf e r e n c e b e t w e e n Pfizer and B r i s t o l . B r i s t o l . 0 0 0 . T h e a c q u i t t a l s led the l i t i g a n t s to shift t h e i r a t t a c k a g a i n s t t h e c o m p a n i e s from a focus on c o n s p i r a c y to e m p h a s i s on the allegation that the tetracycline patent w h i c h e n a b l e d t h e m t o m a i n t a i n e x c e s s i v e prices w a s o b t a i n e d b y fraud. 0 0 0 . in O c t o b e r 1954 t h e p a t e n t . Pfizer f i r s t d i s c o v e r e d t h e m o l e c u l a r s t r u c t u r e o f t e t r a c y c l i n e and filed a p a t e n t a p p l i c a t i o n on it on 23 O c t o b e r 1952. and still c o n t i n u e to this day. A l m o s t simult a n e o u s l y C y a n a m i d had realised t h e t h e r a p e u t i c i m p o r t a n c e o f t e t r a c y c l i n e and l o d g e d a p a t e n t a p p l i c a t i o n on 16 M a r c h 1953. T h e U S g o v e r n m e n t c l a i m e d t h a t C y a n a m i d ' s p u r c h a s e o f H e y d e n w a s unlawful. and t h e former r e g a r d e d it as no m a t c h for t h e m in a p a t e n t s t r u g g l e . By a t t a c k i n g each o t h e r s ' claims they would certainly destroy a n y o n e ' s c h a n c e s o f g e t t i n g t h e p a t e n t . C y a n a m i d also a g r e e d t o supply Pfizer w i t h bulk t e t r a c y c l i n e until its p r o d u c t i o n facilities could be t o o l e d up for m a s s p r o d u c t i o n . had also p r o d u c e d t e t r a c y c l i n e a n d l o d g e d its p a t e n t c l a i m o n 2 8 S e p t e m b e r 1953. In J a n u a r y . A l l p a r t i e s w e r e a w a r e o f t h e fact t h a t t h e y had i n s e c u r e claims o n t h e p a t e n t and t h a t a ruling t h a t t e t r a c y c l i n e was u n p a t e n t a b l e . A t h i r d c o m p a n y . being in contravention ofthe Clayton Act. Pfizer w o n and duly cross-licensed C y a n a m i d . 1954 Pfizer and C y a n a m i d a g r e e d not to d e s t r o y e a c h o t h e r ' s c h a n c e s o f s e c u r i n g a legal m o n o p o l y o v e r t e t r a c y c l i n e . in that it was 'no a d v a n c e m e n t over prior art'. U n l i k e Pfizer a n d C y a n a m i d . the last p a t e n t c l a i m a n t o n t h e s c e n e . a p p r o x i m a t e l y twice t h e b o o k v a l u e o f its a s s e t s . H e n c e the e v i d e n c e suggests t h a t t h e p a t e n t p r o v i d e d a c o v e r for c o n s p i r a t o r i a l b e h a v i o u r to p a r t i t i o n a m a r k e t w h i c h i n t h e a b s e n c e o f t h e p a t e n t w o u l d have b e e n c l e a r l y illegal. T h e w r i t t e n a g r e e m e n t p r o v i d e d t h a t w h i c h e v e r o n e s e c u r e d the p a t e n t w o u l d license t h e o t h e r t o sell t h e d r u g . C y a n a m i d first e l i m i n a t e d t h e t h r e a t from H e y d e n by b u y i n g its a n t i b i o t i c division for $ 1 2 .h e a r i n g e x a m i n e r . T h i s p r o v i s i o n w a s t o p r e v e n t C y a n a m i d from e s t a b l i s h i n g its b r a n d n a m e b e f o r e Pfizer got o n t h e m a r k e t . B u t t h e civil cases c o n t i n u e d . H o w e v e r .Antitrust s e t b a c k for o v e r a h u n d r e d plaintiffs w h o w e r e s e e k i n g civil d a m a g e s a g a i n s t t h e f i v e t e t r a c y c l i n e c o m p a n i e s .

' P o w e r s r e p l i e d : i t ' s g o i n g to get very r o u g h but it w o n ' t be d i r t y . W a l k e r .v o l u m e s a l e s . J o h n . Pfizer s u e d . S q u i b b and U p j o h n gave Bristol legal m u s c l e by i n d e m n i f y i n g t h e m a g a i n s t any p a t e n t i n f r i n g e m e n t suit. t e t r a c y c l i n e itself w a s not p a t e n t a b l e . h e w o u l d not have granted the patent. Yet t h e t e s t s w e r e i n fact c o n t i n u e d and t h e r e s u l t s r e c o r d e d o u t s i d e t h e n o r m a l l a b o r a t o r y r e c o r d s . I t i s clear t h a t B r i s t o l k n e w t h a t c o . H e n c e t h e e x a m i n e r ' s conc l u s i o n w a s t h a t Pfizer had identified t e t r a c y c l i n e a s o n e o f a n u m b e r of d r u g s p r o d u c e d in an 'old p r o c e s s ' and t h e r e f o r e c o n s t i t u t e d no a d v a n c e m e n t over prior art. ' Bristol c a l l e d Pfizer's bluff and b e g a n to sell t e t r a c y c l i n e in v i o l a t i o n o f t h e Pfizer p a t e n t on 30 A p r i l 1954. they w e r e 185 . B r i s t o l ' s alleged s t r a t e g y w a s to assist Pfizer in o b t a i n i n g t h e p a t e n t t h r o u g h misr e p r e s e n t a t i o n and t h e n use t h a t i n f o r m a t i o n to force a licence out of Pfizer.o r g a n i s m s s e l e c t e d by Pfizer for this test w e r e k n o w n t o b e p o o r p r o d u c e r s o f a n t i b i o t i c s . T h i s s e t b a c k c a u s e d Pfizer's p a t e n t a g e n t t o direct Pfizer scientists to e v a l u a t e the e x a m i n e r ' s assumption of co-production. G o v e r n m e n t evidence i n d i c a t e d t h a t t h e m i c r o . i t w a s alleged that Pfizer r i g g e d o t h e r t e s t s . and t h a t the w h o l e t e s t p r o c e d u r e w a s s t r u c t u r e d t o m i n i m i s e a n t i b i o t i c p r o d u c t i o n and d i s c o v e r y .p r o d u c t i o n did n o t o c c u r w e n t b e y o n d m e r e silence. N e g o t i a t i o n s b r o k e d o w n on t h e f o r e b o d i n g n o t e of S c h w a r t z of Bristol saying to P o w e r s of Pfizer: i h o p e this isn't g o i n g to be a dirty fight.p r o d u c t i o n did o c c u r . A p a r t from t h e c o n c e a l m e n t o f test r e s u l t s . B u t a s B r i s t o l c o u n s e l . so it sold bulk t e t r a c y c l i n e to S q u i b b and U p j o h n . T h e s e secret d a t a s h o w e d t h e e x a m i n e r ' s a s s u m p t i o n to be correct. Pfizer refused to g r a n t B r i s t o l a l i c e n c e . later testified. T h e g o v e r n m e n t a r g u e d t h a t C y a n a m i d was a p a r t y to this fraud on t h e p a t e n t office in t h a t its s u p p o r t for t h e Pfizer affidavit t h a t c o . but t h e p a t e n t e x a m i n e r w a s l a t e r t o testify t h a t i f h e had k n o w n o f t h e t e c h n i c a l c o n d i t i o n s u n d e r w h i c h t h e Pfizer test had b e e n c o n d u c t e d . B r i s t o l did not have a p r o m o t i o n a l n e t w o r k to h a n d l e l a r g e . according to the g o v e r n m e n t ' s evidence. h o w e v e r .Antitrust a s s u m p t i o n t h a t t e t r a c y c l i n e w a s i n h e r e n t l y p r o d u c e d b y the p r o c e s s d i s c l o s e d in' t h e C y a n a m i d p a t e n t o n c h l o r t e t r a c y c l i n e . Subseq u e n t l y t h e r e s e a r c h w a s s t o p p e d . T h e e x a m i n e r had a g r e e d t o r e a d m i t the a p p l i c a t i o n i f Pfizer could d e m o n s t r a t e t h a t t e t r a c y c l i n e could not b e r e c o v e r e d from f e r m e n t a t i o n b r o t h s p r o d u c e d i n a c c o r d a n c e with the chlortetracycline process patent. T h e p a t e n t w a s g r a n t e d .

T h e g o v e r n m e n t a l l e g a t i o n a g a i n s t B r i s t o l . o n a r e v i e w o f t h e h e a r i n g r e c o r d . Bristol p r i v a t e l y sent Pfizer a 12-page ' S t a t e m e n t o f F a c t s ' . but not t o any n e w o u t l e t s . it found a g a i n s t t h e e x i s t e n c e of a c o n s p i r a c y to fix p r i c e s .Antitrust determined woods'. A n F T C h e a r i n g e x a m i n e r d i s m i s s e d the c h a r g e s i n 1 9 6 1 . Bristol w a s to be a l l o w e d to c o n t i n u e s u p p l y i n g b u l k t e t r a c y c l i n e t o S q u i b b and U p j o h n . and that Bristol w a s in a s t r o n g p o s i t i o n b o t h to d e s t r o y t h e p a t e n t and r e c o v e r t r e b l e d a m a g e s in a p r i v a t e a n t i t r u s t suit.5 p e r c e n t royalty. to "impress Pfizer t h a t B r i s t o l w a s no b a b e in t h e T h i s t h e y surely did. b u t on a split v o t e . the full f i v e . H o w e v e r .m e m b e r c o m m i s s i o n held t h a t Pfizer and C y a n a m i d had c o m m i t t e d fraud on t h e P a t e n t Office and t h a t the five d e f e n d a n t s had c o n s p i r e d to fix p r i c e s on t e t r a c y c l i n e . T h e s e "facts' i n c l u d e d B r i s t o l ' s belief that t h e Pfizer p a t e n t had b e e n fraudulently o b t a i n e d . T h e r e w a s no c h o i c e but to a d m i t B r i s t o l to t h e c l u b . Sixth C i r c u i t . Pfizer g r a n t e d the c o m p a n y a licence on 13 J a n u a r y 1955. and t h e 186 . ' " T h i s d e c i s i o n was affirmed by t h e US C o u r t o f A p p e a l s . S e p t e m b e r 1967 saw this decision u p h e l d b y the full c o m m i s s i o n . S q u i b b and U p j o h n is t h e r e f o r e t h a t they a c c e p t e d licences u n d e r a p a t e n t w h i c h t h e y k n e w t o b e f r a u d u l e n t l y o b t a i n e d and c o n s e q u e n t l y s h a r e d i n t h e e x p l o i t a t i o n o f a n illegally o b t a i n e d p a t e n t m o n o p o l y . " W h e n h e a r d a g a i n i n the F T C b e f o r e a different e x a m i n e r a finding of fraud on t h e P a t e n t Office w a s a g a i n m a d e . B r i s t o l had t h e m o v e r a b a r r e l . o n 3 0 S e p t e m b e r 1968. The civil cases A long trail of civil c a s e s focusing p r i m a r i l y on the alleged p a t e n t fraud issue r a t h e r t h a n on t h e price-fixing q u e s t i o n have run in p a r a l l e l with t h e c r i m i n a l c a s e s . and ' c o n c e d e d ' t h a t i t had infringed t h a t p a t e n t . I n t h e s e t t l e m e n t a g r e e m e n t Bristol ' a c k n o w l e d g e d ' t h e validity of Pfizer's p a t e n t ( e v e n t h o u g h Bristol had a r g u e d for its i n v a l i d i t y i n t h e p r i v a t e ' S t a t e m e n t o f F a c t s ' ) . T h e C o u r t o f A p p e a l s for t h e Sixth C i r c u i t vacated t h e c o m m i s s i o n ' s findings o n t h e g r o u n d t h a t p r o c e d u r a l defects had t a i n t e d the c o m m i s s i o n ' s d e t e r m i n a t i o n s . that the p u r c h a s e o f H e y d e n and m a n y o t h e r collusive p r a c t i c e s b y Pfizer and C y a n a m i d w e r e i n v i o l a t i o n o f t h e C l a y t o n and S h e r m a n A c t s . I n 1958 the F e d e r a l T r a d e C o m m i s s i o n first c h a r g e d t h e five c o m p a n i e s with m o n o p o l i s i n g t h e t e t r a c y c l i n e m a r k e t . " It o r d e r e d Pfizer to l i c e n s e t h e d r u g to all r e q u e s t i n g c o m p a n i e s at a 2.

t h e o t h e r j u r y w o u l d b e e x c u s e d ( W o l f r a m . the US g o v e r n m e n t . " A f t e r t h e 1967 guilty c r i m i n a l v e r d i c t a n t i t r u s t t r e b l e . A l r e a d y s e t t l e m e n t s in e x c e s s of $250 million h a v e b e e n paid by t h e c o m p a n i e s . J u d g e Lord was confronted with a n u m b e r of m o t i o n s a n d o t h e r signs o f conflict a b o u t d i s c o v e r y . W e s t G e r m a n y . T h e s e cases have been a never-ending judicial nightmare. W h e n e v i d e n c e w a s i n t r o d u c e d t h a t w a s r e l e v a n t t o o n l y o n e set o f c a s e s . W e saw t h e r e m a r k a b l e c o u r t r o o m scene o f t w o different trials in six different cases p r o c e e d i n g at o n c e . A s d i s c o v e r y i n t h e v a r i o u s c a s e s p r o c e e d e d t h r o u g h the s u m m e r of 1971. a n d t h e g o v e r n m e n t s o f I r a n . A s t h e e v i d e n c e and a r g u m e n t s a b o u t t h e o r i e s o f d a m a g e s a n d liability b e c a m e m o r e c o m p l e x . t h e costs to be s h a r e d e q u a l l y by plaintiffs and d e f e n d a n t s ( W o l f r a m .5 million. t w o n a t i o n a l c l a s s e s ( o n e o f i n s u r a n c e c o m p a n i e s and the o t h e r of u n i o n h e a l t h and welfare f u n d s ) . and t h e 187 .4 ) . and a California m e d i c a l g r o u p . For the most part. I n d i a . the P h i l i p p i n e s . S o u t h K o r e a and K u w a i t . p u s h o n . S p a i n . ' J u r y T w o ' w a s h e a r i n g e v i d e n c e i n suits b r o u g h t in behalf of c o m p e t i t o r s o f t h e defendant drug companies. It is believed that the impossible burden ofthe tetracycline l i t i g a t i o n w a s a factor in t h e ill-health which led J u d g e W y a t t to be r e l i e v e d of r e s p o n s i b i l i t y for t h e a n t i t r u s t suits w h i c h had not b e e n s e t t l e d . C o l o m b i a . a p p o i n t e d t w o e x p e r t s a s his p e r s o n a l c o n s u l t a n t s o n e c o n o m i c s and s t a t i s t i c s . state g o v e r n m e n t s s u i n g on b e h a l f of their citizens as a c l a s s .d a m a g e suits b e g a n to flow in. h e a l t h and welfare funds. T h e U S g o v e r n m e n t suit a l l e g e s o v e r c h a r g e s and prej u d g m e n t i n t e r e s t o n t e t r a c y c l i n e sales t o t h e g o v e r n m e n t o f $376. 'Jury O n e ' was hearing evidence in actions brought by the United S t a t e s . u n i o n s . including the US g o v e r n m e n t . 1976: 3 1 3 . J u d g e L o r d . the juries were hearing evidence c o m m o n to both sets o f c a s e s .Antitrust r e q u i r e m e n t s for Pfizer to license c o m p e t i t o r s at a 2. finally t o t a l l i n g o v e r 160. A n u m b e r of litigants. 1 9 7 1 . T h e y c a m e from p r i v a t e h o s p i t a l s . o n M a y 10. 1976: 2 5 4 ) . T h e plaintiffs filed very b r o a d r e q u e s t s t o p r o d u c e d o c u m e n t s . A unique judicial organization proliferated around Judge L o r d . H i s place w a s t a k e n b y J u d g e L o r d w h o a p p l i e d extrao r d i n a r y p r o c e d u r a l i n n o v a t i o n t o t h e 5 8 u n s e t t l e d cases h a n d e d t o h i m i n 1970. S o m e o f t h e hearings were a t t e n d e d by more than a hundred attorneys.5 per cent royalty s t o o d .

O n e t e t r a c y c l i n e d e f e n c e a t t o r n e y c a l c u l a t e d smugly t h a t i t w o u l d t a k e J u d g e L o r d 8. a single j u r y could h e a r all t h e e v i d e n c e a n d r e n d e r a final and b i n d i n g verdict.m e m b e r team of discovery m a s t e r s t o m a k e p r e l i m i n a r y rulings o n privilege and t o m a k e r e c o m m e n d a t i o n s t o him ( W o l f r a m 1976: 3 1 4 . In order to d e a l w i t h t h e issues t h a t t h e o b j e c t i o n s r a i s e d . 1971. T h i s w o u l d r e q u i r e t h e services o f all t h e federal j u d g e s in t h e e n t i r e s y s t e m o v e r a p e r i o d of several y e a r s . the c o r p o r a t e d e f e n d a n t s w e r e a b l e to effect a six m o n t h s ' delay in 1 9 7 1 . O n e o f t h e m a i n a r g u m e n t s o f t h e d e f e n d a n t s against c r e a t i o n o f t h e c o n s u m e r c l a s s e s w a s t h a t trial o f t h e c l a i m s i n t h e s e classes w o u l d be u n m a n a g e a b l e for a n u m b e r of r e a s o n s . In s p i t e of t h e t i m e saved by this brilliant s t r e a m l i n i n g . o n A u g u s t 5. R a t h e r e c o n o m i s t s a n d s t a t i s t i c i a n s w o u l d d e s c r i b e t h e total v o l u m e o f c o n s u m e r sales and t h e p r o b a b l e p r i c e s t h a t w o u l d have b e e n charged in the absence ofthe antitrust violations. t h e d e f e n d a n t s w o u l d insist u p o n their right to j u r y trial as to each a n d e v e r y c o n s u m e r ' s c l a i m . The manageability problem is of course c o m p o u n d e d w h e n the defendants have an interest in perpetuating it. T h e e v i d e n c e w o u l d not c o n s i s t o f a n infinite p a r a d e o f individual c o n s u m e r s w i t h t e s t i m o n y a b o u t family d r u g s t o r e p u r c h a s e s .c l i e n t r e l a t i o n s h i p .000 y e a r s t o try all t h e c o n s u m e r d a m a g e c l a i m s .1 5 ) . J u d g e L o r d . F i r s t . appointed a t h r e e . V a r i o u s privileges w e r e claimed as to several hundred thousand d o c u m e n t s . t h e t e t r a c y c l i n e class a c t i o n s are a l a n d m a r k i n t h e way t h a t s e e m i n g l y u n m a n a g e a b l e legal t a n g l e s o f u n p r e c e d e n t e d m a g n i t u d e can be solved with a sufficient will for p r o c e d u r a l innovativeness. In other w o r d s . t h e ' d a m a g e ' issue c o u l d b e r e f r a m e d t o i n q u i r e into t h e e x t e n t o f injury t h a t t h e a n t i t r u s t v i o l a t i o n had w r e a k e d u p o n all c o n s u m e r s w i t h i n t h e s t a t e . T h e c o n s u m e r m e m b e r s o f t h e class w o u l d t h e n simply m a k e claims 188 .2 b y p e t i t i o n s o f m a n d a m u s c h a l l e n g i n g J u d g e L o r d ' s ability to be i m p a r t i a l . p r i m a r i l y b e c a u s e o f a l l e g e d a t t o r n e y . N e v e r t h e l e s s . o n e can d o n o b e t t e r t h a n q u o t e W o l f r a m ( 1 9 7 6 : 3 4 4 ) a s t o h o w t h e j u d g e m a n a g e d t o find s i m p l e s o l u t i o n s t o c o m p l e x detail. J u d g e L o r d r e s p o n d e d with t h e d e v a s t a t i n g r e m a r k t h a t t h e w a y to try to a j u r y a vast n u m b e r of d a m a g e claims w a s to try all of a s t a t e ' s c o n s u m e r d a m a g e c l a i m s at o n c e . but also o n t r a d e s e c r e t and r e l a t e d g r o u n d s . A g a i n . As to this i s s u e .Antitrust d e f e n d a n t s r e s p o n d e d with s w e e p i n g c l a i m s o f p r i v i l e g e .

. w h e r e he a t t e m p t s to r e c o n s t r u c t his state of mind in 1954 d u r i n g t h e p r o c e e d i n g s for t h e C o n o v e r p a t e n t . I n s o m e c l a s s e s . 1978). e t c . J u d g e L o r d b e l i e v e d t h a t s o l u t i o n s t o so-called m a n a g e a b i l i t y p r o b l e m s were ready to hand. mailed n o t i c e s . a m o r e r e c e n t a s s e s s m e n t o f t h e legal and a d m i n i s t r a t i v e c o s t s of d i s t r i b u t i n g refunds to eligible c o n s u m e r s p u t s it overall at less t h a n 2 0 p e r c e n t o f t h e s e t t l e m e n t fund ( B a r t s h e t a l . a s u r v e y of c l a i m a n t s found t h a t most r e g a r d e d a 20 p e r cent overhead as acceptable. Such evidence cannot constitute 189 . T h e d e f e n d a n t s w o u l d h a v e n o further l e g i t i m a t e i n t e r e s t i n t h e q u e s t i o n o f d a m a g e d i s t r i b u t i o n and could b e e x c u s e d . B e c a u s e o f t h e passage of so many years b e t w e e n Lidoff s testimony and the events about which h e w a s t e s t i f y i n g . H o w e v e r . W o l f r a m ( 1 9 7 6 : 3 6 2 ) e s t i m a t e d . M o r e o v e r . In spite of J u d g e L o r d ' s successful insistence t h a t p r o b l e m s of a n e w o r d e r r e q u i r e d legal s o l u t i o n s of a n e w o r d e r . a g a i n s t a finding of fraud by Pfizer in o b t a i n i n g the tetracycline p a t e n t .Antitrust a g a i n s t w h a t e v e r fund w a s p r o d u c e d b y t h e v e r d i c t . 0 0 0 per m o n t h . C o l l e c t i v e legal e x p e n s e s for t h e plaintiffs often a p p r o a c h e d $ 1 0 0 . t h e legal costs of t h e saga h a v e b e e n m o m e n t o u s . t h e j u d g e w a s n o t p r e p a r e d t o accept such e v i d e n c e a l o n e a s sufficient t o sustain t h e b u r d e n o f p r o o f b e y o n d reasonable doubt: 2 0 T h e g o v e r n m e n t relies on t h e t e s t i m o n y of Lidoff given in 1966 at t h e F T C p r o c e e d i n g s and in 1972 in a d e p o s i t i o n in this c a s e . A l t h o u g h t h e s e c o n c e p t s w e r e t e n t a t i v e . c o s t s ( a t t o r n e y fees. T h e costs o f d i s t r i b u t i o n w o u l d b e t a k e n o u t o f t h e fund. T h e v a l i d a t i o n of c l a i m s a n d d i s t r i b u t i o n could be h a n d l e d by a t e a m a p p o i n t e d b y t h e j u d g e . W e c a n n o t a c c e p t such t e s t i m o n y as credible e v i d e n c e . ) w o u l d be a s u m a l m o s t e q u a l to t h e net m o n i e s e v e n t u a l l y d i s t r i b u t e d t o class m e m b e r s . in c o . T h e c a s e s w h i c h r e m a i n e d u n s e t t l e d after J u d g e L o r d ' s interv e n t i o n s w e r e d e a l t a s e v e r e b l o w i n A u g u s t 1980 w h e n J u d g e W e i n e r ruled. T h e U S g o v e r n m e n t ' s case r e s t e d h e a v i l y o n t e s t i m o n y b y p a t e n t e x a m i n e r Lidoff t h a t h e w o u l d not h a v e g r a n t e d Pfizer t h e p a t e n t had c e r t a i n i n f o r m a t i o n not been withheld by the c o m p a n y . H e a r g u e d that t h e case i l l u s t r a t e d t h e n e e d for g r e a t e r p u b l i c scrutiny of the costs t h a t l a w y e r s a r e a b l e to c h a r g e t h e i r r e m o t e c l i e n t s in a class a c t i o n suit.o r d i n a t e d pretrial proceedings in the E a s t e r n D i s t r i c t of P e n n s y l v a n i a .

p a r t i c u l a r l y t h e p o o r e s t victims in the Third W o r l d . a n d t h a t it is so large a m a r k e t as to a t t r a c t n e w major firms w i t h b r a n d e d lines as late e n t r a n t s in a d d i t i o n to t h e small g e n e r i c manufacturers. T o d a y t e t r a c y c l i n e i s p e r h a p s t h e most p r i c e c o m p e t i t i v e o f any o f t h e m a j o r t h e r a p e u t i c c l a s s e s of d r u g s .Antitrust t h e c l e a r . P r o b a b l y the a n t i t r u s t c a s e s p l a y e d s o m e role i n c r e a t i n g this s i t u a t i o n . T h e g o v e r n m e n t h a s failed t o p r o v e t h e fraudulent i n t e n t . J u d g e W e i n e r held t h a t e v e n i f m i s l e a d i n g informat i o n had b e e n p r o v i d e d t o t h e p a t e n t office.5 ) . M o s t class a c t i o n s c l a i m e d o n l y a p r o p o r t i o n o f t h e e s t i m a t e d d a m a g e s t o class m e m b e r s . T h e J u s t i c e D e p a r t m e n t i s c o n s i d e r i n g w h e t h e r i t will a p p e a l Judge Weiner's decision. But t h e m o r e f u n d a m e n t a l r e a s o n s are t h a t t e t r a c y c l i n e has b e e n off p a t e n t since 1972.c l a s s affluence. but that t h e y did so w i t h t h e specific intent to defraud the P a t e n t Office. I n I n d i a . 8 0 p e r c e n t o f t h e p o p u l a t i o n d o e s not h a v e access t o d r u g s 190 . u n e q u i v o c a l and c o n v i n c i n g e v i d e n c e which a c h a r g e of fraud r e q u i r e s . The role of antitrust law in the pharmaceutical industry R e a d e r s m i g h t be e x c u s e d for t h i n k i n g t h a t t h e issues of c o n c e r n in t h i s c h a p t e r a r e less i m p o r t a n t t h a n t h o s e a d d r e s s e d i n the p r e v i o u s t w o c h a p t e r s b e c a u s e w e a r e h e r e d e a l i n g only with m o n e y and not t h r e a t s to h u m a n life. Tetracyclines today R e g a r d l e s s of h o w badly t h e r e m a i n i n g u n s e t t l e d suits t u r n o u t for t h e d e f e n d a n t s . 1977: 1 0 4 . M o s t v i c t i m s w e r e not i n c l u d e d i n any c l a s s . t h e g o v e r n m e n t had not p r o v e d t h a t t h i s h a d b e e n d o n e with i n t e n t t o defraud: T h e g o v e r n m e n t had the b u r d e n t o p r o v e t h a t M u r p h y and H u t z n o t only w i t h h e l d o r m i s s t a t e d m a t e r i a l i n f o r m a t i o n . t h e r e c a n b e little d o u b t t h a t t h e f i n a l s e t t l e m e n t s will t o t a l only a fraction of t h e e x t r a profits t h e c o m p a n i e s m a d e t h r o u g h a v o i d i n g c o m p e t i t i v e p r i c i n g . M o r e o v e r . T h i s is a m i s t a k e n v i e w . and c e r t a i n l y the least conc e n t r a t e d m a r k e t ( S l a t t e r . a p r o d u c t o f W e s t e r n m i d d l e . M o s t o f t h e w o r l d ' s p o p u l a t i o n d o not b e n e f i t from " w o n d e r d r u g s ' b e c a u s e t h e y c a n n o t afford t h e m .

a p o t e n t i a l licensee w h o w a s t u r n e d a w a y w o u l d b e given s o m e r e a s o n o t h e r t h a n price for the b r e a k d o w n o f t h e a g r e e m e n t so that there would be no grounds for an a n t i t r u s t suit. it w o u l d be s u r p r i s i n g if the l i c e n s e e w e r e not a s k e d t h e price it i n t e n d e d to c h a r g e . A d m i t t e d l y . c o r p o r a t i o n s t o d a y are m o r e s o p h i s t i c a t e d t h a n t o risk the b l a t a n t u n i f o r m i t y o f p r i c e s e v i d e n t with t e t r a c y c l i n e .t o o p r o d u c t to a c o m p e t i t o r is e v i d e n c e o f t h e lack of t h r e a t from a c o m p e t i t o r which is kept within the club. o n e can still see s i t u a t i o n s t o d a y which o n o c c a s i o n a p p r o a c h classic c a r t e l s . t h e f o u r t h and fifth m a r k e t e n t r a n t s m i g h t d e c i d e that t h e only r o u t e to a significant m a r k e t s h a r e is d r a s t i c price c u t t i n g . P r i c e s might b e m a i n t a i n e d w i t h i n b r o a d t o l e r a n c e levels b y ' m e m b e r s o f the c l u b ' . A t t h e o t h e r e x t r e m e . As o n e i n f o r m a n t e x p l a i n e d : i have to d e c i d e . I n 1978. t h e classic i n t e r n a t i o n a l c a r t e l that w a s alleged with t e t r a c y c l i n e is not a f e a t u r e o f t h e w o r l d m a r k e t in p h a r m a c e u t i c a l s t o d a y : g o v e r n m e n t p r i c e c o n t r o l s m a k e this i m p o s s i b l e . is it b e t t e r for me to m a k e w a v e s o r t o not m a k e w a v e s . t o j o i n t h e c l u b o r t o b r e a k o u t . If. t h e C o m m i s s i o n o f t h e E u r o p e a n C o m m u n i t i e s . Pharmaceutical c o m p a n i e s are highly s o p h i s t i c a t e d in the way they r e s o l v e t h e i r p r i c i n g d e c i s i o n s a c c o r d i n g t o t h e specific c i r c u m s t a n c e s w h i c h a p p l y i n e a c h s i t u a t i o n t h e y c o n f r o n t . 2 1 It is impossible to generalise about these matters.t o o v a r i a n t on a p r o d u c t t h e y h a v e u n d e r p a t e n t often licence t h e m e . But m o r e t h a n t h a t . o n e c o m p a n y w e r e licensing a n o t h e r to sell a m e . 1979a :22). M o r e o v e r .Antitrust ( L a l l . s t o p p e d a D u t c h cartel which controlled the m a r k e t i n g of pharmaceuticals in the 191 . o n e s u s p e c t s t h a t t h e p r e s s u r e s a g a i n s t price c u t t i n g are m o r e subtle i n a p p l i c a t i o n . O f c o u r s e . W h e r e a s t h e s e c o n d and third c o m p a n i e s i n t o a m a r k e t m i g h t see it as in their i n t e r e s t s to j o i n the c l u b . T h e r e a s o n for b o t h this s i t u a t i o n and for t h e high profits of p h a r m a c e u t i c a l c o m p a n i e s is the o l i g o p o l i s t i c s t r u c t u r e of the industry. t h e w h o l e price s t r u c t u r e will b r e a k d o w n . sitting i n B r u s s e l s . ' Often w h e n a c o u p l e of l a r g e c o m p a n i e s c h o o s e t h e l a t t e r as their rational e c o n o m i c d e c i s i o n . but e x a c t u n i f o r m i t y w o u l d b e i m p o l i t i c . A n d it w o u l d b e e v e n m o r e s u r p r i s i n g i f t h e l i c e n c e w e r e g r a n t e d after a n i n a p p r o p r i a t e a n s w e r w a s given. A successful l i c e n s e e w h o w e n t o u t and c h a r g e d a l o w e r p r i c e to t h a t i n d i c a t e d to t h e l i c e n s o r would be t h e subject of a d v e r s e g o s s i p in p h a r m a c e u t i c a l circles a n d w o u l d be unlikely on a n y future o c c a s i o n to be a d m i t t e d to t h e c l u b .t o o d r u g it had d i s c o v e r e d . T h e very fact that c o m p a n i e s w h i c h d i s c o v e r a m e . for e x a m p l e .

why not issue an o r d e r that the n e x u s of prices m u s t be b r o k e n and t h a t s o m e f i n a n c i a l p e n a l t y be paid for the e x c e s s profits w h i c h h a v e b e e n a c c r u e d from the n o n . i f the c h a r g e s c a n n o t b e m a d e t o stick i n c o u r t . t h e w e a p o n s t h a t the c r i m i n a l law d e v e l o p e d t o deal with c o n s p i r a c i e s i n o t h e r a r e a s have b e e n glibly a p p l i e d t o price f i x i n g . i m p o r t e r s and d e a l e r s b e l o n g e d t o a n a s s o c i a t i o n which a c c o u n t e d for 80 to 90 p e r cent of all p h a r m a c e u t i c a l sales in the c o u n t r y . r a t h e r t h a n from a small n u m b e r o f p r o s e c u t i o n s a t m u c h g r e a t e r cost u n d e r the m o r e c o m p l e x legal d e t e r m i n a t i o n s based on conspiracy. 1979: 4 5 ) . the case law e n s h r i n e d t h e i m p o r t a n c e o f e v i d e n c e o f c o n s p i r a t o r s g e t t i n g t o g e t h e r and c o m m u n i c a t i n g with o n e a n o t h e r for t h e p u r p o s e o f r e s t r i c t i n g c o m p e t i t i o n .c o m p e t i t i v e p r i c i n g ? O b v i o u s l y it w o u l d be unjust to t h r o w individuals in jail on the strength of proof of unacceptable corporate economic b e h a v i o u r w i t h o u t any d e m o n s t r a t i o n o f individual i n t e n t . If c e r t a i n pricing 192 . 2 2 O n e o f t h e r e a s o n s t h a t classic c a r t e l s are fairly r a r e t o d a y i s that m e t h o d s o f d e t e c t i n g t h e m a r e s o m u c h i m p r o v e d . T o d a y t h e r e are c o m p u t e r p r o g r a m s w h i c h e n a b l e r e g u l a t o r s t o t h r o w into t h e m a c h i n e all b i d s for a g i v e n p r o d u c t line o v e r a period of y e a r s to d i s c e r n if t h e r e is a p a t t e r n in t h e b i d d i n g a l o n g the lines o f ' t o d a y it's y o u r c o n t r a c t and next t i m e its m i n e ' ( E d e l h e r t z . h o w e v e r . i t w a s ruled t h a t t h e a s s o c i a t i o n r e s t r i c t e d c o m p e t i t i o n i n t h e m a r k e t and t h e C o m m i s s i o n o b j e c t e d t o the resale p r i c e m a i n t e n a n c e i m p o s e d by t h e a s s o c i a t i o n on all drug products. F u r t h e r . T h e C o m m i s s i o n found that most D u t c h m a n u f a c t u r e r s . T h i s e m p h a s i s on c o n s p i r a c y has had t h e effect of e m p t y i n g a n t i t r u s t law of its e c o n o m i c c o n t e n t . H e n c e . T h e t e t r a c y c l i n e case study i l l u s t r a t e s in g r a n d style t h e limitat i o n s o f p r o s e c u t o r i a l s o l u t i o n s . I m p r o v e d m e t h o d s o f d e t e c t i o n are o f limited v a l u e . A n o t h e r way of stating t h e p r o b l e m is to a r g u e that we should m o v e a w a y from t h e t r a d i t i o n a l c r i m i n a l law p r e o c c u p a t i o n with b l a m e w o r t h i n e s s a n d focus instead on effects.Antitrust N e t h e r l a n d s . B u t i s i t n e c e s s a r y to i m p r i s o n i n d i v i d u a l s to d e t e r collusive pricing effect i v e l y ? S u r e l y m o r e cost-effective ( a n d h u m a n e ) d e t e r r e n c e would r e s u l t from m a n y successful a c t i o n s against c o m p a n i e s for u n a c c e p t a b l e p r i c i n g u n i f o r m i t y . D o e s it m a t t e r very m u c h w h e t h e r lurid secret hotel m e e t i n g s t o o k p l a c e o r n o t ? W h y c a n n o t t h e focus b e o n e c o n o m i c b e h a v i o u r r a t h e r t h a n c o n s p i r a torial intent? If there is e c o n o m i c evidence of unacceptable u n i f o r m i t y of p r i c i n g . H i s t o r i c a l l y .

or w h i c h a r e e v e n in t h e p u b l i c i n t e r e s t ( e .p e r c e n t e x p a n s i o n i n the sales of o n e will c a u s e t h e sales of e a c h o f t h e o t h e r s to fall by an a v e r a g e of 10 p e r c e n t . t h e n that p r i c i n g b e h a v i o u r s h o u l d b e s t o p p e d . t h e n t h o s e c o m p a n i e s should b e r e q u i r e d t o pay b a c k at least a p a r t of t h a t unjustified e n r i c h m e n t . in a m a r k e t w h e r e t h e r e a r e few sellers (an ' o l i g o p o l y ' ) .c o m p e t i t i v e b e h a v i o u r w h i c h has a d v e r s e effects w h e r e p r o o f o f c o n s p i r a c y i s lacking. t h e i n d i v i d u a l seller is t o o small for his d e c i s i o n s on p r i c i n g and o u t p u t to affect t h e m a r k e t p r i c e .2 of 1 p e r c e n t for e a c h o f t h e o t h e r s . A n d i f such pricing p a t t e r n s h a v e a l r e a d y led t o unjustifiable e n r i c h m e n t o f t h e c o m p a n i e s a t the e x p e n s e o f t h e p u b l i c .a sales loss the victims can hardly o v e r l o o k .3 ) has e x p l a i n e d as follows. ( F o r e x a m p l e . I t w o u l d avoid t h e p r o s e c u t i o n of conspiracies which have minimal economic consequences. A n t i c i p a t i n g a p r o m p t r e a c t i o n by his rivals t h a t will q u i c k l y nullify his g a i n s from price c u t t i n g . Such an a p p r o a c h w o u l d r e t u r n e c o n o m i c c o n t e n t t o a n a r e a o f law w h i c h w a s e n a c t e d for e c o n o m i c r e a s o n s .) In c o n t r a s t . T a c i t c o l l u s i o n u n d o u b t e d l y c a u s e s m o r e social h a r m in the p h a r m a c e u t i c a l industry than blatant cartels. an e x p a n s i o n in o u t p u t o f 2 0 p e r c e n t by o n e of t h e m will result in an a v e r a g e fall in o u t p u t of only a b o u t . so a seller need not w o r r y in m a k i n g his p r i c i n g d e c i s i o n s a b o u t t h e r e a c t i o n s of his rivals. If. The c o n c e p t of tacit c o l l u s i o n is u n d e r p i n n e d by the i n t e r d e p e n d e n c e t h e o r y o f o l i g o p o l y p r i c i n g . for e x a m p l e . t h e r e a r e t h r e e sellers o f e q u a l s i z e . T h e r e a s o n s for s t e e r i n g a w a y from n o t i o n s o f m o r a l b l a m e w o r t h i n e s s b e c o m e m o r e a p p a r e n t w h e n o n e c o n s i d e r s so-called ' t a c i t c o l l u s i o n ' . H e can s h a d e price w i t h o u t fear o f r e t a l i a t i o n b e c a u s e t h e e x p a n s i o n of his o u t p u t r e s u l t i n g from a price r e d u c t i o n will d i v e r t only a n i m p e r c e p t i b l e a m o u n t o f b u s i n e s s from e a c h of his c o m p e t i t o r s . by securing e c o n o m i e s of scale t h r o u g h g e o g r a p h i c p a r t i t i o n i n g of a m a r k e t ) . in a m a r k e t of 100 s e l l e r s of e q u a l size. A n d it w o u l d d e a l w i t h t h e p r o b l e m o f inability t o act against a n t i .Antitrust p a t t e r n s h a v e e c o n o m i c effects w h i c h are u n a c c e p t a b l e . a p r i c e cut t h a t p r o d u c e s a s u b s t a n t i a l e x p a n s i o n in t h e sales of o n e seller will r e s u l t in so s u b s t a n t i a l a c o n t r a c t i o n in t h e sales of t h e o t h e r s t h a t t h e y will p r o m p t l y m a t c h t h e cut. He c a n sell all t h a t he c a n p r o d u c e at t h a t price and n o t h i n g at a h i g h e r p r i c e . w h i c h P o s n e r ( 1 9 7 6 : 4 2 . g . the seller in a highly 193 . a 2 0 . In a m a r k e t of m a n y s e l l e r s .

or o n e c o m p a n y w h i c h is ( w r o n g l y ) s u s p e c t e d of c h e a t i n g to g r a s p a b i g g e r m a r k e t s h a r e can c a u s e o t h e r s t o r e t a l i a t e . n o differently from t h e a c t o r in a c o m p e t i t i v e m a r k e t . T u r n e r ( 1 9 6 2 : 6 5 5 . w h i c h he has to t a k e into a c c o u n t b e c a u s e t h e s i t u a t i o n in w h i c h he finds h i m s e l f p u t s it t h e r e . it s h o u l d not s u r p r i s e us to find. e v e n if it d o e s result in p e o p l e dying t h r o u g h n o t b e i n g a b l e t o afford d r u g s . T h e result is a t e n d e n c y t o a v o i d v i g o r o u s price c o m p e t i t i o n .6 ) a r g u e s that: t h e r a t i o n a l o l i g o p o l i s t is b e h a v i n g in exactly t h e s a m e way as is t h e r a t i o n a l seller in a c o m p e t i t i v e l y s t r u c t u r e d i n d u s t r y . . H o w can t h e o l i g o p o l i s t b e b l a m e w o r t h y w h e n it. It is difficult to c o n c e i v e of such i n t e r d e p e n d e n t pricing b e h a v i o u r as m o r a l l y b l a m e w o r t h y . In a price-fixing a g r e e m e n t . T h e i n t e r d e p e n d e n c e t h e o r y o f o l i g o p o l y pricing leads t o t h e c o n c l u s i o n t h a t it is i m p o s s i b l e to e l i m i n a t e c o n d u c t w h i c h follows i n e v i t a b l y from a given i n d u s t r y s t r u c t u r e . T u r n e r ( 1 9 6 2 : 669) a r g u e s t h a t a n i n j u n c t i o n t h a t m e r e l y ' p r o h i b i t e d each d e f e n d a n t from t a k i n g into a c c o u n t t h e p r o b a b l e price d e c i s i o n s o f his c o m p e t i t o r s i n d e t e r m i n i n g his o w n p r i c e ' w o u l d ' d e m a n d such i r r a t i o n a l b e h a v i o r t h a t full c o m p l i a n c e w o u l d be virtually i m p o s s i b l e . L a t e r s o m e o f t h e s e s t r u c t u r a l r e m e d i e s will b e c o n s i d e r e d .Antitrust c o n c e n t r a t e d m a r k e t will be less likely to initiate a price cut t h a n his c o u n t e r p a r t i n t h e a t o m i z e d m a r k e t . ' G i v e n t h i s p r e d i c a m e n t . as r e p o r t e d in this c h a p t e r . t h a t i n spite o f t h e long history o f a n t i t r u s t law. T h e historical i n s t a b i l i t y of c a r t e l s is a result of t h e fact t h a t they are rife with t e m p t a t i o n s and i n d u c e m e n t s to cheat. he is s i m p l y t a k i n g a n o t h e r factor into a c c o u n t [likely r e a c t i o n s o f rivals to a p r i c e c u t ] . we must p o n d e r some other traditional antitrust remedies. t h e m o s t crucial r e q u i r e m e n t is to be able to detect cheating. First. O l i g o p o l i s t s a r e ' i n t e r d e p e n d e n t ' i n t h e i r pricing: t h e y b a s e their pricing d e c i s i o n s in p a r t on a n t i c i p a t e d r e a c t i o n s to t h e m . Even an inadvertent undercutting of c o m p e t i t o r s on a bid can lead to a g e n e r a l r o u n d of price c u t t i n g . H e n c e the i m p o r t a n c e of c o m m u n i c a t i o n b e t w e e n c o m p a n i e s of detailed information on 194 . . S t r u c t u r a l r a t h e r t h a n c o n d u c t r e m e d i e s are r e q u i r e d . p h a r m a c e u t i c a l e x e c u t i v e s h a v e not i n t e r n a l i s e d a sense of i m m o r a l i t y about antitrust violations. follows t h e only e c o n o m i c ally r a t i o n a l c o u r s e o f c o n d u c t ? H e n c e .

I n f o r m a t i o n is t h u s a t w o . A t t e n d only m e e t i n g s o f l e g i t i m a t e t r a d e and p r o f e s s i o n a l a s s o c i a t i o n s held for p r o p e r b u s i n e s s . scientific. 1978): H o w e v e r . Y e t such i n f o r m a t i o n could also be useful in e n a b l i n g a c a r t e l to restrict its o u t p u t by limiting t h e e x p a n s i o n of p r o d u c t i v e c a p a c i t y . Some of the P h a r m a c e u t i c a l Manufact u r e r s ' A s s o c i a t i o n s a r o u n d t h e w o r l d h a v e s u b c o m m i t t e e struct u r e s b a s e d o n p r o d u c t g r o u p i n g s w h i c h w o u l d o b v i o u s l y facilitate collusion a m o n g producers of therapeutically equivalent drugs. T h e following r u l e s should b e o b e y e d carefully: 1 . . or professional purposes. and h e n c e t h e c o n c e r n o f m a n y a n t i t r u s t e n f o r c e r s t o m a k e e x c h a n g e o f pricing i n f o r m a t i o n a m o n g c o m p e t i t o r s a perse a n t i t r u s t offence. S i m i l a r l y . T h e p h a r m a c e u t i c a l i n d u s t r y has the last w o r d in m a r k e t intellig e n c e t h r o u g h t h e p r i c i n g s u r v e y s o f p h a r m a c i s t s and o t h e r o u t l e t s c o n d u c t e d in m o s t m a j o r c o u n t r i e s by the I M S c o m p a n y . Lilly clearly see t r a d e a s s o c i a t i o n m e e t i n g s a s p r o v i d i n g e x c e l l e n t o p p o r t u n i t i e s for a n t i t r u s t v i o l a t i o n s w h e n they d e v o t e c o n s i d e r a b l e a t t e n t i o n to t h e m a t t e r in t h e i r Guidelines of Company Policy ( S e p t e m b e r .Antitrust p r i c i n g b e h a v i o u r . Simply by s u b s c r i b i n g t o I M S you can find e x a c t l y w h a t y o u r c o m p e t i t o r s are c h a r g i n g for different d o s a g e forms a n d d o s a g e s t r e n g t h s o f a given p r o d u c t . but it can a l s o facilitate c o l l u s i o n ( P o s n e r . w i t h o u t k n o w i n g w h a t the m a r k e t p r i c e is. t h e m o r e i n f o r m a t i o n sellers h a v e a b o u t t h e prices a n d o u t p u t o f t h e i r c o m p e t i t o r s t h e m o r e efficiently the m a r k e t will o p e r a t e .e d g e d s w o r d : it is n e c e s s a r y if t h e c o m p e t i t i v e p r o c e s s is to w o r k p r o p e r l y . C o u l d w e s e r i o u s l y talk o f m a k i n g I M S illegal? N o t w i t h s t a n d i n g its i m p r a c t i c a l i t y . t r a d e a s s o c i a t i o n m e e t i n g s are i n f a m o u s a s v e n u e s for s w a p p i n g pricing plans. m a k i n g price i n f o r m a t i o n e x c h a n g e aper se a n t i t r u s t v i o l a t i o n w o u l d be u n d e s i r a b l e b e c a u s e pricing intellig e n c e c o n f e r s social benefits as well as c o s t s . or i n d e e d w h e t h e r t o p r o d u c e a t all. I n g e n e r a l . . It is i m p o r t a n t t h a t e m p l o y e e s be p a r t i c u l a r l y careful to c o n d u c t t h e m s e l v e s i n a m a n n e r t h a t i s a b o v e suspicion w h e n a t t e n d i n g t h e s e m e e t i n g s . A firm c a n n o t d e c i d e h o w m u c h to p r o d u c e . 195 . t r a d e a s s o c i a t i o n m e e t i n g s are a l m o s t invariably a f a v o r i t e a r e a of e x a m i n a t i o n by a n t i t r u s t e n f o r c e m e n t officials. . 1976: 136).

b u t which the law c a n n o t effectively deal with b e c a u s e t h e a c t i v i t i e s t h a t t a k e p l a c e w i t h i n t h e m also confer social b e n e f i t s ( e .L a m b e r t . t h e A n t i t r u s t D i v i s i o n o f t h e J u s t i c e D e p a r t m e n t has p e r m i t t e d five m a s s i v e m e r g e r s a m o n g t r a n s n a t i o n a l p h a r m a c e u t i c a l c o m p a n i e s d u r i n g t h e last fifteen y e a r s : M e a d J o h n s o n and B r i s t o l M y e r s . g . . or e v e n listen t o . 1 9 5 1 . 1977). 1969. An a l t e r n a t i v e r o u t e is to focus on structural p r e c o n d i t i o n s r a t h e r t h a n the c o n d u c t which such s t r u c t u r e s p r o d u c e . I n any c a s e . 1976. t e r m s of s a l e . E v e n t h e c o m b i n a t i o n o f t w o m e m b e r s (or t h e b r e a k i n g i n t w o o f one m e m b e r ) o f t h e s a m e o l i g o p o l y might not m a k e m u c h difference 196 .M e r r e l l . I n the U n i t e d S t a t e s . b o y c o t t s . If t h e d i s c u s s i o n at an a s s o c i a t i o n m e e t i n g t u r n s to t h e subject o f p r i c e s o r o t h e r p r o h i b i t e d t o p i c s . P a r k e D a v i s a n d W a r n e r . A d v i s e y o u r s u p e r v i s i o n o r t h e a p p r o p r i a t e legal p e r s o n n e l p r o m p t l y of any activity of an a s s o c i a t i o n that may a p p e a r to be illegal or e v e n s u s p i c i o u s . D o w and R i c h a r d s o n . If t h e a g e n d a of a f o r t h c o m i n g a s s o c i a t i o n m e e t i n g i n d i c a t e s d o u b t f u l s u b j e c t s . E l z i n g a . T a k e no p a r t in. 3. 5 . or after t h e formal b u s i n e s s s e s s i o n s of a t r a d e a s s o c i a t i o n m e e t i n g . D i v e s t i t u r e o r d e r s and p r o h i b i t i o n o f m e r g e r s a r e the m o s t w i d e l y s u p p o r t e d s t r u c t u r a l r e m e d i e s . check i n a d v a n c e w i t h y o u r s u p e r v i s i o n before attending. 1972). P f u n d e r e t a l . p r o m o t i o n of self-regulation). or blacklists at an a s s o c i a t i o n m e e t i n g . diffusion of i n n o v a t i o n . any d i s c u s s i o n s of p r i c e . H o w e v e r . C r e a t i n g v a r i o u s per se offences to p r o h i b i t b e h a v i o u r k n o w n to be a s s o c i a t e d w i t h p r i c e fixing d o e s not s e e m a very p r o d u c t i v e r e s p o n s e to the w i d e s p r e a d impossibility of proving conspiracy ( P o s n e r . d i s c u s s i o n s o f g e n e r a l e c o n o m i c t r e n d s are p r o p e r .Antitrust 2. A g a i n . leave the r o o m . 4. A p a r t from p u r e l y social affairs. n e v e r a t t e n d informal gatherings of representatives of c o m p e t i t o r s before. Such m e a s u r e s d e m a n d c o n s i d e r a b l e political will and for t h a t r e a s o n have not b e e n a d o p t e d ( A d a m s . S u c h "rump* m e e t i n g s a r e a l w a y s suspect. C i b a and G e i g y . during. M a n y o f t h e p h a r m a c e u t i c a l c o m p a n i e s which h a v e m e r g e d i n r e c e n t t i m e s w e r e not c o m p e t i t o r s (in the sense t h a t their p r o d u c t lines w e r e not t h e r a p e u t i c a l l y s u b s t i t u t a b l e ) . t r a d e a s s o c i a t i o n m e e t i n g s are a n a r e a which i s k n o w n t o c a u s e p r o b l e m s . P l o u g h and S c h e r i n g . one w o n d e r s how much would be achieved by attempts to break up t h e i n d u s t r y .

T h e r e are a great many alternative types of structural remedies available in the pharmaceutical industry. M o r e o v e r . P a t e n t r e w a r d s . of c o u r s e . s o i t b e c o m e s possible t h a t a t t e m p t s t o b r e a k u p the industry m i g h t have m i n i m a l i m p a c t on c o m p e t i t i o n w h i l e r e d u c i n g t h e flow of t h e r a p e u t i c b r e a k throughs. i n m e d i c i n e p a t e n t s a r e r e s e r v e d for i n n o v a t o r s i n c h e m i c a l t r e a t m e n t s but not i n n o v a t o r s i n n o n . " T h e s e k i n d s o f a r g u m e n t s lead K n i g h t t o a r g u e a g a i n s t p a t e n t m o n o p o l i e s : 'It w o u l d s e e m to be a m a t t e r of political i n t e l l i g e n c e a n d a d m i n i s t r a t i v e c a p a c i t y t o r e p l a c e artificial m o n o p o l y w i t h s o m e d i r e c t m e t h o d o f s t i m u l a t i n g and r e w a r d i n g r e s e a r c h . T h i s c o n c e n t r a t e s scarce r e s e a r c h r e s o u r c e s a n d t a l e n t into c h e m i c a l s o l u t i o n s w h e n altern a t i v e d i r e c t i o n s for r e s e a r c h m i g h t c o n f e r a g r e a t e r social b e n e f i t . W a l k e r (1971) c o n c l u d e d o n t h e b a s i s o f his e c o n o m i c r e s e a r c h that t h e costs t o t h e p u b l i c o f p a y i n g for all o f t h e r e s e a r c h c o n d u c t e d b y t h e p h a r m a c e u t i c a l i n d u s t r y w o u l d b e m o r e t h a n c o m p e n s a t e d for b y the s a v i n g s in p r i c e r e d u c t i o n s which w o u l d follow from a b o l i s h i n g p a t e n t s .Antitrust g i v e n w h a t w e k n o w a b o u t h o w little c o m p e t i t i o n t h e r e i s t o start with in most o f t h e oligopolies. T h e m o s t i m p o r t a n t i s t h a t m o s t r e s e a r c h a n d safety t e s t i n g r e s o u r c e s are d i r e c t e d a t 197 . a n d t h e r e b y e n c o u r a g i n g i n v e s t m e n t i n i n n o v a t i o n . H o w e v e r . this benefit s h o u l d n o t b e e x a g g e r a t e d . P h a r m a c e u t i c a l c o m p a n i e s w o u l d n o t c o m p l e t e l y stop their r e s e a r c h a c t i v i t i e s i f p a t e n t s w e r e a b o l i s h e d . patents have the advantage of r e w a r d i n g . w h e n t h e activity w h i c h is m o s t d e s e r v i n g of r e w a r d is basic r e s e a r c h . ' Such 'direct m e t h o d s of stimulating and rewarding research' w o u l d . however. T h e S e c o n d W o r l d W a r fiasco w i t h p e n i c i l l i n i l l u s t r a t e d o n e o f t h e m . w e h a v e seen that t h e r e are c e r t a i n a d d i t i o n a l c o n s e q u e n c e s o f p a t e n t s w h i c h run c o u n t e r t o t h e p u b l i c interest a p a r t from t h e i r a d v e r s e i m p a c t o n c o m p e t i t i o n . T h e r o u t i n i s e r g e t s the i n c e n t i v e s w h i l e t h e real p i o n e e r ing and e x p l o r a t i o n are d o n e b y o t h e r s . M o r e o v e r . it is known that research p r o d u c t i v i t y i n c r e a s e s with c o m p a n y size. a s K n i g h t (1971) p o i n t e d o u t . A s has b e e n pointed out a l r e a d y . T h e r e w o u l d still b e g r e a t a d v a n t a g e s in b e i n g t h e first in t h e d o c t o r ' s surgery with a n e w product. A s a n a l t e r n a t i v e t o b r e a k i n g u p t h e large c o m p a n i e s . this w o u l d foster the e n t r y o f m a n y s m a l l e r c o m p e t i t o r s t o c h a l l e n g e the g i a n t s .c h e m i c a l t r e a t m e n t s . cost a g r e a t deal of p u b l i c m o n e y . Abolishing p a t e n t s i s t h e m o s t radical s o l u t i o n for r e s t o r i n g c o m p e t i t i o n . g o t o t h o s e w h o put t h e 'finishing t o u c h ' o n a n innovat i o n . Finally.

C o m p u l s o r y licensing is a n o t h e r s t r u c t u r a l reform for i n c r e a s e d c o m p e t i t i o n .Antitrust efforts t o c i r c u m v e n t e x i s t i n g p a t e n t s with m e . i s C o s t e l l o ' s ( 1 9 6 8 ) c o n t e n t i o n t h a t m o n o p o l y p o w e r is in s o m e w a y s a d e t e r r e n t to i n n o v a t i o n (see also H a m b e r g . 1966: 3 9 4 4 ) .h o l d e r i s usually r e t a i n e d b e c a u s e of established brand-prescribing habits among d o c t o r s . for e x a m p l e . G i v e n the p o w e r o f t h e p h a r m a c e u t i c a l l o b b y . A n u m b e r o f W e s t e r n E u r o p e a n c o u n t r i e s . instead of at efforts to i m p r o v e h e a l t h . A final a r g u m e n t against p a t e n t s . A s e v i d e n c e o f t h i s . A b o l i t i o n of b r a n d n a m e s is a s t r u c t u r a l p a t h to i n c r e a s e d c o m p e t i t i o n w h i c h h a s b e e n followed in a limited way by P a k i s t a n and I n d i a . It p r o v i d e s i n c e n t i v e s for i n n o v a t i o n from r o y a l t i e s r a t h e r t h a n m o n o p o l y profits. h a v e p r o v i s i o n for g o v e r n m e n t t o r e q u i r e c o m p a n i e s t o license t h e i r p a t e n t e d p r o d u c t t o p o t e n t i a l c o m p e t i t o r s w h e n t h e g o v e r n m e n t ' s assessment o f t h e public interest d e m a n d s . P r o d u c t s w o u l d b e p r o m o t e d a n d sold b y g e n e r i c n a m e o n l y . t h e m a r k e t d o m i n a n c e o f the o r i g i n a l p a t e n t . t h o u g h p e r h a p s not a particularly s t r o n g o n e .p r e s c r i b i n g h a b i t s and w o u l d o p e n t h e f l o o d g a t e s o f price c o m p e t i t i o n . all o f t h e a d v a n t a g e s o f p a t e n t s c o u l d surely b e a d e q u a t e l y p r o t e c t e d u n d e r a r e d u c e d p e r i o d o f p a t e n t p r o t e c t i o n . Israel and I n d i a . t h a t o n c e C y a n a m i d had p a t e n t e d c h l o r t e t r a c y c l i n e i t rested o n its l a u r e l s . N e v e r t h e l e s s . t h e t e t r a c y c l i n e c a s e study i l l u s t r a t e s h o w quite a r b i t r a r y forces w h i c h h a v e little to do with r e s e a r c h effort often s h a p e w h o gets a p a t e n t and w h o d o e s not. A b o l i s h i n g b r a n d n a m e s a b o l i s h e s t h e a d v a n t a g e from p h y s i c i a n . W h e n all t h e a r g u m e n t s a g a i n s t p a t e n t s are a s s e m b l e d . C o m p a n y r e p u t a t i o n 198 . their j u s t i f i c a t i o n for e x i s t i n g at all s e e m s less o b v i o u s t h a n the industry w o u l d h a v e u s b e l i e v e .t o o p r o d u c t s . T h e a d v a n t a g e s o f being first on t h e m a r k e t are so great with p h a r m a c e u t i c a l s that 16-20 y e a r s of p a t e n t p r o t e c t i o n is an e n o r m o u s cost in r e d u c e d c o m p e t i t i o n for an i n c e n t i v e w h i c h i s e x c e s s i v e l y g r e a t e r t h a n that r e q u i r e d t o foster innovation. t h e political feasibility o f c o m p l e t e l y a b o l i s h i n g p a t e n t s s e e m s m i n i m a l i n m o s t c o u n t r i e s . a b a n d o n i n g all further r e s e a r c h in t h e a r e a until the stimulus o f t h e discovery of tetracycline by other companies (mainly Pfizer) c a m e a l o n g . C o n s i s t e n t with K n i g h t ' s a r g u m e n t . t o n a m e a few. " It h a s b e e n seen t h a t e v e n after a p r o d u c t g o e s off p a t e n t . T y p i c a l l y t h e m a r k e t share o f t h e l e a d e r r e m a i n s i m p e r v i o u s t o i n c u r s i o n s from price c u t t e r s . C o s t e l l o a r g u e s . C a n a d a .

4 ) . I t w o u l d be e a s i e r for d o c t o r s b o t h to get t h e i r initial t r a i n i n g a n d to k e e p u p w i t h n e w d e v e l o p m e n t s i f only o n e n a m e w e r e a s s o c i a t e d w i t h e a c h distinct m o l e c u l a r e n t i t y . D r u g c o m p e n d i a with information on comparative therapeutic efficacy and p r i c e s a r e p u b l i s h e d by g o v e r n m e n t s in t h e U n i t e d K i n g d o m . O t h e r c o m p r o m i s e m e a s u r e s aim t o r e d u c e c o n s u m e r costs b y m a k i n g both physicians and pharmacists m o r e price conscious. so t h a t p h a r m a c i s t s are e m p o w e r e d to s u b s t i t u t e a c h e a p e r . S o m e progress is being m a d e towards a more competitive pharmaceutical market. A n u m b e r of c o u n t r i e s . but the magic o f t h e Valium brand name would disappear. S w e d e n and N o r w a y (Gereffi. T h a l i d o m i d e d e m o n s t r a t e d t h e o t h e r i m p o r t a n t justification for abolishing brand names.p r i c e c o m p a r i s o n s t o p h y s i c i a n s and p h a r m a c i s t s t o e n c o u r a g e t h e m t o l o w e r t h e i r p a t i e n t s ' e x p e n d i t u r e (Business Week.4 p e r cent in 1977 ( U N C e n t e r on 199 . p a t e n t s . I n the U n i t e d S t a t e s . r e q u i r e t h e p o s t i n g o f p r e s c r i p t i o n prices i n pharm a c i e s t o facilitate cost-effective p u r c h a s i n g (Gereffi. 1979: 2 3 . All but four A m e r i c a n s t a t e s have n o w r e p e a l e d their a n t i s u b s t i t u t i o n l a w s . i n o t h e r s s u b s t i t u t i o n i s a u t o m a t i c a l l y p e r m i t t e d unless t h e physician expressly indicates disapproval ofthe practice. a n d s o m e A m e r i c a n s t a t e s .Antitrust c o u l d still b e r e l e v a n t .s u b s t i t u t i o n laws i s that they d o n o t i n v o l v e t h e b u r e a u c r a t i c and legal costs o f a n t i t r u s t p r o s e c u t i o n s and divestitures. and a n t i . I n s o m e s t a t e s this cost s a v i n g can be m a d e only if t h e p h y s i c i a n e x p r e s s e s a p p r o v a l o f g e n e r i c s u b s t i t u t i o n o n t h e p r e s c r i p t i o n form. V a l i u m w o u l d b e c o m e R o c h e d i a z e p a m and w o u l d c o m p e t e w i t h d i a z e p a m sold b y v a r i o u s c o m p a n i e s . 1979: 2 3 ) . I n t h e U n i t e d S t a t e s a t the m o m e n t t h e r e are a l m o s t 3 0 r e g i s t e r e d b r a n d n a m e s for each p r e s cription drug on the m a r k e t ( U N C e n t r e on Transnational Corporations. T h e g r e a t a d v a n t a g e o f s t r u c t u r a l r e m e d i e s such a s t h e a b o l i t i o n o f b r a n d n a m e s . 6 O c t o b e r 1 9 7 5 : 9 9 ) . Many deformed babies were born because o f t h e c o n f u s i o n s u r r o u n d i n g t h e d o z e n s o f different c o m m e r c i a l n a m e s u n d e r w h i c h t h a l i d o m i d e w a s sold a r o u n d t h e w o r l d . b u t t h e r a p e u t i c a l l y e q u i v a l e n t . t h e D e p a r t m e n t o f H e a l t h and H u m a n S e r v i c e s n o w s e n d s lists o f d r u g . 1979:47). T h e r e a r e m a n y c o m p r o m i s e m e a s u r e s t h a t g o only part o f t h e way towards undermining the quasi-monopolistic power of brand n a m e s . g e n e r i c p r o d u c t for t h e b r a n d n a m e w h i c h t h e p h y s i c i a n w r i t e s o n the p r e s c r i p t i o n . The proportion of United S t a t e s d r u g p r e s c r i p t i o n s w h i c h are w r i t t e n g e n e t i c a l l y rose from 6 p e r c e n t in 1966 to 12.

Antitrust Transnational Corporations. o n e w o u l d n o t w a n t to do away with t h e latter. T h e s e a r e simply g e n e r i c d r u g s t o c o m p e t e w i t h t h e o f f . T h e reality o f g r o w i n g p r i c e c o m p e t i t i o n from g e n e r i c m a n u f a c t u r e r s has b e e n c o n f r o n t e d by a n u m b e r o f t h e m a j o r t r a n s n a t i o n a l s w h o are n o w d e v e l o p i n g lines o f ' b r a n d e d g e n e r i c s ' . but which use the c o m p a n y r e p u t a t i o n of the 'branded generic' manufacturer as a promotional advantage. N e v e r t h e l e s s . A 200 . in w h i c h it u n d e r c u t s the price of t h e first c o m p a n y . o n e w o n d e r s w h e t h e r i t i s t h e role o f t h e c o u r t s t o m a k e e c o n o m i c decisions. C o u r t s h a v e n o t fared p a r t i c u l a r l y well i n dealing with the complexities of antitrust matters. 1979:80). for e x a m p l e . W h i l e the real h o p e for r e s t o r i n g c o m p e t i t i o n c o m e s from a r e a s o t h e r t h a n a n t i t r u s t law. or t h e y will lose their n o r m a l b u l k d i s c o u n t o n t h e t w o lines t h e y c o n t i n u e t o p u r c h a s e . A c o m p e t i t o r e n t e r s t h e m a r k e t by p r o d u c i n g only t h e i n t r a v e n o u s f o r m . In s p i t e of t h e g r e a t e r efficiency of t h e s t r u c t u r a l s o l u t i o n s to b a r r i e r s t o c o m p e t i t i o n discussed a b o v e . will lead to g r o w i n g d e m a n d s for price r e d u c t i o n s in c o u n t r i e s with prices well a b o v e w o r l d a v e r a g e s . B u t w h o i s t o d e c i d e w h a t e c o n o m i c effects are una c c e p t a b l e ? In some E u r o p e a n countries courts tend to make these e c o n o m i c d e c i s i o n s w i t h o u t great difficulty and w i t h o u t slipping i n t o t h e m o r a l b l a m e w o r t h i n e s s t r a p s w h i c h have b e e n t h e o u t c o m e o f l e g a l i s m i n c o u n t r i e s such a s A u s t r a l i a . and w i d e r d i s s e m i n a t i o n o f i n f o r m a t i o n o n i n t e r n a t i o n a l price v a r i a t i o n s on t h e s a m e p r o d u c t . t h e p r o b l e m of a large c o m p a n y w h i c h has a drug in an i n t r a v e n o u s l y i n j e c t a b l e . t h e r e are still s i t u a t i o n s w h e n c o n d u c t r e m e d i e s m u s t b e relied u p o n .p a t e n t p r o d u c t s o f o t h e r t r a n s n a t i o n a l s . P e r h a p s much of a n t i t r u s t s h o u l d be shifted from t h e legal d o m a i n to t h e political. I n c i d e n t s such a s the C e n t r a f a r m a m b i t . and o r d e r s for t h e r e p a y m e n t of e x c e s s profits s h o u l d also be m a d e in s o m e of t h e s e c a s e s . w i t h o u t t h e r e q u i r e m e n t o f p r o v i n g c o n s p i r a c y . C a n a d a and J a p a n w h i c h h a v e followed the A m e r i c a n antitrust m o d e l . T h e o r i g i n a l p r o d u c e r t h e n tells its h o s p i t a l c u s t o m e r s t o b u y all t h r e e forms of t h e d r u g from t h e m . C o n s i d e r . T h i s t y p e o f r e s t r i c t i v e t r a d e p r a c t i c e can really only b e d e a l t with b y a c o n d u c t p r o s e c u t i o n or a civil a n t i t r u s t suit. E a r l i e r i t w a s a r g u e d t h a t pricing p a t t e r n s which h a v e u n a c c e p t a b l e e c o n o m i c effects s h o u l d s o m e t i m e s b e s t o p p e d . i n t r a m u s c u l a r l y injectable and orally i n g e s t a b l e form. Perhaps the British M o n o p o l i e s Comm i s s i o n i n t e r v e n t i o n in t h e V a l i u m and L i b r i u m case study is closer t o a n a p p r o p r i a t e m o d e l . for t h a t r e a s o n a l o n e .

h o w e v e r . has its o w n c h e c k s and b a l a n c e s a g a i n s t a b u s e s o f d e c i s i o n . o n e is p r e p a r e d to eschew the option of punishing individuals (particularly i n c a r c e r a t i o n . is s u p e r i o r to t h e legal p r o c e s s for s o m e t y p e s of d e c i s i o n . The legislature (or perhaps the executive under the A m e r i c a n s y s t e m ) c o u l d t h e n c h o o s e t o a c c e p t o r reject the r e c o m m e n d a t i o n .m a k i n g i s one o f t h e m .A T & T . P r e s u m e d c e r t a i n t y of law is a d u b i o u s benefit w h e n an i n d u s t r y m u s t suffer t e r r i b l e u n c e r t a i n t y for a d e c a d e w h i l e c l u m s y c o u r t s a g o n i s e o v e r major e c o n o m i c d e c i s i o n s . c o r p o r a l and c a p i t a l p u n i s h m e n t ) . more political. 2 5 T h e legal s y s t e m w i t h its m o r e i n t r i c a t e p r o c e d u r a l safeguards is c l e a r l y s u p e r i o r for d e c i s i o n s w h i c h t h r e a t e n t h e life and liberty of i n d i v i d u a l p e r s o n s a c c u s e d of w r o n g d o i n g . r e q u i r e m e n t t o p u b l i c l y justify d e c i s i o n s . r e m o v a l o f m i n i s t e r s from office. w h y did t h e y h a v e to go a b o u t it by tying up c o u r t s for 13 y e a r s and s p e n d i n g t e n s of m i l l i o n s of t a x p a y e r s ' d o l l a r s in legal costs? T h e p r e s u m e d a d v a n t a g e of c e r t a i n t y in law is feeble w h e n n e w and r a p i d l y c h a n g i n g e c o n o m i c r e a l i t i e s . M y o w n view i s t h a t t h e r e p o r t o f t h e B r i t i s h M o n o p o l i e s C o m m i s sion on L i b r i u m and V a l i u m r e p r e s e n t s a m i l e s t o n e on the p a t h to a m o r e constructive. I f t h e U S g o v e r n m e n t w a n t e d t o b r e a k u p I B M i n 1969. w i t h all its f a u l t s . ) . T h e political s y s t e m . 201 . or a commission of economic experts a p p o i n t e d b y t h e l e g i s l a t u r e . This conclusion might be generalised beyond the pharmaceutical i n d u s t r y . e t c .c h a n g i n g e c o n o m i c s i t u a t i o n s i s n o longer t e n a b l e . t h e n t h e p r i m a r y r a t i o n a l e for giving t h e c o u r t s r e s p o n s i b i l i t y for d e c i s i o n s a b o u t u n i q u e and e v e r . c o m b i n e d with a n i n e v i t a b l e legal c o m p l e x i t y t o g r a p p l e with such flux. could h o l d p u b l i c h e a r i n g s and m a k e r e c o m m e n d a t i o n s about the economic desirability of intervention in t h e p r i c i n g s t r u c t u r e of a m o n o p o l i s t i c or o l i g o p o l i s t i c m a r k e t w i t h o u t n e c e s s a r y r e f e r e n c e t o m o r a l b l a m e w o r t h i n e s s o r prec e d e n t . T h e d e m o c r a t i c political p r o c e s s . approach to antitrust. If.w a s that the c o m p a n y o p t e d for a legal s e t t l e m e n t in 1982 b e c a u s e of fear t h a t legislation p e n d i n g in t h e C o n g r e s s w o u l d result in a m o r e severe b r e a k u p of A T & T t h a n t h e c o u r t s w o u l d ever dish out (Sunday News Journal. T h e polity is m o r e a b l e ( e v e n if not a l w a y s willing) to be d e c i s i v e .m a k i n g . 10 J a n u a r y 1982). O n e o f t h e ironies o f t h e o t h e r major U S m o n o p o l i z a t i o n c a s e o f t h e 1970s . like the legal s y s t e m . r e n d e r t h e o u t c o m e o f l i t i g a t i o n a n y o n e ' s g u e s s . it can also be m o r e d e t e r m i n e d to b r e a k up m o n o p o l y p o w e r t h a n t h e c o u r t s . S u r p r i s i n g l y .Antitrust p a r l i a m e n t a r y c o m m i t t e e . and e c o n o m i c d e c i s i o n .m a k i n g p o w e r ( e l e c t i o n s .

T h e p r e s e n t c h a p t e r also a r g u e s for i n f r e q u e n t r e g u l a t i o n t h r o u g h t h e c o u r t s . b u t i m p l i e s an i n c r e a s e d role for political r a t h e r t h a n a d m i n i s t r a t i v e r e g u l a t i o n . To the extent that professional opinion is relevant to t h e s e p o l i t i c a l d e c i s i o n s .a d m i n i s t r a t i v e " price c o n t r o l . c o m p a n i e s do not g e n e r a l l y h a v e an i n t e r e s t in e n f o r c i n g t h e setting of l o w e r p r i c e s for t h e i r p r o d u c t s . Since t h e m a r k e t and t h e c o u r t s have failed t o r e g u l a t e p h a r m a c e u t i c a l p r i c e s effectively. o r p e r h a p s u n d e r the A m e r i c a n system a n i n d e p e n d e n t c o m m i s s i o n m a k i n g r e c o m m e n d a t i o n s w h i c h will a u t o m a t i c a l l y b e a d o p t e d u n l e s s t h e C o n g r e s s c h o o s e s t o v e t o t h e m within a fixed p e r i o d ) . H o w e v e r .Antitrust It t h e r e f o r e s e e m s u n d e s i r a b l e for a m a t t e r like t h e b r e a k . and since self-regulation of pricing w o u l d be to put Dracula in charge o f t h e blood bank. C e r t a i n l y political r e g u l a t i o n must be a c c o m p a n i e d by s t r o n g g u a r a n t e e s o f o p e n n e s s and effective laws p r o h i b i t i n g c o r p o r a t e campaign contributions. In c o n t r a s t . W i t h safety m a t t e r s t h e r e is an i m p o r t a n t place for self-regulation b e c a u s e up to a p o i n t g o v e r n m e n t a n d b u s i n e s s share a c o m m o n i n t e r e s t in t h e sale of safe p r o d u c t s . it s h o u l d be p r i m a r i l y t h e professional o p i n i o n s o f e c o n o m i s t s . voting in the legislature on every major antitrust matter w o u l d clearly clog up t h e legislative p r o c e s s ( N e u s t a d t . S u r e l y t h e b r e a k . not l a w y e r s .u p of a c o m p a n y with $20 billion in assets to be d e c i d e d e i t h e r by the c o u r t s o r t h r o u g h t h e secret p o w e r o f a d m i n i s t r a t i v e d e c i s i o n . T h e t h r u s t of t h e c o n c l u s i o n to this c h a p t e r is t h e r e f o r e fundam e n t a l l y different from t h o s e o f t h e p r e v i o u s t w o .r e g u l a t i o n . C y n i c s w o u l d be justified in p o i n t i n g out t h a t political r e g u l a t i o n is m o r e s u s c e p t i b l e t o t h e p o w e r o f big m o n e y t h a n legal r e g u l a t i o n . 1980: 1 4 6 . L o w e r levels o f p o l i t i c i s a t i o n (such a s t h r o u g h a n i n d e p e n d e n t c o m m i s s i o n c o n d u c t i n g a n e n q u i r y and t h e n m a k i n g a r e c o m m e n d a t i o n for c a b i n e t d e c i s i o n u n d e r t h e W e s t m i n s t e r s y s t e m . T h e p r e v i o u s t w o c h a p t e r s p r e s e n t e d a r g u m e n t s for a g r e a t e r role for s e l f . a g r e a t e r role for a d m i n i s t r a t i v e r e g u l a t i o n and a role for litigious r e g u l a t i o n o f safety less c e n t r a l t h a n t h e o t h e r t w o s t r a t e g i e s . M o r e important than 202 . and a m i n i m a l role for self-regulation.m a k i n g .a d m i n i s t r a t i v e c o n t i n u u m .u p of I B M is a big e n o u g h political issue to be d e b a t e d b y e l e c t e d r e p r e s e n t a t i v e s and v o t e d o n i n the C o n g r e s s . it is g e n e r a l l y p r e f e r a b l e to h a v e such c o n t r o l s t o w a r d t h e political end o f t h e p o l i t i c a l . m u s t be a p p l i e d to all but t h e m o s t crucial a n t i t r u s t d e t e r m i n a t i o n s . the o n l y c o u r s e i s for g r e a t e r p o l i t i c a l . As a r g u e d e a r l i e r .4 9 ) .

r e p r e s e n t a t i o n of c o n s u m e r groups on relevant comm i t t e e s of e n q u i r y a n d full p u b l i c a c c e s s to r e c o r d s of g o v e r n m e n t d e l i b e r a t i o n s o n a n t i t r u s t m a t t e r s . W i t h o u t such g u a r a n t e e s .Antitrust p r o f e s s i o n a l o p i n i o n i s c o n s u m e r o p i n i o n . T h i s s h o u l d b e fostered by f i n a n c i a l s u p p o r t for c o n s u m e r g r o u p s to m o u n t s u b m i s s i o n s to g o v e r n m e n t . 203 . politicised antitrust would be captured by the superior power ofthe c o r p o r a t i o n s i n t h e s a m e way t h a t legal a n t i t r u s t has b e e n .

F D A a d v e r s e r e a c t i o n files tell o f a w o m a n w h o . n o t r a g e . C o n s t a n t l y i n t h e m e d i a w e read h o r r o r stories o f b i z a r r e e x p l o i t s of p e o p l e u n d e r t h e influence of illicit d r u g s . In a p r o v o c a t i v e p a p e r . W o k e n b y t h e r e t u r n o f t h e h u s b a n d . had an a r g u m e n t with h e r h u s b a n d . She m i g h t h a v e shot him w i t h o u t the V a l i u m . T h e story p r o v e s n o t h i n g . V a l i u m in i n t e r a c t i o n with alcohol c a n p r o d u c e a ' p a r a d o x i c a l r a g e r e a c t i o n ' . C o m p a r a b l e cases w h e r e illicit d r u g s might be p r e s u m e d to cause anti-social behaviour decidedly are news. In c o n t r a s t . P u b l i c o p i n i o n r e g a r d s t h e p r o d u c t i o n and d i s t r i b u t i o n o f illicit d r u g s as a m a l e v o l e n t c o n s p i r a c y of vast p r o p o r t i o n s . G o r r i n g ( 1 9 7 8 : 82) a r g u e s t h a t t h e p u b l i c i m a g e o f h e r o i n d i s t r i b u t i o n is really not a s o u n d d e s c r i p t i o n o f w h a t h a p p e n s in t h e h e r o i n t r a d e . h a v i n g had a few d r i n k s . B e t t y F o r d . Yet d e p e n d e n c e o n V a l i u m o r D a r v o n can h a v e c o n s e q u e n c e s j u s t a s frightening a s h e r o i n a d d i c t i o n . p u s h e r s of licit d r u g s tend to be v i e w e d as a l t r u i s t i c a l l y m o t i v a t e d p u r v e y o r s o f a social g o o d . T h e p o i n t is t h a t t h e r e is no n e w s v a l u e in anti-social c o n d u c t p r e s u m e d to be c a u s e d by licit d r u g s . It t o o k t h e d r u g d e p e n d e n c e o f t h e wife o f a p r e s i d e n t . t o get h e a d l i n e s a b o u t V a l i u m a d d i c t i o n into A m e r i c a n n e w s p a p e r s . P e r h a p s the F D A w e r e w r o n g t o classify this a s a n ' o b v i o u s a d v e r s e r a g e r e a c t i o n ' t o V a l i u m .p a r a d o x i c a l b e c a u s e V a l i u m is s u p p o s e d to bring c a l m .6 The corporation as pusher P e o p l e w h o foster d e p e n d e n c e on illicit d r u g s such as h e r o i n are r e g a r d e d a s a m o n g t h e m o s t u n s c r u p u l o u s p a r i a h s o f m o d e r n civilisa t i o n . she t o o k out a p i s t o l a n d shot him d e a d . W h e n he left t h e h o u s e . but is r e m a r k a b l y in a c c o r d with w h a t in fact 204 . she t o o k several V a l i u m t a b l e t s to calm d o w n and w e n t t o s l e e p .

G o r r i n g a r g u e s t h a t t h e h e r o i n t r a d e is not as highly o r g a n i s e d as p o p u l a r belief w o u l d h a v e it. e q u a l l y significant are t h e small s e l l e r s . T h a t t h e p o w e r b r o k e r s i n this o r g a n i z a t i o n . T h a t t h e i m m o r a l i t y o f t h e o p e r a t i o n lies i n t h e d e l i b e r a t e . B e l o w t h e m a r e a g e n t s w h o a r r a n g e supply t o i m p o r t e r s i n o t h e r countries. far from cynically m a n i p u l a t i n g a d d i c t i o n i n o t h e r s . T h a t a d i s t r i b u t i o n h i e r a r c h y e x i s t s . w h o . At t h e t o p are faceless m e n i n s o m e undefined foreign c o u n t r y i n t h e E a s t . T h a t a h u g e a n d e l a b o r a t e o r g a n i z a t i o n .b r i b e r y and c o r r u p t i o n of officials. The importers. T h e fact t h a t t h e c o n s u m e r d e r i v e s t r a n s i e n t p l e a s u r e from the g r a t i f i c a t i o n of this illicit n e e d i n c r e a s e s t h e i m m o r a l i t y . G o r r i n g ' s a r g u m e n t t h a t her six p o i n t s constitute a m o r e a c c u r a t e depiction of the multinational p h a r m a c e u t i c a l i n d u s t r y h a r d l y n e e d s t o b e r e p e a t e d h e r e . 3.m o t i v a t e d c r e a t i o n of a n e e d w h i c h is seen as d e t r i m e n t a l to b o t h t h e c o n s u m e r and society as a w h o l e . 1980). w h i c h g o e s t o o far. 2 . T h a t o t h e r c r i m i n a l activities o c c u r in t h e p r o c e s s of d i s t r i b u t i o n . it may d i s c o u r a g e o t h e r s from taking them. d e l i n e a t e s t h e c o m m o n l y held beliefs a b o u t h e r o i n as: 1. i r r e s p e c t i v e of c o n s e q u e n c e s . 205 .The h a p p e n s in t h e d i s t r i b u t i o n of legal corporation as pusher Gorring d r u g s of a d d i c t i o n . O p i u m is g r o w n by p e a s a n t s and p u r c h a s e d by small t r a d e r s . 6. A t t h e lowest level i s t h e p u s h e r w h o s e j o b it is to see t h a t . the m a x i m u m n u m b e r o f c o n s u m e r s use a s m u c h o f t h e drug a s t h e y can afford to pay for. p r o f i t . have agents who operate a sales n e t w o r k t h r o u g h o u t their own c o u n t r y t o a c h i e v e m a x i m u m d i s t r i b u t i o n . c o r n e r all s u p p l i e s o f t h e d r u g . T h e factories w h e r e it is refined into h e r o i n a r e small and often makeshift. W h i l e t h e r e are m a n y large d e a l e r s (see M c C o y . c o n c e r n e d only w i t h m a x i m i z i n g profits w h i c h run t o t h o u s a n d s o f per c e n t . exists t o h a n d l e it. forming a n e t w o r k a c r o s s i n t e r n a t i o n a l b o u n d a r i e s . i f his d e a t h i s a t t r i b u t e d to t h e use of d r u g s . 4. are a d d i c t s t h e m s e l v e s w h o buy for their o w n use and sell excess to f r i e n d s . 5 . C o n v e r s e l y . T h i s c h a p t e r will p r o v i d e f u r t h e r t e s t i m o n y to t h e validity of all t h e p o i n t s e x c e p t n u m b e r 4 . T h a t t h e c o n s u m e r ' s welfare is i m p o r t a n t only b e c a u s e a d e a d c o n s u m e r n o l o n g e r uses d r u g s a n d . in turn. r u t h l e s s m e a s u r e s t a k e n to squeeze out rival distributors.

S o m e o f t h e g r e a t p h a r m a c e u t i c a l c o m p a n i e s o f t o d a y o w e their e x i s t e n c e to profits from t h e t r a d e in h e r o i n and m o r p h i n e in an era w h i c h laid t h e f o u n d a t i o n s for the s e l f . ' ( B r u u n .p e r p e t u a t i n g cycles of a d d i c t i o n t o t h e s e d r u g s i n m o d e r n s o c i e t i e s .L a R o c h e i s the w o r l d ' s l e a d i n g seller o f legal p s y c h o t r o p i c d r u g s . t h e C h i n e s e r e p r e s e n t a t i v e s p o i n t e d out t h a t G e r m a n y . T h e next g e n e r a t i o n m i g h t l o o k b a c k on t h e a c t i v i t i e s of H o f f m a n .a b i d i n g p h a r m a c e u t i c a l firms w e r e a l m o s t equally n o t o r i o u s . A t t h e 1923 m e e t i n g o f t h e O p i u m A d v i s o r y C o m m i t t e e . m a k i n g m a s s i v e profits from d r u g s of a d d i c t i o n in t h e e r a before t h e d r u g b e c o m e s a m a t t e r o f w i d e s p r e a d p u b l i c c o n c e r n . O t h e r global 206 . T h e C a n t o n R o a d s m u g g l i n g c a s e . It is fair c o m m e n t to say t h a t R o c h e h a s a l w a y s b e e n o n e step a h e a d o f public o p i n i o n .2 5 ) . S w i t z e r l a n d by a C h i n e s e d e a l e r . S w i t z e r l a n d a n d t h e U n i t e d S t a t e s w e r e all t u r n i n g out ' m o r p h i n e by the ton.The corporation as pusher A bit of history S o m e q u i t e d i r e c t links b e t w e e n t h e licit and illicit d r u g t r a d e s can b e m a d e . which was purchased by the smugglers by the ton'. 1973: 1 2 3 . B o b s t r e v e a l e d t h a t R o c h e w a s heavily involved in the supply of m o r p h i n e to the underworld b e t w e e n t h e t w o w a r s ( B o b s t . ' D o c u m e n t s p r o d u c e d a t t h e trial r e v e a l e d t h a t a c o n s i d e r a b l e t r a d e had b e e n p l y i n g b e t w e e n G w a n d o a n d t h e Swiss d r u g f i r m s H o f f m a n L a R o c h e and M a c D o n a l d and C o . I n his a u t o b i o g r a p h y . T o d a y t h e Swiss c o m p a n y H o f f m a n . 1979: 3 ) .L a m b e r t .L a R o c h e in p u s h i n g V a l i u m a n d L i b r i u m w i t h disgust e q u a l to that we feel t o d a y t o w a r d s t h e i r h e r o i n sales b e t w e e n t h e w a r s .L a R o c h e i n the U n i t e d S t a t e s until t h e end o f t h e S e c o n d W o r l d W a r . G r e a t B r i t a i n . G w a n d o . ' R o c h e w a s not a l o n e .L a R o c h e i n the illegal d r u g t r a d e . J a p a n . T h e c a s e i n v o l v e d 180 c h e s t s o f o p i u m s h i p p e d from C o n s t a n t i n o p l e and sold in C h i n a . t h e c h a i r m a n o f t h e British d e l e g a t i o n . E l m e r B o b s t w a s p r e s i d e n t o f H o f f m a n . M a n y s u p p o s e d l y l a w . r e v e a l e d t h e e x t e n s i v e i n v o l v e m e n t o f H o f f m a n . h e a r d by t h e M i x e d C o u r t of S h a n g h a i in 1925. The m i n u t e s of the L e a g u e of N a t i o n s O p i u m Advisory Comm i t t e e m e e t i n g of 1927 r e v e a l t h a t w h e n a n o t h e r case of traffic i n v o l v i n g R o c h e w a s d i s c u s s e d . and in the 1960s r e i g n e d as p r e s i d e n t of W a r n e r . and 26 b o x e s c o n t a i n i n g m o s t l y h e r o i n i m p o r t e d from B a s l e . Sir J o h n C a m p b e l l a r g u e d t h a t h e ' h a d n o d o u b t w h a t e v e r t h a t H o f f m a n La R o c h e a n d C o m p a n y w a s not a firm to which a licence t o d e a l w i t h d r u g s s h o u l d b e g i v e n .

A m p h e t a m i n e s a r e p r o d u c e d for t h e A m e r i c a n m a r k e t i n q u a n t i t i e s w h i c h far e x c e e d any c o n c e i v a b l e level of l e g i t i m a t e d e m a n d . T h e c o n s t a n t b a r r a g e o f O T C (over t h e c o u n t e r ) d r u g a d v e r t i s i n g o n t e l e v i s i o n . T h e r e i s e v i d e n c e t h a t p a r e n t s w h o a r e u s e r s o f t r a n q u i l l i s e r s . t h e r e a r e s i m i l a r i t i e s b e t w e e n t h e role o f i n d u s t r y i n s u p p o r t i n g t h e s t r e e t t r a d e i n a m p h e t a m i n e s and t h e role w h i c h i n d u s t r y played i n h e r o i n distribution b e t w e e n the wars. Nevertheless. T h e i m p o r t a n c e o f a d u l t role m o d e l s i n this r e g a r d i s n o w fairly well e s t a b l i s h e d . cocaine c i g a r e t t e s . b a r b i t u r a t e s and s t i m u l a n t s are m o r e likely t o h a v e c h i l d r e n w h o are u s e r s o f m a r i j u a n a . B a y e r ' s international advertising campaign p r o m o t e d heroin as a panacea for infant r e s p i r a t o r y a i l m e n t s . L S D . M a n y o f t h e pills sold i n m a s s i v e o r d e r s t o M e x i c a n p u r c h a s e r s are redirected back to the street trade in the United States. c o m b i n e d with t h e h e g e m o n y o f d r u g t h e r a p y i n the m e d i c a l p r o f e s s i o n . A t a b o u t t h e s a m e t i m e P a r k e D a v i s w a s a p p l y i n g similar p r o m o t i o n a l e n t h u s i a s m t o t h e t h e r a p e u t i c virtues of cocaine.The corporation as pusher p h a r m a c e u t i c a l c o m p a n i e s carry a similar legacy. T h e r e is no e v i d e n c e of direct sales of a m p h e t a m i n e s to t h e u n d e r w o r l d by today's reputable drug companies. 1973: 9 7 . and o t h e r d r u g s ( P e k k a n e n . Parke-Davis produced coca-cordial.8 ) .M y e r s and A m e r i c a n H o m e P r o d u c t s spend more on A m e r i c a n network TV advertising than G e n e r a l M o t o r s . At the t u r n of the century B a y e r were applying the same mass-marketing tactics to h e r o i n as it had used so successfully with a s p i r i n . 1 9 7 9 : 2 6 1 ) . Excess production is u n l o a d e d w i t h full k n o w l e d g e of w h e r e t h a t e x c e s s will end u p . S e n a t o r G a y l o r d N e l s o n found t h a t the a n n u a l e x p e n d i t u r e s on the advertising of psychoactive O T C drugs exceed the federal g o v e r n m e n t ' s allocations to combat drug abuse (Hughes a n d B r e w i n . Y o u n g people need to develop a tolerance of f r u s t r a t i o n t h r o u g h following adult role m o d e l s w h o w i t h s t a n d and c o p e w i t h t h e s t r e s s e s and a n x i e t i e s o f e v e r y d a y life. o i n t m e n t s and sprays ( M u s t o . As one o f t h e world's leading cocaine manufacturers. 1973: 7 ) . But drug a d v e r t i s i n g c o n s t a n t l y e x p o s e s c h i l d r e n t o o p p o s i t e role m o d e l s a d u l t s w h o i m m e d i a t e l y resort t o c h e m i c a l s o l u t i o n s t o frustration r a n g i n g from h e a d a c h e s t o i n s o m n i a a n d mild a n x i e t y . c r e a t e s a pill-popping culture. 207 . B r i s t o l . A n d the a d v e r t i s i n g i s p e r v a s i v e . h y p o d e r m i c c a p s u l e s . T h e m o s t i m p o r t a n t link b e t w e e n licit and illicit d r u g use is m e d i a t e d b y c u l t u r e .

000 for h o s p i t a l . A s one c o r p o r a t e m e d i c a l d i r e c t o r e x p l a i n e d : ' P r e s c r i p t i o n d r u g s are n o more than tamed poisons. T h e e x t e n t o f a d r u g ' s i n d i c a t i o n s is no a c a d e m i c q u e s t i o n . P h a r m a c e u t i c a l c o m p a n i e s n a t u r a l l y have a n i n t e r e s t i n e x p a n d i n g m a r k e t s b y p r o m o t i n g w i d e i n d i c a t i o n s a n d limiting c o n t r a . 1971). . g . a d v e r s e drug r e a c t i o n s a l r e a d y a c c o u n t for $2 billion in medical and hospital costs and 3 0 . d r u g s which are powerful e n o u g h to c o n t r o l a d i s e a s e a r e also c a p a b l e o f c a u s i n g s e v e r e injury t o p a t i e n t s . T h e n u m b e r o f d e a t h s from a d v e r s e d r u g r e a c t i o n s i n t h e U n i t e d S t a t e s e a c h y e a r has b e e n a hotly d i s p u t e d q u e s t i o n . and d e s p i t e t h e ineffectiveness o f t h e d r u g . M a d i s o n A v e n u e is able to respond creatively when t h e p h a r m a c e u t i c a l c o m p a n y says: ' H e r e ' s t h e c u r e . is defined as: 208 . A s a n overall class. for e x a m p l e . t h e p e r s o n m a y be s u b j e c t e d to u n n e c e s s a r y risks if a less toxic d r u g w o u l d do t h e j o b as well (Ledogar.The corporation as pusher The overmedicated society T h e s u b c o m m i t t e e h e a r d that o n e out o f every t w o h o s p i t a l i z e d A m e r i c a n s w h o r e c e i v e s a n t i b i o t i c s this y e a r will be t a k i n g a drug t h a t is i r r a t i o n a l l y p r e s c r i b e d and w h i c h may result in an a d v e r s e d r u g r e a c t i o n . a c c o r d i n g t o t h e m e d i c a l j o u r n a l a d v e r t i s e m e n t s . t h e n t h e d i s e a s e . 1974: 7 1 9 ) .000 or 130.i n d i c a t i o n s .000. I r r e s p e c t i v e of w h e t h e r a m o r e a c c u r a t e figure is 30. 0 0 0 d e a t h s e a c h y e a r . with s o m e r e s e a r c h e r s c l a i m i n g t h a t the n u m b e r could be as high as 130.i n d i c a t i o n s . will be left u n t r e a t e d . B e h a v i o r a l drift. 1975:7). it is c e r t a i n t h a t A m e r i c a p a y s a heavy price for b e i n g an o v e r m e d i c a t e d s o c i e t y . and the d i s e a s e s for w h i c h it w o u l d be p a r t i c u l a r l y d a n g e r o u s t o use t h e drug are its c o n t r a . Subcommittee on H e a l t h . ' A n e x a m p l e o f such c r e a t i v i t y was t h e p r o m o t i o n o f L i l l y ' s A v e n t y l for a n e w d i s e a s e called ' b e h a v i o r a l drift'. S h a p i r o e t a l . p e r h a p s s e r i o u s . If.i n d u c e d r e a c t i o n s alone ( e . I n a d d i t i o n . P h a r m a c e u t i c a l c o m p a n i e s e v e n m a n a g e t o invent n e w d i s e a s e s as indications. E i g h t y p e r c e n t o f t h e s e r e a c t i o n s are t h o u g h t t o be preventable (Senator Edward Kennedy. t h e p e r s o n using it still r u n s t h e risk ofits toxic effects. E v e n i f t h e d r u g is effective. find t h e d i s e a s e .' T h e d i s e a s e s for w h i c h a d r u g is r e c o m m e n d e d a r e called its i n d i c a t i o n s . a d r u g is r e c o m m e n d e d and used for a d i s e a s e a g a i n s t w h i c h it is n o t e f f e c t i v e . I n v a r i a b l y .

f o u n d a t least 900 d e a t h s a t t r i b u t a b l e t o V a l i u m u s e . T h e N a t i o n a l I n s t i t u t e o f D r u g A b u s e c o n c l u d e s from its study that Lilly's D a r v o n is an even bigger d a n g e r than Valium. and t h e n I start crying for no real r e a s o n . Director of t h e F D A ' s B u r e a u o f D r u g s . . T h e publici n t e r e s t m o v e m e n t . 3rd v i s i t . i t has t h e r a p e u t i c v a l u e .i n t e r e s t c a m p a i g n for w i t h d r a w a l from the m a r k e t . c o n d u c t e d by the National Institute of D r u g A b u s e . 7th v i s i t . .100 d e a t h s d u r i n g t h e y e a r . T h e o v e r u s e of V a l i u m has b r o u g h t a frightful c o s t . I c a n ' t fall a s l e e p . C r o u t c o n c l u d e s t h a t Pfizer w e r e a t t e m p t i n g t o c r e a t e t h e i m p r e s s i o n t h a t d e p r e s s i o n w a s ' e v e r y w h e r e and being u n d e r diagnosed'. chief o f t h e D r u g A b u s e Staff a t t h e F D A t h a t "We are d e v e l o p i n g a p o p u l a t i o n d e p e n d e n t o n this d r u g e q u a l t o t h e n u m b e r o f a l c o h o l i c s i n this c o u n t r y . I c a n ' t sit still.m o n t h p e r i o d in 1 9 7 6 . . T h e least n o i s e and I'm r e a d y to c l i m b t h e w a l l s . r e p l i e s t h a t t h e p r o d u c t i s not being 209 . the study. .7 7 . 2nd visit . D o c t o r . i n t u r n . M a n y of the d e a t h s were due to either accidental or intentional o v e r d o s e . . H e n c e t h e c o n c l u s i o n o f D r E d w a r d T o c u s . D a r v o n has b e e n the subject of a c o n c e r t e d p u b l i c . 5th visit. F o r a t w e l v e . . 8th v i s i t . plus a n o t h e r 2 0 0 d e a t h s linked t o its c h e m i c a l p r e d e c e s s o r . . o v e r u s e .The corporation as pusher 1st v i s i t . o n e study found that 54. V a l i u m h a s b e e n t h e d r u g w h i c h has b e e n m o s t heavily and successfully p r o m o t e d in this kind of w a y . a r e you sure it's not cancer? T h e n t h e r e i s t h e m o r e basic s t r a t e g y o f defining i n d i c a t i o n s such as d e p r e s s i o n as widely as possible. or a b u s e o f V a l i u m ( H u g h e s a n d B r e w i n . It was l i n k e d t o 1. . Lilly d e f e n d s its p r o d u c t by p o i n t i n g out t h a t if used p r o p e r l y a n d c a u t i o u s l y . D u r i n g t h e s a m e p e r i o d . but later we are told t h a t u n d e r a d e f i n i t i o n of d e p r e s s i o n as ' a b s e n c e of j o y ' t h e figure w o u l d b e 2 0 m i l l i o n . Dr Richard C r o u t . T h e t a p e b e g i n s by a s s e r t i n g t h a t 4 to 8 m i l l i o n A m e r i c a n s suffer from d e p r e s s i o n . 6th v i s i t . gives t h e e x a m p l e o f a Pfizer v i d e o t a p e d i s t r i b u t e d to h o s p i t a l s . M a y b e it's silly. 4th visit . L i b r i u m .400 sought hospital emergency room t r e a t m e n t in the United States concerning the use. . . . I s e e m to h a v e lost my p o w e r s of c o n c e n t r a t i o n . We a r e in a s i t u a t i o n n o w w h e r e we see at least as m a n y p e o p l e b e i n g h u r t by t h i s d r u g as a r e b e i n g helped by it' ( H u g h e s a n d B r e w i n . . 1979: 2 4 ) . so I r o a m t h r o u g h t h e h o u s e . . .9 ) . It m a k e s me n e r v o u s to stay in o n e p l a c e . I feel so w o r t h l e s s all t h e t i m e . . but I t h i n k I have c a n c e r . 1979: 8 . .

A n a t i o n a l survey in 1975. B u t it was p r o m o t e d as a b r o a d .t y p h o i d fever.5 to 4 million A m e r i c a n s w e r e b e i n g d o s e d w i t h P a r k e . 1968. especially in children. C h l o r a m p h e n i c o l is a r e m a r k a b l y effective a n t i b i o t i c in t h e t r e a t m e n t of a limited r a n g e of infections .000 c h l o r a m p h e n i c o l prescriptions were written in the US for u p p e r r e s p i r a t o r y infections ( S u b c o m m i t t e e o n H e a l t h . m o r e t h e n t w e n t y y e a r s after the fatal side-effects of c h o l o r a m p h e n i c o l w e r e clearly e s t a b l i s h e d .D a v i s sold $52 million w o r t h o f c h l o r a m p h e n i c o l ( b r a n d n a m e C h l o r o m y c e t i n ) . it w a s e s t i m a t e d t h a t only 10.D a v i s ( n o w a s u b s i d i a r y of W a r n e r L a m b e r t ) . P a r t 6: 2 5 6 6 ) . and a few o t h e r s .D a v i s C h l o r o m y c e t i n e a c h year. h a e m o p h i l u s i n f l u e n z a . I f the drug h a d b e e n p r e s c r i b e d only for c o n d i t i o n s for which it w a s truly i n d i c a t e d . t h e w o r s t being a p l a s t i c a n a e m i a . The proba b i l i t y o f t h e side-effect a p p e a r i n g w a s not high. s o i n the t r e a t m e n t of a s e r i o u s d i s e a s e like t y p h o i d . A p l a s t i c a n a e m i a causes a terrible d e a t h . 1978: 664). 1 9 5 1 . and p r e s c r i b e d by d o c t o r s for everyt h i n g from s o r e t h r o a t s to a c n e .D a v i s m i s r e p r e s e n t e d the F D A w a r n i n g to its o w n sales r e p r e s e n t a t i v e s in a " P r e s i d e n t ' s L e t t e r ' w h i c h r e a d : ' C h l o r o m y c e t i n [ c h l o r a m p h e n i c o l ] has b e e n officially c l e a r e d b y t h e F D A and t h e N a t i o n a l R e s e a r c h C o u n c i l w i t h no r e s t r i c t i o n s on t h e n u m b e r or t h e r a n g e of d i s e a s e s for w h i c h C h l o r o m y c e t i n may be a d m i n i s t e r e d . U n f o r t u n a t e l y . But for t h e t r e a t m e n t o f c o m m o n cold and o t h e r trivial c o m p l a i n t s t h e risk is u n c o n s c i o n a b l e . ' The Nelson S u b c o m m i t t e e d i s c o v e r e d in N o v e m b e r 1967 that 3. c h l o r a m p h e n i c o l w a s a s s o c i a t e d with a n u m b e r o f s e r i o u s s i d e . T h e F D A was c o n c e r n e d . P a r k e .000 p e r s o n s at most w o u l d h a v e r e c e i v e d it ( U S S e n a t e . and in 1952 issued an official w a r n i n g t h a t c h l o r a m p h e n i c o l "should not be used indisc r i m i n a t e l y for m i n o r i n f e c t i o n s ' . found that d u r i n g t h e year 93.The corporation as pusher u s e d c a u t i o u s l y p r e c i s e l y b e c a u s e o f t h e a d v e r t i s i n g h y p e o f Lilly's p r o m o t i o n o f D a r v o n in the y e a r s following its r e l e a s e . In its first y e a r on the m a r k e t . T h e m o s t w a n t o n e x a m p l e o f t h e o v e r u s e o f a d r u g causing social h a r m b e c a u s e of p r o m o t i o n for e x c e s s i v e i n d i c a t i o n s is that of c h l o r a m p h e n i c o l by P a r k e . P a r k e .e f f e c t s .s p e c t r u m a n t i b i o t i c . it w a s a risk w o r t h t a k i n g . The costs of promotion W h e n the p r o p o r t i o n ofthe G N P spent on health is never enough to 210 . to put the c o m p a n y at the top of drugc o m p a n y e a r n i n g s for t h a t y e a r .

t h e W a l d o r f A s t o r i a i n N e w Y o r k C i t y .c a r e p r o f e s s i o n s and o v e r t w o billion s a m p l e s o f free d r u g s ( S u b c o m m i t t e e on H e a l t h . T h e gifts are d i s t r i b u t e d by t h e sales r e p r e s e n t a t i v e to c l i e n t s . or is likely to b e . and m y g r e a t h o p e is t h a t it will give you p l e a s u r e p e r h a p s at a t i m e you have a 211 . i n c l u d i n g free M e r c e d e s . D o c t o r s and t h e i r w i v e s are f l o w n t o alle x p e n s e s . several t i m e s t h e U S g o v e r n m e n t ' s e x p e n d i t u r e o n t h e n a t i o n ' s m e d i c a l s c h o o l s . 0 0 0 and $8. ( 1 9 8 2 : 121). s t e t h o s c o p e s . I n d e r a l . a p p l a u s e i s very p e r s o n a l and an i m m e d i a t e sign of a p p r e c i a t i o n . (1982: 123) q u o t e a well placed source in N i g e r i a as s u g g e s t i n g t h a t a third o f t h e w h o l e s a l e cost of p r e s c r i p t i o n d r u g s g o e s on this graft. i n d e e d . It is a special a l b u m t h a t w e h a v e w o r k e d o u t w i t h A b b o t t L a b o r a t o r i e s . almost every type of c o n s u m e r product imaginable ( S u b c o m m i t t e e on H e a l t h . t a p e r e c o r d e r s . I n s i d e t h e sleeve w a s a note w h i c h said: D e a r D o c t o r : F o r a n e n t e r t a i n e r . so this a l b u m is my way of a p p l a u d i n g you in t h e m e d i c a l p r o f e s s i o n . T h e F D A e s t i m a t e s that p h a r m a c e u t i c a l c o m p a n i e s i n the U n i t e d S t a t e s s p e n d b e t w e e n $ 6 .B e n z s e d a n s . 1974). A survey b y K e n n e d y ' s staff r e v e a l e d t h a t . O n o n e drug a l o n e . A m e r i c a n H o m e P r o d u c t s s p e n d s $ 4 million o n p r o m o t i o n annually within the United States. the value of t h e gifts b e a r i n g a r e l a t i o n s h i p to h o w heavy a p r e s c r i b e r of t h e c o m p a n y ' s p r o d u c t s t h e d o c t o r is.p a i d ' c o n f e r e n c e s ' i n e x o t i c l o c a t i o n s such a s B e r m u d a . a c c o r d i n g t o S i l v e r m a n et al. 20 p h a r m a c e u t i c a l c o m p a n i e s gave 12.8 million gifts to m e m b e r s o f t h e h e a l t h . S o m e of t h e gifts a r e so u n c t u o u s as to m a k e o n e w o n d e r why they do not p r o d u c e a b a c k l a s h from t h e m e d i c a l p r o f e s s i o n . Much o f t h e pharmaceutical industry's promotional expenditure a r o u n d t h e w o r l d g o e s o n p e r k s for d o c t o r s w h o p r e s c r i b e t h e c o m p a n y ' s p r o d u c t s . golf balls with Pfizer s t a m p e d on t h e m . p r o s t i t u t e s laid o n .The corporation as pusher p r o v i d e a d e q u a t e h e a l t h care for e v e r y o n e . ' S e l e c t e d influential p h y s i c i a n s i n t h e T h i r d W o r l d can e x p e c t m u c h m o r e .000 e a c h y e a r for every d o c t o r i n t h e c o u n t r y o n p r e s c r i p t i o n d r u g p r o m o t i o n . 1974: 1273). it is tragic to see h e a l t h c a r e r e s o u r c e s w a s t e d on a c t i v i t i e s w h i c h often do as m u c h h a r m as g o o d . d u r i n g t h e c a l e n d a r y e a r 1973. S i l v e r m a n et al. or simply a cash k i c k b a c k for e a c h p r e s c r i p t i o n w r i t t e n . S e n a t o r K e n n e d y p r o d u c e d a P e g g y L e e r e c o r d . T h e K e n n e d y S e n a t e h e a r i n g s d o c u m e n t e d gifts t o d o c t o r s o f f r e e z e r s . N i c e . T h e total c o m e s t o o v e r a billion d o l l a r s .

I t h e r e f o r e gave him a g e n e r o u s s u p p l y o f t h o s e p r o d u c t s w h i c h h e said t h o s e p a t i e n t s were taking.m a r k e t c o u n t e r f e i t e r s o f p r e s c r i p t i o n d r u g s . A f o r m e r sales r e p r e s e n t a t i v e told t h e following story of d o c t o r greed: O n e ofthe most disconcerting experiences of my detailing career i s w h e n o n e p h y s i c i a n told m e h e had several p o o r p a t i e n t s w h o c o u l d n o t afford to buy t h e i r m e d i c a t i o n . a l t h o u g h limited c o n t r o l s have recently been introduced in the United States. The p r a c t i c e has b e e n s o c o m m o n t h a t b l a c k . W i t h t h a n k s for all you h a v e d o n e . T h e following day I saw t h a t very s a m e p h y s i c i a n walk into one o f m y p h a r m a c y a c c o u n t s with t w o s h o p p i n g bags filled with t h e s a m p l e s I had g i v e n h i m . O n e e x e c u t i v e c o m p l a i n e d t o m e that h e h a d r e c e n t l y b e e n c o n t a c t e d by a m e d i c a l a s s o c i a t i o n w h i c h w a s h a v i n g a golf t o u r n a m e n t ( w h i c h had n o t h i n g to do with m e d i c i n e ) a n d w h i c h d e m a n d e d t h a t his c o m p a n y d o n a t e a n e x p e n s i v e t r o p h y . Promotional expenditure pays off I do not p r e s u m e to h a v e t h e c o m p e t e n c e to p r o n o u n c e on the 212 . a n d a b o t t l e of c o l o g n e for his wife. but n e v e r ask for its r e t u r n .' 'Placidyl w h e n sleep is a part of S o m e c o u n t r i e s h a v e b a n n e d the giving o f gifts t o d o c t o r s .6 ) . T h e p h a r m a c y m o s t likely filled t h e p r e s c r i p t i o n s at his r e g u l a r price w i t h s a m p l e s t h a t t h e d o c t o r d r o p p e d off ( S u b c o m m i t t e e o n H e a l t h . T h e g r e e d o f s o m e d o c t o r s plays a n i m p o r t a n t part i n p e r p e t u a t i n g t h e p r o c e s s . B u t t h e r e are m a n y w a y s a r o u n d such l a w s . O n e i s for t h e drug c o m p a n y to l e n d ' e x p e n s i v e e q u i p m e n t for t h e s u r g e r y . [signed] Peggy Lee T h e b a c k of t h e s l e e v e r e a d s : therapy. In r e t u r n for this d e l i v e r y of s a m p l e s t h e d o c t o r t o o k shaving c r e a m . 1974: 7 2 5 . h a v e b e e n able t o tell p h a r m a c i s t s t h a t t h e i r w a r e s w e r e ' p h y s i c i a n s ' s a m p l e s you can h a v e c h e a p ' ( K r e i g .The corporation as pusher real n e e d for m o m e n t s of r e l a x a t i o n . U n f o r t u n a t e l y . often p a r t o f o r g a n i s e d c r i m e . r a z o r b l a d e s . t h e reselling of free p h y s i c i a n s ' s a m p l e s is a c o m m o n p r a c t i c e i n m o s t p a r t s o f t h e w o r l d . 1967: 2 0 4 ) . in a d d i t i o n to s a m p l e s which o t h e r d e t a i l m e n had left w i t h h i m .

w h e r e r e s e a r c h has b e e n d o n e b y p e o p l e with t h e r e l e v a n t e x p e r t i s e . in c o l l a b o r a t i o n with h o s p i t a l staff from all speciali t i e s . p r o m o t i o n a l m a t e r i a l i n t h e m a i l . . M i n t z . . w h e r e 600. (1972) found t h a t d o c t o r s w h o w e r e . D o c t o r s w h o w r o t e fewer t h a n 5 0 p r e s c r i p t i o n s a w e e k r e c e i v e d fewer t h a n half t h i s n u m b e r of visits. 8 0 per 2 213 . E a t o n a n d P a r i s h . a c c o r d i n g t o t h e i r c r i t e r i a . But there is a wealth of evidence from s u r v e y s o f d o c t o r s t o d e m o n s t r a t e t h a t o v e r w h e l m i n g l y t h e most i m p o r t a n t source of information about drugs is the p h a r m a c e u t i c a l i n d u s t r y : sales r e p r e s e n t a t i v e s . 1 9 7 3 . particularly concerning new drugs. relied m o r e h e a v i l y o n t h e r e a d i n g o f m e d i c a l j o u r n a l s for i n f o r m a t i o n a b o u t d r u g s than on industry p r o m o t i o n . . 1974. e t c . r a t i o n a l p r e s c r i b e r s . T h e r e i s e v i d e n c e t h a t p h y s i c i a n s w h o get m o r e visits from sales r e p r e s e n t a t i v e s w r i t e m o r e p r e s c r i p t i o n s . defined r a t i o n a l m a x i m u m p r e s c r i p t i o n s for 7 8 c o m m o n d r u g s ( M a r o n d e e t a l . 1976). e v i d e n c e o f o v e r p r e s c r i b i n g has b e e n found. solely i n t e r m s o f a m o u n t s ( w i t h o u t considering w h e t h e r it was rational to prescribe the p r o d u c t at all) m i g h t r e s u l t in a d r o p in sales o f t h e o r d e r of 3 0 . T h i s f i g u r e a l s o i g n o r e s o v e r m e d i c a t i o n resulting from patients obtaining rational prescriptions independently from n u m e r o u s p h y s i c i a n s . W a l k e r . H o w e v e r . This n e e d n o t n e c e s s a r i l y m e a n t h a t t h e e x t r a visits c a u s e i n c r e a s e d s a l e s . T h a t is. T h e s e s u r v e y s a l s o s h o w t h a t t h e m o s t i m p o r t a n t single s o u r c e o f i n f o r m a t i o n . Stolley e t al. b e c a u s e r e p r e s e n t a t i v e s select for special a t t e n t i o n d o c t o r s w h o are k n o w n a s h e a v y p r e s c r i b e r s . .The corporation as pusher difficult q u e s t i o n o f w h a t c o n s t i t u t e s r a t i o n a l p r e s c r i b i n g . j o u r n a l a d v e r t i s e m e n t s . (Office of H e a l t h E c o n o m i c s . r a t i o n a l p r e s c r i b i n g . cocktail parties organised by t h e i n d u s t r y . 1971). M o s e r .4 0 p e r c e n t . A t t h e U n i v e r s i t y of S o u t h e r n California Medical C e n t e r . M o r e c o n v i n c i n g i s t h e f i n d i n g that a m o n g p h y s i c i a n s w h o w r o t e o v e r 5 0 p r e s c r i p t i o n s a w e e k . 1967: 8 6 . m e e t i n g s . American Medical News.4 p e r cent o f t h e p h y s i c i a n s w h o w e r e superprescribers. a g r o u p of five p h y s i c i a n s a n d t w o p h a r m a c i s t s . F o r s e d a t i v e s and t r a n q u i l l i s e r s 3 0 .000 prescript i o n s a r e w r i t t e n e a c h y e a r . A further i n t e r e s t i n g finding w a s t h a t a l m o s t half t h e e x c e s s i v e p r e s c r i p t i o n s c o u l d be a c c o u n t e d for by a small m i n o r i t y o f 3.4 0 p e r c e n t of p r e s c r i p t i o n s w r i t t e n w e r e found to be in excessive q u a n t i t i e s . I n a n o t h e r s t u d y . is the pharmac e u t i c a l c o m p a n y sales r e p r e s e n t a t i v e . 1 9 7 1 . 1978. W a l k e r ( 1 9 7 1 : 7 4 ) found t h a t d o c t o r s w h o w r i t e o v e r 150 p r e s c r i p t i o n s a w e e k r e c e i v e m o r e t h a n eight visits a w e e k from sales r e p r e s e n t a t i v e s .

half relied p r i m a r i l y o n industry s o u r c e s and half p r i m a r i l y o n p r o f e s s i o n a l s o u r c e s . a m o n g those writing 31-50 presc r i p t i o n s p e r w e e k . L i b r i u m . ' T h e n e w c o l l e g e s t u d e n t may be afflicted by a sense of lost i d e n t i t y in a s t r a n g e e n v i r o n m e n t . t h e a d s u g g e s t s a n o t h e r c a u s e . . . ' O f course. V a l i u m has b e e n a d v e r t i s e d in 214 . T h e c o r n e r s o f h e r m o u t h are t u r n e d d o w n . At the s a m e t i m e V a l i u m has b e e n p r o m o t e d for 'psychic s u p p o r t for the t e n s e i n s o m n i a c ' and for t h e ' a l w a y s w e a r y ' . can help the anxious student to handle the primary p r o b l e m and to " g e t h e r b a c k on her feet" ' ( P e k k a n e n 1973: 77-8). T o g e t h e r with y o u r ( t h e d o c t o r ' s ) c o u n s e l i n g and r e a s s u r a n c e . P e r h a p s m o s t a p p e a l ingly of all to t h e m e d i c a l p r o f e s s i o n .The corporation as pusher c e n t r e p o r t e d t h a t i n d u s t r y w a s t h e i r m o s t i m p o r t a n t source o f information about new d r u g s . and a m o n g d o c t o r s writing 30 or fewer p r e s c r i p t i o n s a w e e k . of A n x i e t y . . ' W h e n m o u n t i n g p r e s s u r e s c o m b i n e t o t h r e a t e n t h e e m o t i o n a l stability o f t h e a n x i o u s s t u d e n t . E v e n t h o u g h this last p r o b l e m s e e m s t o suggest h e r n e e d for b i r t h c o n t r o l pills m o r e t h a n a n y t h i n g e l s e . 'To h e l p free h e r of excessive anxiety . the real a n s w e r to h e r w o e s is s o m e t h i n g different. i f i n d i c a t e d . ' A n o t h e r s u g g e s t i o n : ' E x p o s u r e to n e w friends and o t h e r influences may force her to r e e v a l u a t e herself and h e r g o a l s . T h e copy u n d e r her p i c t u r e r e a d s : ' A W h o l e N e w W o r l d . ' Y e t a n o t h e r : ' H e r newly s t i m u l a t e d i n t e l l e c t u a l c u r i o s i t y may m a k e h e r m o r e sensitive t o a n d a p p r e h e n s i v e a b o u t u n s t a b l e n a t i o n a l and w o r l d c o n d i t i o n s . adjunctive L I B R I U M . only 40 p e r cent relied p r i m a r i l y on industry sources (Walker. ' S u r r o u n d i n g her on t h e b a c k g r o u n d a r e italicised s u g g e s t i o n s o f w h a t t h e a n x i o u s world m i g h t b e . It is n o t a grim e x p r e s s i o n b u t it e x h i b i t s c o n c e r n and s u g g e s t s u n c e r t a i n t y . a d j u n c t i v e use o f L i b r i u m can h e l p relieve the s y m p t o m s caused by her excessive anxiety. M a y b e it's ' u n r e a l i s t i c p a r e n t a l e x p e c t a t i o n s ' o r ' t o d a y ' s c h a n g i n g m o r a l i t y ' and ' n e w f r e e d o m ' t h a t a r e d o i n g it. ' I f w o r l d affairs and p e e r p r e s s u r e d o n ' t m a k e h e r a n x i o u s . . c a r r y i n g b o o k s . Medical journal advertising S h e is s t a n d i n g a l o n e b e f o r e a d a r k e n e d b a c k g r o u n d : a y o u n g c o l l e g e g i r l . V a l i u m and L i b r i u m h a v e b e e n p r o m o t e d a s s o l u t i o n s t o almost e v e r y p s y c h o l o g i c a l s t a t e which falls s h o r t of total s e r e n i t y . 1971: 74).

w i t h o u t i n d i c a t i n g safer and m o r e effective t h a n w h a t . 1973: 8 0 ) . O t h e r p s y c h o t r o p i c d r u g s h a v e b e e n t o u t e d i n e q u a l l y i r r e s p o n s i b l e w a y s . i n t e r n i s t . ' B u t S i l v e r m a n and L e e p o i n t out t h a t The e x p e r i e n c e had not been that limited. T h e i n s t r u c t i o n s a l s o said: it is o b v i o u s t h a t I n d o c i n will w o r k in t h a t w h o l e h o s t o f r h e u m a t i c c r o c k s and c r u d s w h i c h e v e r y g e n e r a l p r a c t i t i o n e r . 1977: 4 1 ) . separation. i t w a s found t h a t I n d o c i n i n c r e a s e s s u s c e p t i b i l i t y t o infection ( S i l v e r m a n and L e e . M e r c k had only d e m o n s t r a t e d efficacy for four t y p e s of a r t h r i t i c d i s e a s e . but Merck neglected to m e n t i o n t h a t t h e claim w a s b a s e d on e x p e r i m e n t s w i t h a few rats c h a l l e n g e d n o t w i t h infections b u t w i t h b a c t e r i a l e n d o t o x i n s . Pfizer p r o m o t e d t h e t r a n q u i l l i s e r Vistaril b y s h o w i n g t h e t e a r . dental visits. M e r c k said t h a t ' s i n c e t h e e x p e r i e n c e with I n d o c i n in c h i l d r e n is l i m i t e d .s t r e a k e d face of a y o u n g girl a n d proffering its use for c h i l d r e n w h o are frightened by 'school. a n d o r t h o p e d i c s u r g e o n sees every day i n his p r a c t i c e . ' A c c o r d i n g t o t h e S e n a t e h e a r i n g s t h e i n s t r u c t i o n s continued: 215 . T h e a d v e r t i s e m e n t s r e p e a t e d l y d e s c r i b e d I n d o c i n a s 'safer' and ' m o r e effective'. Pfizer w a s also forced by F D A to send a ' D e a r D o c t o r l e t t e r ' to p h y s i c i a n s i n d i c a t i n g t h a t its a d v e r t i s e m e n t s for Vistaril and a n u m b e r of c h e m i c a l l y similar p r o d u c t s failed t o d i s c l o s e t h a t t h e r e w a s r e s e a r c h e v i d e n c e t o s u g g e s t t h a t t h e s e p r o d u c t s could b e d a n g e r o u s t o p r e g n a n t women. it is r e c o m m e n d e d t h a t this d r u g s h o u l d not b e a d m i n i s t e r e d t o p e d i a t r i c a g e g r o u p s until t h e i n d i c a t i o n s for use and d o s a g e have b e e n e s t a b l i s h e d . the c o m p a n y was a l r e a d y a w a r e t h a t t h e d r u g h a d b e e n t r i e d i n c h i l d r e n and had evidently caused several d e a t h s .The corporation as pusher a d o c t o r ' s m a g a z i n e as an aid in p r o d u c i n g 'a less d e m a n d i n g and c o m p l a i n i n g p a t i e n t ' ( W a l d r o n . the d a r k . " m o n s t e r s " ' ( P e k k a n e n . 1974: 61-2). It was claimed that Indocin does not increase susceptibility to infection. O n e o f M e r c k ' s m o s t successful d r u g s has b e e n its a n t i a r t h r i t i c . M o r e e m b a r r a s s i n g for M e r c k w a s t h e d i s c o v e r y b y S e n a t e i n v e s t i g a t o r s of i n s t r u c t i o n s to its sales r e p r e s e n t a t i v e s w h i c h e m p h a s i s e d c l a i m s for safety and efficacy far in e x c e s s of w h a t w a s legal i n t h e s e n s e o f h a v i n g b e e n a p p r o v e d b y t h e F D A . W h e n t h e p r o d u c t w a s first i n t r o d u c e d i n 1 9 6 3 . yet it w a s p r o m o t e d for use w i t h m a n y o t h e r s . W h e n h u m a n trials w e r e u n d e r t a k e n . I n d o c i n .

the president of M e r c k said: ' L a n g u a g e is not a perfect m e t h o d of c o m m u n i c a t i o n a n d it m a y well be t h a t w o r d s and p h r a s e s t h a t are used in t h e belief t h a t t h e y m e a n o n e t h i n g may h a v e b e e n i n t e r p r e t e d b y s o m e p h y s i c i a n s t o m e a n s o m e t h i n g else. .and c o n t i n u e s . a c u t e r e s p i r a t o r y d i s t r e s s . g a s t r o i n t e s t i n a l b l e e d i n g . some of these warnings were b e i n g w e a k e n e d a n d o t h e r s o m i t t e d . . " L e t ' s s t a n d on o u r little old t w o feet this m o n t h and sell t h e benefits o f I n d o c i n . L e t ' s g o . h e a r i n g d i s t u r b a n c e s . . loss o f h a i r . and only t h e n w h e n o t h e r less t o x i c t h e r a p i e s had failed. . 1968).The corporation as pusher ' T e l l ' e m a g a i n . ' 'For these entities he is presently prescribing steroids. Such are t h e c o m p l e x i t i e s o f s e m a n t i c s ' ( G a d s d e n . p r o b a b l y 130 t i m e s . S o . . T h e p h y s i c i a n . 216 worst . until it is indelibly i m p r e s s e d in his m i n d and he s t a r t s . and tell it again and a g a i n a n d a g a i n and a g a i n .l i k e b u t a z o n e s .' ' N o w e v e r y e x t r a b o t t l e of 1. ' ' T a k e off t h e kid g l o v e s . B y t h e e n d o f t h e 1960s M e r c k w a s b e i n g m o r e r e s p o n s i b l e i n t h e p r o m o t i o n of I n d o c i n w i t h i n the U n i t e d S t a t e s . . toxic h e p a t i t i s and j a u n d i c e .to p r e s c r i b e I n d o c i n . . Afterman (1972: 119-121) has s u m m a r i s e d o n e o f t h e instances of journal advertising misrepresentation.' W h e n the Senate invited the c o m p a n y to explain. o r limited a n a l g e s i c s like D a r v o n a n d t h e a l m o s t w o r t h l e s s m u s c l e r e l a x a n t s . ' Y e t i n A u s t r a l i a and many other parts o f t h e world. . for b u r s i t i s ( t e n n i s e l b o w ) and t e n d i n i t i s .' ' Y o u ' v e told t h i s story n o w . C h a n c e s are t h e p a t i e n t is a l r e a d y t a k i n g a s p i r i n . I n d o c i n w a s a highly t o x i c d r u g w h i c h c o u l d c a u s e ' p e r f o r a t i o n s and h e m o r r h a g e o f t h e e s o p h a g u s . . 1971). o p t i m a l effects. go b a c k . was b e i n g r e c o m m e n d e d i n A u s t r a l i a as an a l t e r n a t i v e to a s p i r i n for the relief of p a i n following dental s u r g e r y . . Pile it in. Go get it. H e h a s c o m e t o t h e p h y s i c i a n b e c a u s e a s p i r i n a l o n e i s not a f f o r d i n g s a t i s f a c t o r y . a m i n o p y r i n e . let him use it.80 in i n c e n t i v e p a y m e n t s . p s y c h o t i c e p i s o d e s . c o m a and c o n v u l s i o n s . If he w a n t s to use aspirin as b a s e line t h e r a p y . r e t i n a l d i s t u r b a n c e s and b l u r r i n g o f vision. a s p i r i n . . .000 I n d o c i n t h a t you sell is w o r t h an e x t r a S2. ' ' T e l l 'em until t h e y are sold and stay s o l d . a n d a g a i n . h o w e v e r . and a g a i n . T h e s e A u s t r a l i a n i n d i c a t i o n s a p p e a r e d n o w h e r e in the A m e r i c a n literature (Sessor. A d r u g w h i c h should b e used i n only r e l a t i v e l y s e v e r e c a s e s o f a r t h r i t i s . s t o m a c h and small i n t e s t i n e s . has h e a r d it only o n c e .

S t u d i e s w h i c h reflected different c o n c l u s i o n s w e r e o m i t t e d . and p r o v i d e d t h e r e a d e r with d a n g e r o u s l y m i s l e a d i n g d o s a g e i n f o r m a t i o n . A d o s a g e o f t h e d r u g up to 40 m g . D . O n e for A b b o t t ' s P l a c i d y l . c o n t a i n e d a p i c t u r e of a p r e g n a n t w o m a n .The corporation as pusher [ S e r a x ] w a s r e c o m m e n d e d i n the t r e a t m e n t o f a n x i e t y and t e n s i o n of p a t i e n t s from all age g o u p s . S o m e o f t h e a d v e r t i s i n g m i s r e p r e s e n t a t i o n s have b e e n m u c h m o r e s u b t l e . A b b o t t a p p a r e n t l y a r g u e d t h a t this ad w a s lawful b e c a u s e t h e w o m a n in the p i c t u r e w a s in late p r e g n a n c y . d e s p i t e the fact that t h e t r e a t m e n t o f d e p r e s s i o n w a s specifically c o n t r a . e x a g g e r a t e d o r m i s l e a d i n g c l a i m s . 'give us her n i g h t s ' . as a s t r o k e or d e a t h could result. a day w a s q u o t e d from t h e study d e s p i t e t h e fact t h a t t h e a p p r o v e d p a c k a g e labelling limited t h e initial d o s a g e in o l d e r p a t i e n t s to 30 m g . A . t h e p r o d u c t w a s r e c o m m e n d e d for t h e t r e a t m e n t o f ' a n x i e t y . T h e advertisement which appeared in three medical journals. with t h e h e a d i n g . e m p h a s i z e d t h e use o f t h e p r o d u c t for t h e t r e a t m e n t o f e l d e r l y p a t i e n t s a n d i n c l u d e d a w a r n i n g in fine print t h a t g r e a t c a r e should be t a k e n in s e l e c t i n g a d o s a g e . F i n a l l y . O n t h e s e g r o u n d s t h e F .i n d i c a t e d o n the label. T h e S a i n s b u r y C o m m i t t e e i n G r e a t B r i t a i n w a s p r e s e n t e d with the results of a survey by W a d e and E l m e s o f t h e Q u e e n ' s University of B e l f a s t w h i c h found t h a t 22 of 45 a d v e r t i s e m e n t s in t h e study 217 . O n t h e basis o f t h e c o n t e n t s o f this a d v e r t i s e m e n t the p r o d u c t was seized. O n e c o u l d c o n t i n u e ad infinitum w i t h p h a r m a c e u t i c a l a d v e r t i s e m e n t s w h i c h m a k e false. O n e r e p o r t f a v o u r a b l y c o m p a r i n g a s p e c t s o f Serax t h e r a p y w i t h a c o m p e t i n g p r o d u c t w a s r e p r o d u c e d i n the a d v e r t i s e m e n t . T h e a d v e r t i s e m e n t also r e f e r r e d to a study involving 148 'elderly p a t i e n t s ' b u t failed to reveal t h a t t h e s a m p l e age r a n g e c o m m e n c e d at 35 y e a r s for m a l e s a n d 33 y e a r s for f e m a l e s . I t w a s i m p l i e d t h a t t h e p a r t i c u l a r study q u o t e d r e p r e s e n t e d the m e d i c a l c o n s e n s u s as to t h e p e r f o r m a n c e of S e r a x in r e l a t i o n to a c o m p e t i n g p r o d u c t . i n c l u d i n g t h e e l d e r l y . It w a s also c o n s i d e r e d offensive b e c a u s e it p r e s c r i b e d t h e d r u g for p u r p o s e s for w h i c h it w a s c o n t r a i n d i c a t e d . c o n s i d e r e d that t h e a d v e r t i s e m e n t c o n t a i n e d n e i t h e r a fair nor factual b a l a n c e . T h e small p r i n t at t h e b o t t o m of t h e ad i n d i c a t e d that Placidyl s h o u l d not b e g i v e n t o w o m e n i n early p r e g n a n c y . a day. a s l e e p i n g pill.l i n k e d d e p r e s s i o n ' .

T h e possibilities for c o l o u r i n g reality are so m u l t i f a r i o u s t h a t u n d e r any system of legal c o n t r o l s it is not difficult to s t e e r clear of b l a t a n t v i o l a t i o n s by s k i r t i n g a r o u n d t h e b o u n d a r i e s o f legal r e q u i r e m e n t s . Or it could be careful not to say a n y t h i n g t h a t w o u l d not be s u p p o r t e d by scientific e v i d e n c e and have low i m p a c t a d v e r t i s i n g . A d v e r t i s e m e n t s w o u l d not a p p e a r u n l e s s their claims had b e e n a p p r o v e d by a d i s t i n g u i s h e d c o m m i t t e e of p h y s i c i a n s . We tell o u r a d v e r t i s i n g a g e n c y t h a t we w a n t to go as close as we can to w h a t F D A will a l l o w . N o t i n f r e q u e n t l y r e f e r e n c e s are m a d e t o o b s c u r e j o u r n a l a r t i c l e s in such a way as to imply t h a t t h e source confirms the c l a i m b e i n g m a d e w h e n this is not in fact t h e c a s e . JAMA advertising r e v e n u e s j u m p e d d r a m a t i c a l l y i n t h e y e a r s following t h e liberalising o f t h e r e s t r a i n t s o n its a d v e r t i s e r s . Nothing .The corporation as pusher i n c l u d e d u n w a r r a n t e d c l a i m s . a d v e r t i s e m e n t s m i g h t only refer t o the e a r l y s t u d i e s . The A M A have been hypocrisy of their stances 218 s u b j e c t e d t o m u c h criticism for t h e on the advertising question. T h e r e a r e t h r e e a p p r o a c h e s a c o m p a n y can t a k e . We shoot for t h e grey a r e a . T h e r e is an infinite v a r i e t y of w a y s t h a t m i s l e a d i n g i m p r e s s i o n s can be created in pharmaceutical advertisements. but u n f a v o u r a b l e findings from later m o r e s o p h i s t i c a t e d w o r k . W h e n a p r o d u c t a t t r a c t e d f a v o u r a b l e results from e a r l y r e s e a r c h s t u d i e s . O n e regul a t o r y affairs d i r e c t o r w a s r e m a r k a b l y h o n e s t o n this s c o r e : 4 T h e F D A a d v e r t i s i n g c o n t r o l s are very v a g u e l y defined. I t can m a k e e x t r a v a g a n t c l a i m s w h i c h are clearly o u t s i d e t h e rules but which will sell its p r o d u c t . T h e Gaffin survey found t h a t t h e l a r g e p h a r m a c e u t i c a l c o m p a n i e s w e r e critical o f t h e restrict i o n s i m p o s e d o n a d v e r t i s e r s b y t h e Seal o f A c c e p t a n c e p r o g r a m m e . I n a d d i t i o n i t w a s c o m m o n for a d v e r s e effects to be o m i t t e d or glossed o v e r . A d r o p in a d v e r t i s i n g r e v e n u e c a u s e d t h e A M A i n 1952 t o c o m m i s s i o n B e n Gaffin and A s s o c i a t e s to find t h e r e a s o n s . A c c o r d i n g l y t h e C o n s u l t a n t s ' r e c o m m e n d a t i o n t h a t t h e Seal o f Acceptance be abolished was accepted. Or it could do a d v e r t i s e m e n t s which are in a fairly l a r g e grey a r e a . T h e e d i t o r s o f m e d i c a l j o u r n a l s d o not h a v e a n illustrious record of r e s t r a i n i n g m i s l e a d i n g d r u g a d v e r t i s i n g . P r i o r to t h e early 1950s t h e A M A had a Seal o f A c c e p t a n c e p r o g r a m m e for a d v e r t i s e m e n t s appearing in the Journal of the American Medical Association. Advertising 3 a g e n c i e s a r e skilled a t d e s i g n i n g l a y o u t s w h i c h highlight the good n e w s a n d n o t t h e b a d .

1973). S e n . N e l s o n : I t w o u l d b e nice i f t h e A M A w o u l d r e v i e w the ads t h e y run for a c c u r a c y . S e n . [ N e l s o n t h e n cited a d s in the Journal p r o m o t i n g P a r k e . y o u h a v e run ads for y e a r s t h a t p r o m o t e d very bad use o f d r u g s and w e have v o l u m e s t h a t will p r o v e t h a t . D r . The two associations almost i n v a r i a b l y s u p p o r t e a c h o t h e r before c o m m i t t e e s o f e n q u i r y . but it is m i s u s e d 90 t o 9 9 p e r c e n t o f t h e t i m e . and p r o v i d e m u t u a l aid for l o b b y i n g efforts in t h e c a p i t a l s o f t h e w o r l d . S e n . b e c a u s e you run a d s in t h e A M A Journal t h a t are disgracefully i n a c c u r a t e and the history of it is c l e a r as a b e l l . S e n . Do not try to shift it to the F D A . a n d I can d e m o n s t r a t e t h a t to y o u . S a m m o n s : S e n a t o r . I s u b m i t to y o u t h e F D A will h a v e to share that responsibility with whoever is responsible. a n d t h e i r e q u i v a l e n t s i n o t h e r c o u n t r i e s . d o c t o r . N e l s o n : T h e y see t h e ad after it r u n s . T h e A M A and P M A ( P h a r m a c e u t i c a l M a n u f a c t u r e r s A s s o c i a t i o n ) . You complain that they interfered in the medical p r a c t i c e and y o u t h r o w t h e b l a m e o n t h e m w h e n they d o n o t d e s e r v e it.D a v i s ' s a n t i b i o t i c C h l o r o m y c e t i n for g e n e r a l u p p e r r e s p i r a t o r y illness. and for the A M A it is basically a c a s h n e x u s . D r . .] D r . N e l s o n : T h a t is kind of a n o n s t a t e m e n t . N e l s o n : B u t t h e disgraceful p a r t is. A P M A p u b l i c r e l a t i o n s p e r s o n told m e t h a t w h e n t h e P M A r u n s its g e n e r a l a d v e r t i s e m e n t s 219 . and you t o o k ads t h a t p r o m o t e d t h e m i s u s e a n d I t h i n k it is disgraceful ( S u b c o m m i t t e e on H e a l t h . S a m m o n s : L e t m e p o i n t o u t t o y o u t h a t t h e A M A was o n e o f t h e first p e o p l e to p o i n t out t h e p o t e n t i a l harmful effects of Chloromycetin. C h l o r o m y c e t i n still has a place in t h e a r m a m e n t a r i u m in the practice of m e d i c i n e . executive vice-president ofthe A M A . T h e fact o f t h e m a t t e r is. you p o i n t e d it out and c o n t i n u e d t o t a k e t h e ads t h a t p r o m o t e d i m p r o p e r use o f t h e d r u g . are f i r m l y linked within the medical-industrial c o m p l e x . T h e n e x u s is i n v a l u a b l e for t h e P M A in b e i n g able to c o u n t on ' i n d e p e n d e n t ' p r o f e s s i o n a l s u p p o r t for t h e i r p o s i t i o n . e v e r y single o n e o f t h e w o r d s i n t h o s e ads [ h a s ] t o h a v e F D A a p p r o v a l and if t h e r e is a long history of i n a c c u r a c y .The corporation as pusher c o u l d e x p r e s s t h e a n t a g o n i s m m o r e clearly t h a n the following e x c h a n g e b e t w e e n S e n a t o r N e l s o n and D r J a m e s H . . S a m m o n s : S e n a t o r . S a m m o n s .

T h e y g u a r a n t e e d t o find t h e m e d i c a l r e s e a r c h e r s w h o w o u l d test it.The corporation as pusher e x t o l l i n g t h e benefits w h i c h the p h a r m a c e u t i c a l i n d u s t r y has b e s t o w e d u p o n m a n k i n d and p r a i s i n g s e l f . and had d o n e so. H e a n d his a s s o c i a t e s w e r e r e p r e s e n t i n g a c o m p a n y w h i c h had d e v e l o p e d a n e w p r o d u c t to t r e a t a very c o m m o n a i l m e n t . 0 0 0 into it. W e l c h was the editor of two private j o u r n a l s which w e r e financially b a c k e d by a n t i b i o t i c m a n a u f a c t u r e r s such as Pfizer. I n a d d i t i o n . m a n y o f t h e m e d i c a l j o u r n a l s run t h e s a m e a d s free of c h a r g e "as a service to the industry which supports them'.142. A third W e l c h j o u r n a l failed.r e g u l a t i o n . •IB. but n o t b e f o r e P a r k e . JB . T h r o u g h o u t his d i r e c t o r s h i p o f t h e a n t i biotics division. t h e y had a m e t h o d of g e t t i n g it p u b l i s h e d m o r e quickly in a m e d i c a l j o u r n a l t h a n might o t h e r w i s e be d o n e . M i n t z ( 1 9 6 7 : 6 0 . A t t i m e s t h e c a s h n e x u s w i t h i n the m e d i c a l . J o u r n a l i s t s can also b e c o .o p t e d into t h e m e d i c a l . i n his o w n w o r d s . B l a k e s l e e . E d i t o r ' s h o n o r a r i u m s w e r e paid t o W e l c h . F u r t h e r . U p j o h n . b e t w e e n 1953 and 1960 W e l c h ' s s h a r e o f t h e profits.o w n e r o f t h e c o m p a n y that published the two journals. At t h i s p o i n t he w e n t to a m a g a z i n e and s u g g e s t e d a story on t h e g e n e r a l t o p i c . a s c i e n c e w r i t e r o f t h e A s s o c i a t e d P r e s s . so that it b e c a m e 'legitimate' news. R e c e n t l y . He d e s c r i b e d very frankly his o w n r a t h e r c u r i o u s o r g a n i z a t i o n .6 1 ) r e c o u n t s t h e story o f A l t o n L .40.6 0 ) . If the industry sees t h a t t h e j o u r n a l i s s u p p o r t i n g t h e m . was $287. : As a result of this your advertising space for your money is doubled or something like that? P R from P M A : More than doubled.2 2 ) . a s h a l f .i n d u s t r i a l c o m p l e x h a s v e r g e d o n t h e d o w n r i g h t c o r r u p t . they will s u p p o r t it w i t h a d v e r t i s i n g . PR from P M A : : Why do they do that? T h e r e ' s a self-interest. 1976: 2 1 8 . S m i t h K l i n e and A b b o t t . I w a s a p p r o a c h e d by a m a n w h o said he had an o p p o r t u n i t y for me to p l a c e an article in a m a g a z i n e on a f r e e . W e l c h was a target of public-interest-group c r i t i c i s m for t h e zeal w i t h w h i c h he p u s h e d t h e use of a n t i b i o t i c s ( T u r n e r .i n d u s t r i a l c o m p l e x . H e n r y W e l c h served a s d i r e c t o r o f t h e F D A ' s a n t i b i o t i c s division d u r i n g t h e b o o m p e r i o d for a n t i b i o t i c s w h i c h c o i n c i d e d with t h e a l l e g e d t e t r a c y c l i n e pricing conspiracy ( 1 9 5 3 .D a v i s had sunk $ 1 0 0 .l a n c e b a s i s . a n d told t h e m a g a z i n e e d i t o r t h a t t h e c o m p a n y 220 .

more p o w e r f u l m o d a l i t i e s a r e d e m a n d i n g a r e a s s e s s m e n t of h o w drug pushing can be brought under control. w a s said t o h a v e b e e n e x a c t e d . T h e n e w s p a p e r q u o t e d a n officer o f t h e m e d i c a l j o u r n a l a s saying t h a t t h e c o m p a n i e s c a n c e l l e d their a d v e r t i s e m e n t s b e c a u s e t h e y felt 'you d o n ' t feed p e o p l e w h o beat y o u u p ' ( H u g h e s a n d B r e w i n .The corporation as pusher w o u l d p l a c e a large a m o u n t of a d v e r t i s i n g with t h e m if t h e story w e r e u s e d . h e said. I n J a n u a r y 1976 t h e New York Times ran a s e r i e s of a r t i c l e s on m e d i c a l incomp e t e n c e . new.500 or $2. including the misuse of prescription drugs. 8 0 . T h e n if t h e article w e r e picked up a n d r e p r i n t e d by a c e r t a i n o u t l e t . M i x e d in with this is p r o m o t i o n a l copy on n e w a n d old d r u g s . D r u g c o m p a n i e s d i s p e n s e n e g a t i v e a s well a s p o s i t i v e s a n c t i o n s t o m a s s m e d i a o u t l e t s a c c o r d i n g t o h o w they p e r f o r m . T h e c o m p a n y .s e t s . He a l s o v o l u n t e e r e d to find a science w r i t e r w h o w o u l d w r i t e t h e s t o r y . A s w e m o v e t o w a r d s t h e twenty-first c e n t u r y . 221 . I n t h e U n i t e d S t a t e s . s o the c o m p a n y w o u l d give me $ 5 . 0 0 0 d o c t o r s i n 3 5 cities h a v e b e e n p r o v i d e d . B e f o r e w e h a v e r e a l l y b e g u n t o c o m e t o grips with r e g u l a t i o n o f pharmaceutical advertising in traditional channels. a n d t h e c o m p a n y w o u l d b e s o d e l i g h t e d w i t h the a d v e r t i s i n g a c h i e v e d t h a t way t h e y w o u l d pay m e $ 1 0 . k n e w t h a t w r i t e r s w e r e n e v e r paid w h a t t h e y w e r e w o r t h . m o r e effective. I w o u l d get that r e p r i n t fee. p h a r m a c e u t i c a l a d v e r t i s i n g i s finding n e w . T h e initial lists of d o c t o r s to get free r a d i o sets w e r e s u p p l i e d by a d v e r t i s i n g d r u g c o m p a n i e s from their lists of k n o w n high p r e s c r i b e r s . T h e P h y s i c i a n s R a d i o N e t w o r k c l a i m s a 'signif i c a n t l y h i g h e r " s h a r e o f m i n d " a m o n g r a d i o h o l d e r s ' t h a n can b e g a i n e d by a d v e r t i s i n g by d i r e c t mail or in j o u r n a l s ( H u g h e s and B r e w i n . T h e r a d i o s c o n s t a n t l y c h u r n out m e d i c a l n e w s and f e a t u r e s o f i n t e r e s t to p h y s i c i a n s . w i t h F M r a d i o sets t u n e d t o t h e P h y s i c i a n s R a d i o N e t w o r k . 1979: 2 0 3 ) . and this i s w h a t h e w a s t a l k i n g t o m e a b o u t . 0 0 0 on t h e side. and all I had to do w a s t o m e n t i o n this n e w p r o d u c t b y t r a d e n a m e t w i c e . and p e r h a p s be p a i d S 1. Retaliation in t h e form of c a n c e l l a t i o n of half a m i l l i o n d o l l a r s ' w o r t h of a d v e r t i s i n g in Modern Medicine. 0 0 0 m o r e .000 for t h e a r t i c l e . free o f c h a r g e . a j o u r n a l o w n e d by t h e Times c o m p a n y . 1979: 2 1 9 ) . m o d a l i t i e s . He said I w o u l d m a k e my deal with t h e m a g a z i n e e d i t o r . and n e v e r m e n t i o n any o t h e r p r o d u c t . P e r h a p s it will soon be free v i d e o .

D a v i s r e p r e s e n t a t i v e t h a t C h l o r o m y c e t i n p o s e d n o m o r e risk of b l o o d d a m a g e t h a n any o t h e r a n t i b i o t i c . . T h a t ' s g e t t i n g i n v o l v e m e n t folks' (Hentoff. T h e M E R / 2 9 litigation unearthed a wealth of information about t h e i n s t r u c t i o n s w h i c h w e n t o u t t o R i c h a r d s o n . . but M E R / 2 9 has b e e n o n t h e m a r k e t a l m o s t a y e a r n o w a n d w a s s t u d i e d i n t h o u s a n d s o f p a t i e n t s for y e a r s before t h a t . I t ' s from T i m B o w e n .a claim t h a t the heavy d e a t h toll from C h l o r o m y c e t i n can r e a d i l y d i s p r o v e ( e . Its r a t e o f use i n d i c a t e s t h a t a c c e p t a n c e i s b r o a d e n i n g rapidly.The corporation as pusher The sales representative O v e r 100. .u p s o c c u r . 1967). O b v i o u s l y it is m u c h m o r e difficult for h e a l t h a u t h o r i t i e s to m o n i t o r t h e c l a i m s of sales r e p r e s e n t a t i v e s t h a n it is to m o n i t o r t h e p r i n t e d w o r d . t h e sales r e p r e s e n t a t i v e i s t h e a n a l o g u e for licit d r u g s o f t h e s t r e e t p u s h e r of illicit d r u g s .M e r r e l l sales r e p r e s e n t a t i v e s o n h o w t o p u s h this d r u g : H e r e ' s o n e t h a t s e e m s like a red hot i d e a for M E R / 2 9 . 1972: 2 1 . B u t s l i p . C h a r l o t t e .000 p e o p l e a r o u n d t h e w o r l d e a r n a living as sales r e p r e s e n t a t i v e s ( ' d e t a i l m e n * ) w h o visit d o c t o r s t o p e r s u a d e t h e m t o p r e s c r i b e t h e i r c o m p a n y ' s p r o d u c t s . if it's y o u r s t y l e . e . . C . f i n a l sales p i t c h to t h e d o c t o r ] g o e s s o m e t h i n g like this (we got it third hand): D o c t o r . 1973). B e s t . p a r t i c u l a r l y with n e w p r o d u c t s . A i m e d p a r t i c u l a r l y a t t h e 'wait and s e e ' p h y s i c i a n . . c i t e d i n G r u n s p o o n and S t r i n g e r . I n t h e t e r m s o f G o r r i n g ' s ( 1 9 7 8 ) a n a l y s i s . T i m ' s close [ i . a physician brought two hyperactive children to use i n a d e m o n s t r a t i o n o f t h e basic s y m p t o m s o f F u n c t i o n a l B e h a v i o u r P r o b l e m s . such as w h e n a p r a c t i s i n g physic i a n w h o h a p p e n e d to be a p a r t . Y [a d e t a i l e r ] r e p o r t s t h a t a t a n i n s e r v i c e m e e t i n g o f special e d u c a t i o n p e r s o n n e l . W e have seen t h a t surveys o f d o c t o r s s h o w t h e s a l e s r e p r e s e n t a t i v e t o b e the m o s t i m p o r t a n t s i n g l e s o u r c e o f d r u g i n f o r m a t i o n . P e r h a p s these words of A l e x a n d e r Pope have some 222 . I can a p p r e c i a t e and a d m i r e y o u r c a u t i o n a b o u t any n e w d r u g . g . N .t i m e F D A e m p l o y e e w a s told by a P a r k e . A 1971 C i b a sales r e p o r t w a s e v e n so explicit as to u r g e sales r e p r e s e n t a t i v e s to be "more effective p u s h e r s ' of R i t a l i n : ' Y o u r ingenuity in the promotion of Ritalin FBP [Functional B e h a v i o r P r o b l e m s ] is b e c o m i n g m o r e a p p a r e n t : Mr.

M a n y d o c t o r s enjoy g e t t i n g n e w s a m p l e s from t h e sales r e p r e s e n t a t i v e . 1969). nor t h e last to lay t h e old a s i d e . ' P h a r m a c e u t i c a l c o m p a n i e s d o not like t o upset d o c t o r s : S a l e s r e p r e s e n t a t i v e s will be on t h e m a t if t h e y have r u b b e d d o c t o r s u p t h e w r o n g w a y .The corporation as pusher b e a r i n g o n y o u r c o n s i d e r a t i o n o f M E R / 2 9 : ' B e not t h e first b y w h o m t h e n e w is t r i e d . it r e m a i n s a major irony t h a t the m o s t influential m e t h o d o f d r u g p r o m o t i o n i s t h e least c o n s t r a i n e d by l a w . D o c t o r s t h e r e f o r e i n v o k e a n effective c o n t r o l w h e n they w r i t e t o t h e c o m p a n y t o c o m p l a i n a b o u t t h e c l a i m s o f a sales r e p r e s e n t a t i v e . P h y s i c i a n s t h e m s e l v e s are t h e m o s t hopeful source o f c o n t r o l . A s o n e m e d i c a l d i r e c t o r e x p l a i n e d : ' D o c t o r s like n e w toys t o p l a y w i t h . . E v e n m o r e effective with a t r a n s n a t i o n a l is for t h e d o c t o r to c o m plain direct to world h e a d q u a r t e r s . T h e r e . w r i t t e n i n f o r m a t i o n e q u i v a l e n t t o t h a t r e q u i r e d for p a c k a g e inserts m u s t be g i v e n to t h e p h y s i c i a n . i t t a k e s e x t r a o r d i n a r y e v e n t s such a s t h e M E R / 2 9 p r o s e c u t i o n s t o bring such a b u s e s t o t h e surface. T h e c o m p a n y ' s credibility i s a l l . Sterling Drug Inc. A senior Australian executive c o n c e d e d that doctors w h o have an intelligent understanding of h o w t o sting t h e sales d e p a r t m e n t ' w o n ' t g o t h r o u g h t h e local p e o p l e b e c a u s e t h e y will only c o v e r i t u p ' . e v e n w h e r e d i s c l o s u r e w a s m a d e i n labelling m a t e r i a l s ( A f t e r m a n . C o r p o r a t e h e a d q u a r t e r s d o not get a lot of f e e d b a c k a b o u t h o w its s u b s i d i a r i e s in far-flung p a r t s of t h e w o r l d a r e p e r f o r m i n g . A W H O s u r v e y in 1968 s h o w e d t h a t m o s t g o v e r n m e n t s do not have legisl a t i o n w h i c h e n a b l e s t h e m t o c o n t r o l oral s t a t e m e n t s b y drug sales r e p r e s e n t a t i v e s ( W H O . B y a n d l a r g e . it w a s held in t h e U n i t e d S t a t e s that a m a n u f a c t u r e r w a s liable for a failure of its sales r e p r e s e n t a t i v e s to disclose side-effects. w h e n e v e r a drug is a d v e r t i s e d orally for t h e first t i m e . . In Yarrow v. In spite of t h e s e d e v e l o p m e n t s . O u r g r e a t c o n c e r n i s not s o m u c h a v o i d i n g m i s r e p r e s e n t a t i o n . h o w e v e r .i m p o r t a n t . s o l e t t e r s from p h y s i c i a n s with s e r i o u s c o m p l a i n t s can c r e a t e s o m e heat for t h e local sales d e p a r t m e n t . can y o u r style be b e n t j u s t a bit to fit? ( F u l l e r . ' L o t s of p o w e r t h e r e . but avoiding those kinds of m i s r e p r e s e n t a t i o n which upset d o c t o r s . t h o u g h t h a t ' s i m p o r t a n t for its o w n s a k e . O n e F D A official l a m e n t e d t h a t F D A c o m p l a i n t s t o t h e c o m p a n y a r e not a l w a y s as effective a s a n c t i o n : 'Often t h e y will r e s p o n d to t h e 223 . S o u t h Africa w a s t h e only e x c e p t i o n f o u n d . 1972: 8 8 ) . 1972).

o n e t h a t n e e d s its sales b o o s t e d along a bit. and not by i m p r o v e m e n t s in the k n o w l e d g e of the physicians' ( H e m m i n k i and P e s o n e n . not on the strength ofthe balance ofthe knowledge imparted. said at o n e point in his t e s t i m o n y b e f o r e t h e K e f a u v e r s u b c o m m i t t e e : ' T h e r e is a simple m a x i m . m a n y r e p r e s e n t a t i v e s discard any p r e t e n c e o f a fair p r e s e n t a t i o n of risks and benefits. S e n a t o r K e n n e d y o n c e d r e w a t t e n t i o n t o a J o h n s o n and J o h n s o n t e a c h i n g m a n u a l w h i c h e m p h a s i s e d t h e selling r a t h e r t h a n the i n f o r m a t i o n . o f t h e p r o d u c t s/he i s p u s h i n g . I n d e e d . An e x a m p l e from o n e e x e c u t i v e : A s h a d e o f g r e y a r e a w o u l d be w h e r e t h e c o m p a n y r e c o m m e n d s a d o s a g e i n t h e r a n g e say 2 0 0 . B u t o n e specialist says to a sales r e p r e s e n t a t i v e t h a t you really n e e d a d o s a g e of450 mis.' T h e l i m i t a t i o n o f d o c t o r c o m p l a i n t s is. T h e former m e d i c a l d i r e c t o r of S q u i b b . c o m p a r e d w i t h a l t e r n a t i v e t h e r a p i e s .p r o v i d i n g side of their w o r k : ' T h i n k s a l e s m e n and not d e t a i l m e n . h o w e v e r . T h e p r e s s u r e to a c h i e v e sales m a k e s it difficult for the c o m p a n y r e p r e s e n t a t i v e t o b e o b j e c t i v e i n p r e s e n t i n g t h e a d v a n t a g e s and d i s a d v a n t a g e s . I n d e e d . ' T h e success o f t h e r e p r e s e n t a t i v e s ' w o r k i s m e a s u r e d b y t h e v o l u m e o f s a l e s . D e l e t e t h e w o r d " d e t a i l " from the v o c a b u l a r y and think selling and s a l e s ' ( S u b c o m m i t t e e o n H e a l t h . I n spite o f t h i s r h e t o r i c . It will not bring u n d e r c o n t r o l t h e m o r e p e r v a s i v e subtle forms o f m i s r e p r e s e n t a t i o n . D a l e C o n s o l e . s/he is usually paid s a l a r y and i n c e n t i v e s c o m m e n s u r a t e with success at selling. 1974: 7 7 0 ) . T h e p h a r m a c e u t i c a l sales r e p r e s e n t a t i v e i s told b y the c o m p a n y t h a t s/he has a dual r e s p o n s i b i l i t y : to sell and p r o m o t e the a d v a n t a g e s o f t h e p r o d u c t . Dr A. I 224 . 1977a: 111). Newspaper a d v e r t i s e m e n t s for p h a r m a c e u t i c a l sales r e p r e s e n t a t i v e s typically a p p e a r u n d e r S for s a l e s m e n .The corporation as pusher to c o m p l a i n t b y t r a n s f e r r i n g the overly a g g r e s s i v e detail m a n a n o t h e r r e g i o n . O n e of t h e s e is t h e s e l e c t i v e use of a c c u r a t e i n f o r m a t i o n . but also t o e d u c a t e d o c t o r s a s t o t h e risks and l i m i t a t i o n s o f t h e t h e r a p y . T h e n t h e s a l e s r e p r e s e n t a t i v e will go and say this to a G P : that such and such a s p e c i a l i s t r e c o m m e n d s t h a t t h e d o s a g e really should be 450 mis. t h a t c o m p a n i e s will only be c o n c e r n e d a b o u t t h o s e t y p e s of claims w h i c h are an i n s u l t to t h e i n t e l l i g e n c e of p h y s i c i a n s . a n d often ask for p r o v e n ability at a g g r e s s i v e sales p e r f o r m a n c e . M a y b e m o s t specialists a g r e e w i t h t h i s d o s a g e .2 5 0 m i s .

T h e d o c t o r d o e s not place a n o r d e r w i t h t h e r e p r e s e n t a t i v e s . S a n d o z solved t h e p r o b l e m by selling t h e licence to d i s t r i b u t e S e r e n t i l to a c o m p e t i t o r . for t h e t r e a t m e n t o f s c h i z o p h r e n i a and o t h e r psychoses involving disordered thinking. T h e 'not f i t t i n g in' a d v e r t i s e m e n t w a s u n a c c e p t a b l e t o t h e F D A . "If you c a n ' t c o n v i n c e t h e m . But Sandoz needed a new m a r k e t . . F D A r e g u l a t o r y action a g a i n s t t h e S e r e n t i l a d v e r t i s i n g b r o u g h t t h e p r o d u c t differentiation p r o b l e m to a h e a d . Serentil i s m e t a b o l ized i n e s s e n t i a l l y t h e s a m e w a y a s a n o t h e r S a n d o z p r o d u c t .I n g e l h e i m . a p h e n o t h i z i n e d r u g . I n m o s t p a r t s o f t h e world sales r e p r e s e n t a t i v e s are paid b o n u s e s a c c o r d i n g t o t h e i r sales p e r f o r m a n c e . S a n d o z sales r e p r e s e n t a t i v e s w e r e h a v i n g difficulty in e x p l a i n i n g to d o c t o r s the fact that w h a t w a s e s s e n t i a l l y t h e s a m e p r o d u c t c o u l d be u s e d for p s y c h o s i s on t h e one h a n d . confuse t h e m " ' ( M i n t z . i n o r d e r t o e m b r a c e n e w m a r k e t s . . Serentil a d v e r t i s e m e n t s r e f e r r e d t o : ' T h e n e w c o m e r i n t o w n w h o can't m a k e friends. a n d s o on. a n d for mild a n x i e t y o n t h e o t h e r . Melloril ( t h i o m i d a z i n e ) . . and S a n d o z w e r e c o m p e l l e d t o run a r e m e d i a l a d v e r t i s e m e n t which read: T h e F D A s t a t e s t h a t t h e p r i n c i p a l t h e m e o f t h e a d suggests u n a p p r o v e d uses of S e r e n t i l for relatively m i n o r or e v e r y d a y a n x i e t y s i t u a t i o n s e n c o u n t e r e d often i n t h e n o r m a l c o u r s e o f living.The corporation as pusher l e a r n e d from detail m e n . D i f f e r e n c e s i n d o c t o r s ' a t t i t u d e s t o w a r d t h e m a r e d u e m a i n l y t o o u r p r o m o t i o n ' ( N a d e r . T h e fact is t h a t S e r e n t i l . 1967: 8 6 ) .l a w ' . M a d i s o n A v e n u e f r e q u e n t l y c r e a t e s q u i t e artificial d i s t i n c t i o n s b e t w e e n p r o d u c t s w h i c h a r e e s s e n t i a l l y similar t h e r a p e u t i c a l l y . w h o s e sales r e p r e s e n t a t i v e s w o u l d not h a v e t h e p r o b l e m o f disting u i s h i n g it from o t h e r p r o d u c t s in t h e i r line. clinically. is limited in its use to c e r t a i n d i s e a s e s t a t e s . it is i m p o s s i b l e to see h o w a s a l e s r e p r e s e n t a t i v e could afford t o b e o b j e c t i v e . . B o e h r i n g e r . T h e w o m a n w h o can't get a l o n g w i t h her n e w d a u g h t e r i n . F o r m a n y p r o m o t i o n a l c a m p a i g n s . A c c o r d i n g t o a s e n i o r F D A official. . T h e l a t t e r i s not a l w a y s easy t o a s s e s s .a l o n g step from s c h i z o p h r e n i a . . 225 . S o S e r e n t i l w a s p r o m o t e d 'for t h e anxiety t h a t c o m e s from n o t fitting in' . C o n s i d e r t h e following i n f o r m a t i o n p r o v i d e d t o S m i t h K l i n e sales r e p r e s e n t a t i v e s : ' " C o m p a z i n e " and " S t e l a z i n e " a r e very s i m i l a r . T h e o r g a n i z a t i o n m a n w h o can't adjust to a l t e r e d status w i t h i n his c o m p a n y . 1973: 6 ) . A f a s c i n a t i n g case study o f t h i s t y p e w a s t h e p r o m o t i o n of Serentil ( m e s o r i d a z i n e ) b y S a n d o z i n t h e U n i t e d S t a t e s .

A H e l s i n k i study found that 94 per cent of s a l e s r e p r e s e n t a t i v e s o b t a i n e d sales statistics . T r a i n i n g c o u r s e s run b y d i s i n t e r e s t e d p a r t i e s o u t s i d e the p h a r m a c e u t i c a l industry might help. a s a n o t h e r sales r e p r e s e n t a t i v e put it: ' W h e n you k e e p saying t h a t t h i s d r u g is g o o d and n e c e s s a r y for a w h o l e y e a r . R o c h e sent t h e d o c t o r ' s medical school a d o n a t i o n o f $10 for e a c h r e p o r t c o m p l e t e d ( H u g h e s and B r e w i n . M a k i n g sales r e p r e s e n t a t i v e s more informed would help to underm i n e t h e t e n d e n c y t o w a r d s glib a c c e p t a n c e o f their c o m p a n y ' s p r o p a g a n d a . O n e m u s t s p a r e a t h o u g h t for t h e sales r e p r e s e n t a t i v e as victim. I n m a n y p a r t s o f t h e w o r l d c o m p a n i e s d o p r e s c r i p t i o n s u r v e y s w h e r e t h e p h a r m a c i s t ' s r e c o r d s are c h e c k e d t o see w h i c h i n d i v i d u a l d o c t o r s h a v e p r e s c r i b e d a p a r t i c u l a r p r o d u c t in n u m b e r s . H o w e v e r . T h e s t a t e m e n t o f a M e r c k sales r e p r e s e n t a t i v e b e f o r e t h e K e n n e d y s u b c o m m i t t e e u n d e r l i n e s the situation: D e t a i l m e n a r e g e n u i n e l y c o n v i n c e d b y their e m p l o y e r s t h a t they a r e w o r k i n g for t h e finest p h a r m a c e u t i c a l c o m p a n y in t h e i n d u s t r y . D o c t o r s w e r e a l s o sent r e p o r t c a r d s t o r a t e R o c h e r e p r e s e n t a t i v e s a s ' e x c e l l e n t . At present. 1977a: 109). t o o ' ( H e m m i n k i and P e s o n e n .9 ) .c h e c k s of d o c t o r s to d e t e r m i n e t h e last t i m e d o c t o r s saw a R o c h e r e p r e s e n t a t i v e 'and w h a t d r u g s t h e y t a l k e d a b o u t ' . c o m p a n i e s have good m a r k e t i n t e l l i g e n c e o n h o w t h e i r p r o d u c t s are selling a t p h a r m a c i e s w i t h i n e a c h sales r e g i o n . O r . 1979: 8 8 . T h e y m u s t t h e r e f o r e s p r e a d t h e word a s t o t h e w o r t h o f t h e i r d r u g s ( S u b c o m m i t t e e o n H e a l t h . a n d t h a t t h e i r p r o d u c t s are t h e best. you finally b e l i e v e it yourself. 18 p e r c e n t only from t h e i r own a r e a . pressure w h i c h c a u s e s m a n y t o b r e a k d o w n . 1974: P a r t 3 : 7 3 3 ) .M e r r e l l sales m a n u a l ) ( S h a p o . They are put u n d e r t r e m e n d o u s pressure to perform.17 per cent only n a t i o n . 1977a: 108). O b v i o u s l y this p r a c t i c e e n t a i l s a c e r t a i n b r e a c h of conf i d e n t i a l i t y o n t h e part o f t h e p h a r m a c i s t . t h e y a r e c o n v i n c e d t h a t society is in n e e d of t h e i r e m p l o y e r s ' p r o d u c t s . R o c h e d o e s t e l e p h o n e s p o t . g o o d o r p o o r ' .The corporation as pusher b u t will s i m p l y give an i n d i c a t i o n t h a t he or she m i g h t try the p r o d u c t w i t h future p r e s c r i p t i o n s .to t h e millions of p e o p l e w h o n e e d M E R / 2 9 .t o b e e n t h u s i a s t i c ' ( R i c h a r d s o n . T h e y are i n d o c t r i n a t e d into b e l i e v i n g t h a t t h e i r p r o d u c t s really are a b o o n t o m a n k i n d : ' Y o u o w e it to y o u r s e l f . M o r e t h a n t h i s .to y o u r c o m p a n y .w i d e . in most 226 . 1979: 2 0 6 ) . and the o t h e r s from t h e w h o l e c o u n t r y and their o w n a r e a ( H e m m i n k i and P e s o n e n .

W e l l .The corporation as pusher c o u n t r i e s a r o u n d the world. t h e s i t u a t i o n is d r a m a t i c a l l y different. h e replied: ' N o . W e ' r e lucky i f w e can get high school g r a d u a t e s .h o u s e t r a i n i n g c o u r s e s t h a t r u n for w e e k s r a t h e r t h a n m o n t h s . I w a s quite c e r t a i n t h a t t h e d o c t o r w o u l d t h r o w me out of his office if I a p p r o a c h e d him w i t h any o f t h e t e c h n i q u e s s u g g e s t e d b y m y c o l l e a g u e s .t r a i n e d science g r a d u a t e s are m o r e likely t o look c r i t i c a l l y at t h e c l a i m s of an e m p l o y e r w h o is found to p r o v i d e t h e m o n l y with j o u r n a l r e f e r e n c e s to s t u d i e s f a v o u r a b l e to a p r o d u c t . I w a s free to offer him a large g r a n t to s u p p o r t any r e s e a r c h of his c h o i c e ' w i t h o u t s t r i n g s ' or to r e t a i n him as a c o n s u l t a n t w i t h a g e n e r o u s a n n u a l c o m p e n s a t i o n . Dale Console. ' Doctor conflict of interest Dr A. T h e y g e t j u s t t h r e e o r four w e e k s o n basic s a l e s m a n s h i p and p r o d u c t i n f o r m a t i o n . T h e boost t o o k t h e form o f o b t a i n i n g an e n d o r s e m e n t from a p h y s i c i a n w h o w a s a p r o m i n e n t a u t h o r i t y in t h e field. I d e c i d e d . to use a s t r a t a g e m t h a t was m o r e likely to be effective a n d t h a t I t h o u g h t (at t h e t i m e ) w o u l d be e a s i e r on my o w n conscience. S o m e o f t h e m I w o u l d n ' t e m p l o y to . E i g h t y p e r c e n t o f Lilly's sales r e p r e s e n t a t i v e s w i t h i n t h e U n i t e d S t a t e s are qualified p h a r m a c i s t s . I 227 . . w h e n I w a s still a m e d i c a l d i r e c t o r . former Squibb medical director. T h e y all had t h e o b v i o u s o d o r of a b r i b e . S o m e c o m p a n i e s a r e b e t t e r t h a n o t h e r s . W h e n I asked t h e g e n e r a l m a n a g e r o f o n e c o m p a n y w h e t h e r his r e p r e s e n t a t i v e s w e r e a s well t r a i n e d a s i n t h e U n i t e d S t a t e s . . t h e lagging s a l e s o f o n e o f o u r p r o d u c t s led m a n a g e m e n t t o d e c i d e t h a t t h e p r o d u c t n e e d e d a b o o s t . c o m p a n i e s c o n d u c t i n . But in neighbouring G u a t e m a l a . I o b j e c t e d since I felt t h a t t h e d o c t o r w a s i n c o r r u p t i b l e and b e c a u s e I felt t h e p r o d u c t did not d e s e r v e e n d o r s e m e n t . My b u s i n e s s c o l l e a g u e s o v e r r u l e d me and I w a s left w i t h a blank check to win his favor. t h e r e f o r e . W e k n e w t h a t t h e p a r t i c u l a r p h y s i c i a n w a s being s u b s i d i z e d b y a n o t h e r d r u g c o m p a n y and s o m a n a g e m e n t d e c i d e d t h a t it w o u l d be s i m p l e for me as m e d i c a l d i r e c t o r to ' b u y ' him. as j a n i t o r s . testified before the US Senate: S o m e t i m e in 1956. I t o o k t h e d o c t o r to l u n c h . including the U n i t e d States. and after t h e usual two m a r t i n i s . C o s t a R i c a has g o n e so far as to r e q u i r e t h a t p h a r m a c e u t i c a l r e p r e s e n t a t i v e s be pharmacy graduates.

p h y s i c i a n s w e r e abuzz with interest i n the s u c c e s s o f T a g a m e t .b a c k for p r e s c r i b i n g t h e c o m p a n y p r o d u c t s .t o . t h e c o m p a n y split 5 0 . A n d for a p e r i o d o f t w o y e a r s d o c t o r s w e r e f o u n d w h o w e r e willing to p a r t i c i p a t e in such a s c h e m e ( M i n t z 1967:320-1). . In 1979 w h e n I w a s i n t h e U n i t e d S t a t e s . . can h a v e a significant i m p a c t on profitability. C o n v e r s a t i o n g r a d u a l l y shifted to t h e p r o d u c t a n d . M y t r a v e l e x p e n s e s and t h e price o f t h e lunch m a d e u p the e n t i r e cost t o t h e c o m p a n y ( P e k k a n e n . In this m a n n e r we e s t a b l i s h e d a p h y s i c i a n . w r o t e t o t h e c o m p a n y ' s 228 . S e n a t o r H a r t d e s c r i b e d t h e M e r i t s e t . B u t t h e m o r e i n t e n s e conflict o f i n t e r e s t i s with s m a l l e r c o m p a n i e s w h e r e i n d i v i d u a l p h y s i c i a n s . . t h i s a p p e a r s to be n o t h i n g but a k i c k . D e a n o f t h e Louisiana S t a t e U n i v e r s i t y School o f M e d i c i n e . Dr William W. we got o u r e n d o r s e m e n t a l m o s t as a p e r s o n a l favor. but the m o r e p e r v a s i v e conflict of i n t e r e s t w h i c h i m p i n g e s on physician drug p u s h i n g is t h e o w n e r s h i p by d o c t o r s of s h a r e s in p h a r m a c e u t i c a l c o m p a n i e s . . and h o w this h a d d o u b l e d S m i t h K l i n e s h a r e p r i c e s i n the c o u r s e o f six m o n t h s . to m a k e a long story s h o r t .5 0 w i t h t h e detail m e n . M e r i t P h a r m a c e u t i c a l C o m p a n y I n c . In M a r c h 1964. F r y e . A n e x a m p l e from N e w O r l e a n s w a s C a r r t o n e L a b o r a t o r i e s . 1973: 7 3 ) . O n e c o u l d p o i n t t o o t h e r e x a m p l e s o f this sort. In the U n i t e d S t a t e s .3 2 5 d ) has forcefully b r o u g h t h o m e the p r o b l e m s . O f its 3 . c o m p a n y president. a n i m p r o v e d t h e r a p y for u l c e r s . o r small g r o u p s o f physicians p u s h i n g d r u g s .p h y s i c i a n r e l a t i o n s h i p i n which w e w e r e b o t h d e p l o r i n g t h e q u e s t i o n a b l e tactics used b y t h e d r u g i n d u s t r y . T e x a s p h y s i c i a n s had a n i n t e r e s t in 1 in 25 o f t h e s t a t e ' s p h a r m a c i e s and in 26 o f t h e 126 Texas-licensed p h a r m a c e u t i c a l manufacturing firms.The corporation as pusher told him e x a c t l y w h a t had b e e n g o i n g on and my d i s a g r e e m e n t w i t h my c o l l e a g u e s . H e p o i n t s o u t t h a t i n 1964. O n e of these s m a l l c o m p a n i e s . had 244 p h y s i c i a n s a m o n g its 4 6 6 s t o c k h o l d e r s . at least 1.200 w e r e p h y s i c i a n s . and the drug industry is one o f t h e more obvious investment c h o i c e s for p e o p l e w h o in t h e c o u r s e of their professional w o r k are k e p t i n f o r m e d a b o u t d e v e l o p m e n t s in t h a t i n d u s t r y . . T h e y in t u r n g a v e 25 p e r c e n t to p a r t i c i p a t i n g d o c t o r s . M o s t d o c t o r s are affluent e n o u g h t o h a v e capital t o invest.u p before t h e S e n a t e : D o c t o r s e n t e r e d into partnership with drug salesmen to p r o m o t e c o m p a n y p r o d u c t s . M i n t z ( 1 9 6 7 : 3 2 0 . 0 0 0 s t o c k h o l d e r s .

. L o u i s i a n a . s t o c k w i s e . . . p r o m o t e o u r stock i n t e r e s t by way of actively " p e n p u s h i n g " Carrtone products. W a y n e Gilley o f C h a t t a n o o g a w r o t e t h a t h e had ' s e n t p e r s o n a l l e t t e r s t o all d o c t o r s i n T e n n e s s e e w h o w e r e k n o w n to have C a r r t o n e stock. . A letter from C. ' H e wrote them that ' C a r r t o n e ' s g r o w t h will r e w a r d you t h r o u g h y o u r h o l d i n g i n C a r r t o n e stock . . . T h o m a s of N a t c h i t o c h e s . 229 . 'I do a g r e e to p r e s c r i b e and e n c o u r a g e m y a s s o c i a t e s t o use C a r r t o n e p r o d u c t s . a t t e m p t i n g t o initiate a c a m p a i g n o f s u p p o r t for C a r r t o n e a m o n g his fellow p h y s i c i a n . . . . Boyce P. K e n t u c k y . A v e r y . s u p e r i n t e n d e n t o f t h e h o s p i t a l . assistant b u s i n e s s m a n a g e r o f t h e B r o u g h t o n State Hospital. .' Dr. [it] was t h e b a l d e s t p r o p o s i t i o n that I h a v e e v e r h e a r d in 17 y e a r s of bulk p u r c h a s i n g ( M i n t z : 1967: 322-3). J o s e p h A. . . Strain w r o t e . 1967: 3 2 2 . K.' ( M i n t z . D r J o h n M c K e e J r . . so t h a t it w o u l d 'start m a k i n g a sizeable profit i m m e d i a t e l y ' . u r g e d t h a t ' w e . W e w e r e ' g u a r a n t e e d ' t h a t t h e stock w o u l d triple o r q u a d r u p l e i f w e t o o k such a c t i o n .The corporation as pusher p h y s i c i a n . I l o o k u p o n C a r r t o n e a s a r o s e b u d a b o u t t o b l o o m . T. I n t h e s u b c o m m i t t e e h e a r i n g r e c o r d is a reply in w h i c h D r . E . C a r r t o n e s u r v i v e d by s c h e m e s to sell its stock to d o c t o r s w h o w o u l d agree to heavily prescribe C a r r t o n e products to e n h a n c e the v a l u e of t h e i r i n v e s t m e n t . and t h r e e Carrtone people: I do n o t k n o w w h o m a d e t h e s u g g e s t i o n . ' Similar l e t t e r s . D r . L e t ' s p u s h t h e p e n for C a r r t o n e . D r . s o m e o f t h e m m a k i n g i t clear t h a t t h e a u t h o r s w e r e glad t o h e l p if to do so w a s c o n s i s t e n t with t h e p a t i e n t ' s h e a l t h n e e d s c a m e from o t h e r s o u t h e r n states i n c l u d i n g A r k a n s a s . .3 ) .s h a r e h o l d e r s u r g i n g e a c h of t h e m to 'do j u s t a little bit m o r e for his c o m p a n y ' . a n d O k l a h o m a . a n d t h a t the H o s p i t a l t h e n switch its e n t i r e b u s i n e s s t o C a r r t o n e L a b o r a t o r i e s . . L e t t e r s like t h i s d r e w a h e a r t w a r m i n g r e s p o n s e .s t o c k h o l d e r s . N o r t h C a r o l i n a . E. a g r e e d that 'it is up to us s h a r e h o l d e r s t o m a k e o u r c o m p a n y g o and g r o w . Griggs of L i n c o l n t o n . but it w a s m a d e a g a i n a n d a g a i n t h a t t h e m e d i c a l staff b e a d v i s e d t o p u r c h a s e s u b s t a n t i a l q u a n t i t i e s o f t h e c o m m o n stock i n C a r r t o n e L a b o r a t o r i e s w h i c h w a s t h e n selling at a low price . . was tabled in t h e S e n a t e c o n c e r n i n g a c o n f e r e n c e t e l e p h o n e call a m o n g A v e r y . . ' F r o m S h r e v e p o r t .

A similar p a t t e r n a m o n g eye d o c t o r s w a s testified to by D r .an 83 p e r c e n t difference . M y e r s testified t h a t o u t of e v e r y 1. W a s h i n g t o n . M a r c A n t h o n y .000 p r e s c r i p t i o n s w r i t t e n by t h e d o c t o r . A n t h o n y testified t h a t m o s t o f t h e d i f f e r e n c e . for a n a l g e s i c s . D r . Towards effective control It is t r i t e to say t h a t t h e r e is m u c h m o n e y to be m a d e from drug a b u s e .c o n t a i n i n g p r o d u c t s . for e x a m p l e . o r h o w g e n e r a l l y true this p r o p o s i t i o n is. A n t h o n y o r e a c h o f his litigant c o l l e a g u e s w h o d o not d i s p e n s e . four o p h t h a l m o l o g i s t s w h o sell e y e g l a s s e s s t i p u l a t e d in a c o u r t case t h a t each p r e s c r i b e s 2 . testified a b o u t a s u r v e y he had d o n e in a large but unidentified city. 1967:325d). 104 w e r e for p e n c i l l i n . 73 per c e n t . T h i s is not to say it d o e s not exist. for n i c o t i n e . t o w h i c h a n e s t i m a t e d 2 0 million A m e r i c a n s a r e a l l e r g i c or s e n s i t i v e . In his city of S p o k a n e . M y e r s . t h e 230 . about pharmaceutical repackaging firms. a n d a n o t h e r c o m p a n y run b y t h e wives o f t e n d o c t o r s . T h i s is 1. In t h e 1967 H a r t h e a r i n g s .l a b e l offerings w e r e p r o d u c t s c o n t a i n i n g p e n i c i l l i n . it was 8 t i m e s that found a m o n g a control g r o u p of p r e s c r i b i n g p h y s i c i a n s .o w n e r s . In t h e late 1970s t h e r e w e r e e x p r e s s i o n s of c o n c e r n in P a r a g u a y .The corporation as pusher M i n t z i s r e l e n t l e s s i n using S e n a t e t e s t i m o n y t o d e m o n s t r a t e t h a t p h y s i c i a n conflict of i n t e r e s t may be a p e r v a s i v e p r o b l e m . B u t m o s t d o not realise h o w m u c h . O t h e r c o u n t r i e s h a v e not had t h e benefit o f t h e A m e r i c a n system o f S e n a t e s u b c o m m i t t e e h e a r i n g s and t h e i n v e s t i g a t i v e j o u r n a l i s m of a M o r t o n M i n t z to e x p o s e t h e e x t e n t of d o c t o r conflict of i n t e r e s t . 26 p e r cent of all sales r e v e n u e c o m e s from h a z a r d o u s u s e r s . T h i s w a s a rate 2Vi t i m e s t h e n a t i o n a l a v e r a g e . A m o n g their p r i v a t e . 2 0 0 p a i r s a y e a r . an assistant professor a t t h e P h i l a d e l p h i a C o l l e g e o f P h a r m a c y and S c i e n c e . F o u r such firms w e r e o w n e d by a total of 14 p h y s i c i a n s and o s t e o p a t h s .000 m o r e t h a n w e r e p r e s c r i b e d by t h e e q u a l l y busy D r . w h i c h may have been M i l w a u k e e . h e told S e n a t o r H a r t . If sales of h a z a r d o u s s u b s t a n c e s w e r e limited only t o r e s p o n s i b l e u s e r s . a b o u t a g r o w i n g p h a r m a c e u t i c a l c o m p a n y with s i x t e e n d o c t o r s h a v i n g key s h a r e h o l d i n g s . 33 per c e n t of sales w e r e to h a z a r d o u s u s e r s . W i n k l e r (1974) has d e m o n s t r a t e d its g e n e r a l i t y in A u s t r a l i a w h e n he s h o w e d t h a t for a l c o h o l . M a v e n J.w a s a c c o u n t e d for by e x p l o i t a t i o n o f p a t i e n t s w h o s e old g l a s s e s 'are really ok' ( M i n t z .

reform follows crises w h i c h b e c o m e visible t o t h e p u b l i c . F o r t h e s e r e a s o n s . In Dr. t o b a c c o and d r u g c o m p a n i e s w o u l d be shot to pieces. T h e p r i m e c o r p o r a t e i n t e r e s t of A b b o t t L a b o r a t o r i e s is Health Care World Wide.and it is e x t e n s i v e .The corporation as pusher profits of a l c o h o l . . w h i c h m a n u f a c t u r e r s c l a i m e d w o u l d tan t h e skin w h e n t a k e n orally. T h e first c r i m i n a l p r o s e c u t i o n t o o k p l a c e i n 1965 w h e n W a l l a c e L a b o r a t o r i e s w a s c h a r g e d with 231 . w e m u s t p r o t e s t w h e n a r e s p e c t e d a c a d e m i c i n s t i t u t i o n like t h e U n i v e r s i t y o f P i t t s b u r g h i s u s e d to m a k e an u n w a r r a n t e d a t t a c k on t h e p r o d u c t of a c o r p o r a t i o n t h a t is highly r e s p e c t e d for its scientific r e p u t a t i o n a n d i n t e g r i t y . . for e x a m p l e . t h e l e t t e r from C h a r l e s S . at c u r r e n t l y used levels is safe and useful in t h e h u m a n d i e t .is unjustifiably a t t a c k e d . . . o u r p r o d u c t . . F o r this r e a s o n c o n t r o l of a b u s e is b o u n d to be difficult. B e l g i u m legislated for d r u g a d v e r t i s i n g to be p r e . F o l l o w i n g visits from r e p r e s e n t a t i v e s o f A b b o t t ' s public r e l a t i o n s firm a n d a p u b l i c a t t a c k by A b b o t t . P r o f e s s o r S c h u b e r t r e t a i n e d a l a w y e r t o p r o t e c t his i n t e r e s t s .tells us c y c l a m a t e . A s i n o t h e r a r e a s o f p h a r m a c e u t i c a l r e g u l a t i o n . S i n c e t h e t h a l i d o m i d e d i s a s t e r . . . E x e c u t i v e Vice P r e s i d e n t o f A b b o t t L a b o r a t o r i e s to the Chancellor o f t h e University of Pittsburgh. W e r e q u e s t t h a t you t a k e a p p r o p r i a t e action t o c o r r e c t the misleading s t a t e m e n t s m a d e in the n a m e o f y o u r U n i v e r s i t y ( T u r n e r 1976: 9 3 ) . S c h u b e r t ' s s t a t e m e n t s . P h a r m a c e u t i c a l c o m p a n i e s fight h a r d a g a i n s t p e o p l e w h o c h a l l e n g e t h e h a z a r d s from use o f t h e i r p r o d u c t s . B r o w n . R e f o r m will c o m e . .c l e a r e d with h e a l t h a u t h o r i t i e s in 1977 after a f u r o r e l e a d i n g t o t h e b a n n i n g o f the so-called ' b r o n z e pill'. t h e industry is v u l n e r a b l e on the c h a r g e of p u s h i n g t h e o v e r u s e o f p r e s c r i p t i o n d r u g s . D r u g and C o s m e t i c A c t h a s p r o v i d e d c r i m i n a l p e n a l t i e s for m i s l e a d i n g advert i s i n g o f p h a r m a c e u t i c a l p r o d u c t s . C o n s i d e r . . t h e A m e r i c a n F o o d . T h e scientific i n f o r m a t i o n we have . It c o m p l a i n s a b o u t a n a r t i c l e b y P r o f e s s o r Jack S c h u b e r t o f the U n i v e r s i t y w h i c h w a s critical o f t h e h a z a r d s a s s o c i a t e d with e x t e n s i v e use o f c y c l a m a t e s . In spite o f t h e p r o p e n s i t y for t h e p h a r m a c e u t i c a l industry to fight its o p p o n e n t s v i g o r o u s l y .and t h u s o u r r e p u t a t i o n . I m o s t s t r o n g l y p r o t e s t t h e use by a faculty m e m b e r of publications ofthe University ofPittsburgh to make unwarranted misleading s t a t e m e n t s about a product of A b b o t t L a b o r a t o r i e s .

o n e w h i c h has m o r e s e v e r e c o n s e q u e n c e s for t h e c o m p a n y t h a n a fine o f a few t h o u s a n d d o l l a r s . W h e n p a t i e n t s read t h a t s t o c k s o f a p r o d u c t h a v e b e e n s e i z e d . 1979). W i t h i n a few y e a r s t h e r e had b e e n six c r i m i n a l p r o s e c u t i o n s c o n c e r n i n g a d v e r t i s i n g . F D A r e a s o n i n g i s that the c r i m i n a l s a n c t i o n is not sufficiently flexible a d e v i c e for d e a l i n g with t h e p r o b l e m . T h e F o o d . C r i m i n a l p r o s e c u t i o n s s i m p l y d o not o c c u r any m o r e . b u t t h e use of any litigious s o l u t i o n to t h e c o n t r o l of a d v e r t i s i n g c l a i m s ( R h e i n s t e i n and H u g s t a d . T h e m a x i m u m $2. seizure is an essential protection. T. d u r i n g t h e period it was believed to have an impact. B u t seizure is an o b v i o u s l y d e f e c t i v e r e c o u r s e for m i s l e a d i n g a d v e r t i s i n g .i n d i c a t i o n i n f o r m a t i o n in a d v e r t i s i n g for t h e d r u g . T h i s is not t h e case w i t h s e i z u r e s a r i s i n g from e x t r a v a g a n t a d v e r t i s i n g . P r e e M. So the most c o m m o n sanctions became: 5 (a) Dear doctor letters: T h e c o m p a n y is r e q u i r e d to write to all p h y s i c i a n s p o i n t i n g out that t h e c l a i m s m a d e i n r e c e n t p r o m o t i o n a l m a t e r i a l w e r e u n r e a s o n a b l e i n c e r t a i n specified ways. This permits F D A a civil c o u r s e of a c t i o n as an a l t e r n a t i v e to criminal p r o s e c u t i o n . D r u g and C o s m e t i c A c t also p r o v i d e s for g o v e r n m e n t seizure o f p r o d u c t s which have been improperly advertised. It w o u l d typically t a k e t h r e e y e a r s to b r i n g a criminal p r o s e c u t i o n to a c o n c l u s i o n . (b) Remedial advertisements: T h e c o m p a n y is r e q u i r e d to include in t h e issue of a j o u r n a l following o n e in w h i c h a m i s l e a d i n g c l a i m w a s m a d e an a d v e r t i s e m e n t of e q u a l size and eye a p p e a l refuting t h e c l a i m s o f t h e p r e v i o u s a d v e r t i s e m e n t .The corporation as pusher o m i t t i n g e s s e n t i a l side-effect and c o n t r a . T h e last d e c a d e has seen a shift a w a y from not only the use of s e i z u r e s .000 fine w a s i m p o s e d by t h e U n i t e d S t a t e s District C o u r t for N e w J e r s e y after a p l e a of no c o n t e s t by t h e c o m p a n y . T h e s e a r e effective s a n c t i o n s . they a s s u m e this m e a n s t h a t t h e p r o d u c t itself is defective in s o m e w a y . By t h e n an a d v e r t i s i n g c a m p a i g n w o u l d h a v e long since run its c o u r s e . T h e p r e f e r r e d strategy w a s t o s t r i k e at an a d v e r t i s i n g c a m p a i g n i m m e d i a t e l y . Of course when batches of p r o d u c t really a r e physically d e f e c t i v e . A m e r i c a n s e i z u r e s o f t h i s t y p e h a v e b e e n found t o g e n e r a t e u n n e c e s s a r y w o r r y a m o n g p a t i e n t s a b o u t w h e t h e r they should c o n t i n u e using the d r u g s they have in their medicine chests. P h a r m a c e u t i c a l c o m p a n i e s pay a d v e r t i s i n g a g e n c i e s a g r e a t deal of m o n e y for effective a d v e r t i s i n g 232 .

T h e s i t u a t i o n is similar in A u s t r a l i a .d o c t o r s . t h e r e w e r e only 3 D e a r D o c t o r l e t t e r s and 3 r e m e d i a l a d v e r t i s e m e n t s d u r i n g t h e t w o y e a r s .m o v i n g a d e v i c e for r o u t i n e c o n t r o l . ( 1 9 7 9 ) have s h o w n t h a t British and A u s t r a l i a n s e l f .' Instead i n d u s t r y s e l f . e v e n t h e use o f t h e n e w flexible s a n c t i o n s falls s o m e w h a t s h o r t of a blitz.The corporation as pusher c a m p a i g n s . In 1968 t h e British A s s o c i a t i o n of P h a r m a c e u t i c a l Manufacturers succeeded in having t h e g o v e r n m e n t a c c e p t a v a g u e l y w o r d e d v o l u n t a r y c o d e o f advert i s i n g . It also costs a lot of m o n e y to send a l e t t e r to tens of t h o u s a n d s of d o c t o r s . t h e n . T h e r e w e r e 125 a d v e r t i s e m e n t s c a n c e l l e d and 174 ' N o t i c e of V i o l a t i o n L e t t e r s ' sent out. D a r v a l l . T h e s e s o l u t i o n s . " I n d e e d .r e g u l a t i o n h a s b e e n the s t r a t e g y . H e n c e . N e v e r t h e l e s s . N a j m a n e t al. 1972. R e m e d i a l a d v e r t i s e m e n t s and D e a r D o c t o r l e t t e r s a r e p a r t i c u l a r l y c o u n t e r p r o d u c t i v e t o t h e c o m p a n y i n the way that t h e y d e n t t h e i r r e p u t a t i o n for integrity a m o n g the p e o p l e w h o m a t t e r m o s t . H o w e v e r . a c c e p t t h e reality that p h a r m a c e u t i c a l a d v e r t i s e m e n t s have such a s h o r t half-life that t h e c o u r t s p r o v i d e t o o s l o w . G r e a t B r i t a i n and A u s t r a l i a h a v e not seen t h e direct i n t e r v e n t i o n o f h e a l t h a u t h o r i t i e s in the control of j o u r n a l advertising. it has c e r t a i n l y had an effect. A u s t r a l i a n s t a t e and F e d e r a l H e a l t h m i n i s t e r s a g r e e d i n 1974. The content of D e a r Doctor letters a n d r e m e d i a l a d v e r t i s e m e n t s is a m a t t e r of t o u g h n e g o t i a t i o n b e t w e e n t h e c o m p a n y and t h e F D A .r e g u l a t i o n by v o l u n t a r y c o d e s has not p r o d u c e d t h e g o o d s in t h e 233 . F e e b l e t h o u g h t h e A m e r i c a n level o f e n f o r c e m e n t might s e e m t o b e . i f t h e c o m p a n y refuses t o c o m p l y . p r o s e c u t i o n s never h a p p e n ( A f t e r m a n . u p o n a set of 'Proposed R e q u i r e m e n t s for t h e A d v e r t i s i n g o f T h e r a p e u t i c G o o d s ' . In c o n t r a s t to t h e U n i t e d S t a t e s . in a r e m a r k a b l e m o m e n t of i n t e r s t a t e u n a n i m i t y .o f f w a s a g a i n a v a g u e l y w o r d e d v o l u n t a r y c o d e . and t o see t h e m t u r n e d against t h e c o m p a n y i s e n o r m o u s l y p a i n f u l . o n e w o u l d h a v e t h o u g h t t h a t t h e r e w o u l d b e a case for o c c a s i o n a l p r o s e c u t i o n s t o foster g e n e r a l d e t e r r e n c e and m a i n t a i n t h e s t i g m a of t h e a s s o c i a t i o n of c r i m i n a l i t y with false a d v e r t i s i n g . T h e t r a d e . s u r r o u n d e d by all t h e a d v e r s e publicity it can m u s t e r . 1978. 1980). w h e r e even t h o u g h states have the power to prosecute pharmaceutical comp a n i e s for false or m i s l e a d i n g a d v e r t i s i n g . But t h e F D A has the b a c k s t o p of c r i m i n a l p r o s e c u t i o n . In n e i t h e r t h e 1977 n o r 1978 financial y e a r s w e r e t h e r e any legal a c t i o n s o f any sort i n s t i t u t e d a g a i n s t d r u g a d v e r t i s e m e n t s . the Australian Pharmaceutical Manufacturers A s s o c i a t i o n h a s successfully l o b b i e d to k e e p this legislation sitting on t h e shelf.

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w a y t h e A m e r i c a n F D A - i m p o s e d c o n t r o l h a s . W i t h the p r o g r e s s i v e i n t r o d u c t i o n of US c o n t r o l s b e t w e e n 1961 and 1977 t h e p r o p o r t i o n o f a d v e r t i s i n g s p a c e d e v o t e d t o side-effects and c o n t r a - i n d i c a t i o n s increased markedly in t h e Journal of the American Medical Association. In G r e a t B r i t a i n and A u s t r a l i a , in c o n t r a s t , i m p r o v e m e n t s w e r e n o t e v i d e n t d u r i n g this p e r i o d i n t h e c o u n t e r p a r t j o u r n a l s . W h i l e m i n u s c u l e p r o p o r t i o n s o f t h e British and A u s t r a l i a n a d v e r t i s i n g copy a r e d e v o t e d t o side-effects and c o n t r a - i n d i c a t i o n s , t h e p r o p o r t i o n of A m e r i c a n advertising space devoted to cautionary c o n t e n t is n o w a l m o s t as g r e a t as t h e s p a c e d e v o t e d to indic a t i o n s . N o t w i t h s t a n d i n g t h i s , q u a n t i t y i s not q u a l i t y ; i t r e m a i n s t h e i n d i c a t i o n s w h i c h a r e t h e subject o f e y e - c a t c h i n g copy i n t h e U n i t e d States.
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T h e r e is some e v i d e n c e suggesting that remedial advertisements a r e effective from a s t u d y c o n d u c t e d for t h e F D A by A p p l i e d M a n a g e m e n t S c i e n c e s ( S u b c o m m i t t e e o n H e a l t h , 1974: 2 0 0 3 - 3 0 ) . T h e r e m e d i a l a d v e r t i s e m e n t is a t t r a c t i v e b e c a u s e it is such a public k i n d of s a n c t i o n . H o p e f u l l y , all o t h e r m a n u f a c t u r e r s see it, and g e n e r a l d e t e r r e n c e is fostered in t h e m o s t explicit way p o s s i b l e . A p p l i e d M a n a g e m e n t Sciences asked a representative sample of 1,379 p h y s i c i a n s if t h e y had seen a r e m e d i a l a d v e r t i s e m e n t conc e r n i n g an o r a l c o n t r a c e p t i v e . A s u r p r i s i n g 2 4 . 6 p e r cent of the s a m p l e saw and r e m e m b e r e d the r e m e d i a l a d v e r t i s e m e n t . M o r e i m p o r t a n t l y , 3 6 . 8 p e r c e n t o f o b s t e t r i c i a n s and g y n a e c o l o g i s t s and 4 0 . 7 p e r c e n t o f p h y s i c i a n s w h o had e v e r p r e s c r i b e d t h a t b r a n d o f o r a l c o n t r a c e p t i v e n o t i c e d t h e ad. T h i s surely can be c o u n t e d as r e m a r k a b l y effective c o m m u n i c a t i o n of a r e g u l a t o r y action to the relevant audience. I n g e n e r a l , a d v e r s e publicity i s t h e m o s t f l e x i b l e , c h e a p , s p e e d y a n d effective s a n c t i o n a g a i n s t p r o m o t i o n a l e x c e s s e s . T h e F D A has legislative backing to disseminate information concerning drugs, f o o d , d e v i c e s , or c o s m e t i c s which it c o n s i d e r s e i t h e r c o n s t i t u t e an ' i m m i n e n t d a n g e r to h e a l t h ' or i n v o l v e a ' g r o s s d e c e p t i o n of the c o n s u m e r ' . T h e d i s c r e t i o n i s w i d e , p r o v i d i n g that ' n o t h i n g i n t h e s e c t i o n shall be c o n s t r u e d to p r o h i b i t t h e S e c r e t a r y from . . . r e p o r t ing .. . t h e r e s u l t s of i n v e s t i g a t i o n s . . . .' It w a s held in Hoxsey Cancer Clinic v. Folsom t h a t t h e F D A may issue such i n f o r m a t i o n w i t h o u t a h e a r i n g , and t h a t no legal r e m e d y is a v a i l a b l e to p r e v e n t its r e l e a s e to t h e p u b l i c ( A f t e r m a n , 1972: 122).

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In arguing above that g o v e r n m e n t - i m p o s e d regulation of advert i s i n g in t h e U n i t e d S t a t e s has b e e n m o r e effective t h a n selfr e g u l a t i o n in G r e a t B r i t a i n and A u s t r a l i a , I did not m e a n to imply t h a t s e l f - r e g u l a t i o n is u s e l e s s . I n d e e d , m u c h of t h e success of g o v e r n m e n t r e g u l a t i o n in t h e U n i t e d S t a t e s is in a p e r v e r s e way a t t r i b u t a b l e t o s e l f - r e g u l a t i o n . D r P e t e r R h e i n s t e i n , D i r e c t o r o f the F D A ' s D i v i s i o n o f D r u g A d v e r t i s i n g , gets m a n y o f his best tip-offs a b o u t a d v e r t i s i n g v i o l a t i o n s inside plain b r o w n e n v e l o p e s w h i c h a p p e a r u n d e r his d o o r i n t h e d e a d o f night. S o m e c o m p a n i e s are less r e t i r i n g , and c o m p l a i n verbally a b o u t v i o l a t i o n s c o m m i t t e d b y c o m p e t i t o r s . S o m e t i m e s t h e s e c o n t a i n m a n y p a g e s o f legal o p i n i o n on t h e a l l e g e d v i o l a t i o n . T h e s e tips are of g r e a t a s s i s t a n c e to a p r o f e s s i o n a l staff of five w h o c a n n o t r e a d and hear all t h e p r o m o t i o n a l m a t e r i a l d i s s e m i n a t e d i n t h e U n i t e d S t a t e s each d a y . C o m p a n i e s will often i n s t i t u t e c e r t a i n s e l f - r e g u l a t o r y m e a s u r e s t o c l e a n u p t h e i r p r o m o t i o n i n r e s p o n s e t o r e m o n s t r a t i o n s from F D A . F o r e x a m p l e , c o m p a n i e s s o m e t i m e s a g r e e t o d i s m i s s sales r e p r e s e n t a t i v e s w h o a r e t h e subject o f F D A c o m p l a i n t . T h e c a r e e r o f one j u n i o r c o m p a n y e m p l o y e e m i g h t be r e g a r d e d as a small sacrifice to e n a b l e s e n i o r m a n a g e m e n t t o d e m o n s t r a t e t h e i r g o o d faith t o F D A . O n e can o n l y s y m p a t h i s e with t h e sales r e p r e s e n t a t i v e w h o s e guilt or i n n o c e n c e m i g h t n o t be an issue. Self-regulation is better than no regulation. The Australian Pharmaceutical Manufacturers Association committee which s c r u t i n i s e s all j o u r n a l a d v e r t i s e m e n t s o f m e m b e r s before they are p u b l i s h e d d o e s , i n a small w a y , raise t h e lowest c o m m o n d e n o m i n a t o r of advertising s t a n d a r d s . The chairperson of the c o m m i t t e e told m e t h a t w h e n e v e r t h e c o m m i t t e e t h i n k s t h a t a n a d g o e s t o o far, he t e l e p h o n e s the m a n a g i n g director o f t h e c o m p a n y concerned. ' N o t o n c e h a s a m a n a g i n g d i r e c t o r refused to c o m p l y with the r e q u e s t e d c h a n g e , e v e n in a c o u p l e of c a s e s w h e r e it w a s a nonP M A m e m b e r . ' F o r its o w n m e m b e r s , A P M A has t h e s a n c t i o n o f e x p e l l i n g t h e v i o l a t o r from t h e a s s o c i a t i o n . M a n y local m a n a g i n g d i r e c t o r s of t r a n s n a t i o n a l s m i g h t be d i s m i s s e d if t h e y did s o m e t h i n g w h i c h c a u s e d t h e c o m p a n y t o b e t h r o w n o u t o f t h e A P M A . B u t this s a n c t i o n n e v e r has to be used. A m i n o r c h a n g e to o n e a d v e r t i s e m e n t is n o t a m a t t e r w h i c h w o u l d justify falling o u t with o t h e r m e m b e r s of t h e c l u b . T h e s e r e l a t i o n s h i p s m u s t b e p r e s e r v e d for m o r e i m p o r t a n t m a t t e r s like ' o r d e r l y m a r k e t i n g ' . A t least w i t h respect t o the 235

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p h a r m a c e u t i c a l i n d u s t r y , the criticism of t r a d e a s s o c i a t i o n selfr e g u l a t i o n is n o t t h a t it can n e v e r exact effective s a n c t i o n s to maint a i n c o m p l i a n c e , but t h a t t h e s t a n d a r d s i m p o s e d will be low o n e s w h i c h are m u t u a l l y c o m f o r t a b l e a m o n g the industry l e a d e r s . T h e c o m m i t t e e r a r e l y b r i n g s specialists o n t o t h e c o m m i t t e e t o discuss t h e scientific m e r i t o f a specific claim or o m i s s i o n . W h a t they do not k n o w a b o u t , t h e y n e e d not act u p o n . E x c e p t i n o c c a s i o n a l s t r u g g l e s b e t w e e n c o m p e t i t o r s (when 'orderly marketing' breaks d o w n ) , t h e r e is no i n c e n t i v e for c o m m i t t e e m e m b e r s to do investigative digging. M o r e i m p o r t a n t t h a n t r a d e a s s o c i a t i o n self-regulation i s intrac o r p o r a t e s e l f - r e g u l a t i o n . O n e c o m p a n y I visited c l a i m e d that if t h e r e w e r e 30 p a p e r s a s s o c i a t e d w i t h a given a d v e r t i s i n g c l a i m , t h e n t h e legal d e p a r t m e n t , q u i t e a p a r t from t h e m e d i c a l d e p a r t m e n t , w o u l d r e a d e a c h o f t h o s e 3 0 p a p e r s . A g a i n w e have a s i t u a t i o n w h e r e only l a r g e c o m p a n i e s can afford a legal d e p a r t m e n t o f a size to be a b l e to do t h i s . A n d of c o u r s e it w o u l d be n a i v e to a s s u m e t h a t in this kind of w o r k t h e legal d e p a r t m e n t ' s function is p r i m a r i l y s e l f - r e g u l a t o r y ; it is e q u a l l y to a d v i s e m a r k e t i n g staff on w h a t t h e y c a n get a w a y w i t h . N e v e r t h e l e s s , i t i s i m p o r t a n t t o g r a n t t h e p r o fessional c o n s t i t u e n c i e s within the organisation power to over-rule marketing on promotional claims. M o s t crucial is the p o w e r o f t h e medical director. In the better c o m p a n i e s , t h e m e d i c a l d i r e c t o r a t h e a d q u a r t e r s and t h e local m e d i c a l d i r e c t o r i n t h e s u b s i d i a r y has a n a b s o l u t e right o f v e t o o v e r a n y p r o m o t i o n a l c l a i m sent u p from m a r k e t i n g . T o u n d e r s t a n d t h e i m p o r t a n c e o f t h i s w e m u s t r e m e m b e r t h a t a large c o r p o r a t i o n i s not a p r o f i t - m a x i m i s i n g m o n o l i t h . W h i l e t h e p e r f o r m a n c e of the m a r k e t i n g d e p a r t m e n t i s m e a s u r e d b y s a l e s , the m e d i c a l d i r e c t o r ' s s u c c e s s is a s s e s s e d in t e r m s of his or h e r c a p a c i t y to s t e e r the c o r p o r a t i o n a w a y from a t h e r a p e u t i c / r e g u l a t o r y d i s a s t e r , and to m a i n t a i n the c o m p a n y ' s credibility a m o n g the medical profession as a socially r e s p o n s i b l e e n t e r p r i s e . T h i s is not to say t h a t t h e m e d i c a l d i r e c t o r can afford to i g n o r e profit c o n s i d e r a t i o n s . N e v e r t h e l e s s , it r e m a i n s true that to the extent that intra-corporate constituencies w h i c h h a v e g r e a t e r e m p h a s i s o n social r e s p o n s i b i l i t y goals can b e g i v e n n e g o t i a t i n g s t r e n g t h against c o n s t i t u e n c i e s w h o s e overw h e l m i n g c o n c e r n is short-term expansion of sales, better protect i o n o f t h e p u b l i c will r e s u l t . M o s t l a r g e c o m p a n i e s h a v e fairly c o m p l e x s y s t e m s for a p p r o v i n g n e w p r o m o t i o n a l m a t e r i a l . T y p i c a l l y , t h e m a r k e t i n g m a n a g e r will

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first h a v e t o sign t h a t his d e p a r t m e n t a p p r o v e s t h e n e w m a t e r i a l . T h e n t h e m e d i c a l d i r e c t o r will sign, t h e n t h e legal d e p a r t m e n t , t h e n r e g u l a t o r y affairs. S o m e t i m e s t h e r e m a y b e a d o z e n p e o p l e w h o m u s t sign off t h e i r a p p r o v a l , a l t h o u g h t h e e x t e n t t o which t h e i r c o m m e n t s a r e h e e d e d will vary. I n t h e o r y , t h e S O P i s usually t h a t all m u s t sign off b e f o r e t h e m a t e r i a l can go o u t ; in p r a c t i c e m i n o r m o d i f i c a t i o n s will be n e g o t i a t e d in e x c h a n g e for a s i g n a t u r e . If s o m e o n e , m o s t likely t h e m e d i c a l d i r e c t o r o r t h e legal d e p a r t m e n t , d i g s in t h e i r h e e l s , t h e n a m e e t i n g m u s t be called to t h r a s h o u t a s e t t l e m e n t , or t h e d e a d l o c k must be referred to a h i g h e r a u t h o r i t y . D e a d l o c k s occur rarely, however. I n this p r o c e s s , o n e w o u l d h a v e t h o u g h t t h e legal d e p a r t m e n t m i g h t afford as g r e a t a p r o t e c t i o n to t h e p u b l i c as t h e medical d i r e c t o r . Y e t t h i s s e e m s not t o b e so. W h i l e t h e p r o f e s s i o n a l s o c i a l i s a t i o n o f d o c t o r s i n d o c t r i n a t e s t h e m w i t h t h e ideal t h a t w h a t t h e y a r e a b o u t i s p r o v i d i n g t h e best p o s s i b l e h e a l t h care t o the p u b l i c , t h e s o c i a l i s a t i o n o f l a w y e r s e m p h a s i s e s serving the best i n t e r e s t s o f t h e client ( w h o p a y s t h e bills) w h e t h e r t h e client i s right o r w r o n g . P r o f e s s i o n a l i d e o l o g y p r o c l a i m s t h a t every p a r t i c i p a n t i n a n a d v e r s a r y s y s t e m d e s e r v e s t h e best legal a d v i c e . C e r t a i n l y p r o fessional s o c i a l i s a t i o n b e c o m e s less and less i m p o r t a n t as b o t h d o c t o r s and l a w y e r s b e c o m e l o o k - a l i k e o r g a n i s a t i o n p e r s o n s . N e v e r t h e l e s s , t h e r e r e m a i n s o m e differences w h e r e b y d o c t o r s c o n t i n u e t o see t h e i r u l t i m a t e mission a s being t o i m p r o v e t h e h e a l t h o f t h e p u b l i c , w h i l e l a w y e r s see t h e i r r e s p o n s i b i l i t y a s t o p r o t e c t t h e i r e m p l o y e r from t h e p u b l i c . O n e l a w y e r e x p r e s s e d a justifiable c y n i c i s m w h e n I put t h e a b o v e i n t e r p r e t a t i o n to him: ' L a w y e r s are o p e n a b o u t selling t h e i r skills t o t h e h i g h e s t b i d d e r ; but d o c t o r s d e l u d e t h e m s e l v e s into b e l i e v i n g t h a t t h e y are serving s o m e o n e o t h e r t h a n he w h o is p a y i n g t h e bills.' 1 r e s p o n d e d t h a t it is a d e l u s i o n w h i c h m i g h t o c c a s i o n a l l y afford s o m e small p r o t e c t i o n t o t h e p u b l i c . T h e l a w y e r a g r e e d t h a t this c o u l d b e . L a w y e r s a r e , t h e n , self-consciously s e r v a n t s o f t h e c o r p o r a t e i n t e r e s t r a t h e r t h a n t h e p u b l i c i n t e r e s t , e s s e n t i a l l y advising the c o r p o r a t i o n o n w h a t t h e y can get a w a y w i t h . B u t this d o e s not m e a n t h a t l a w y e r s see t h e i r m i s s i o n as profit m a x i m i s a t i o n for t h e c o m p a n y . L a w y e r s see t h e i r goal as to be g o o d l a w y e r s , largely as d e f i n e d by t h e i r p r o f e s s i o n a l s o c i a l i s a t i o n . It is t h e j o b of s e n i o r m a n a g e m e n t t o a r t i c u l a t e t h e w o r k o f a s u b u n i t w h i c h d o e s good l a w y e r i n g t o t h e o v e r a l l goals o f t h e o r g a n i s a t i o n :

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pusher When you finally sign off on approval of a new piece of promotional material, do you do so as the lawyer or the company man? Thatis, where there is only a low product liability risk and a high profit gain, do you take the point of view of the company's overall profitability? I am paid to be a l a w y e r . If I d o n ' t r e p r e s e n t legal i n t e r e s t s , I am not doing the j o b I'm paid for.

J. B.:

General counsel:

Replacing advertising with information W e h a v e s e e n t h a t t h e b u r d e n i m p o s e d o n t h e e c o n o m y b y pharm a c e u t i c a l p r o m o t i o n is t r e m e n d o u s . For the average A m e r i c a n d o c t o r w h o writes $35,000 worth of prescriptions a year, about $ 7 , 0 0 0 will h a v e b e e n spent in p e r s u a d i n g him or h e r to write t h o s e p r e s c r i p t i o n s . T h i s i s c e r t a i n l y not a n a r e a w h e r e r e g u l a t i o n w o u l d i m p o s e c o s t s t o b e p a s s e d o n t o t h e c o m m u n i t y . R e g u l a t i o n would p r o d u c e s a v i n g s . H e a l t h a u t h o r i t i e s i n s o m e c o u n t r i e s have recognised that excessive pharmaceutical p r o m o t i o n produces more social h a r m t h a n g o o d and a r e acting t o r e d u c e c o r p o r a t e p r o m o t i o n a l e x p e n d i t u r e . T h e y can d o this b e c a u s e t h e i r g o v e r n m e n t s , a s w e saw i n t h e last c h a p t e r , h a v e effective c o n t r o l o f d r u g p r i c e s . T h e B r i t i s h g o v e r n m e n t i m p o s e s limits o n t h e a m o u n t s p h a r m a c e u t i c a l c o m p a n i e s m a y s p e n d o n p r o m o t i o n . T h e pricing formula for N H S p u r c h a s e s w a s r e v i s e d in 1978-9 to allow an a v e r a g e of 11 per cent of s a l e s r e v e n u e t o g o o n p r o m o t i o n . T h i s has forced d o w n e x p e n d i t u r e on p r o m o t i o n by s e v e r a l p e r c e n t a g e p o i n t s in the last few y e a r s to 12 p e r c e n t of r e v e n u e . T h i s is b e i n g further r e d u c e d as the g o v e r n m e n t has n o w l o w e r e d the t a r g e t to 10 per c e n t . A similar p r o c e s s has b e g u n i n F r a n c e , w h e r e t h e H e a l t h M i n i s t r y a d v i s e d p h a r m a c e u t i c a l m a n u f a c t u r e r s in 1978 t h a t no firm will be allowed to e x c e e d a m a x i m u m of 17 p e r c e n t of sales value on p r o m o t i o n for social s e c u r i t y r e i m b u r s e d p r o d u c t s . T h e A u s t r a l i a n H e a l t h D e p a r t m e n t also a r g u e d before t h e R a l p h E n q u i r y t h a t i t s h o u l d b e e m p o w e r e d t o take steps t o r e d u c e promotional expenditure: T h e D e p a r t m e n t t a k e s t h e view t h a t m u c h o f t h e d r u g p r o m o t i o n (mainly carried out by 'medical representatives' or 'drug d e t a i l e r s ' ) is u n n e c e s s a r y , m u s t o b v i o u s l y i n c l u d e a significant 238

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bias a n d s h o u l d be largely r e p l a c e d by o b j e c t i v e i n f o r m a t i o n to d o c t o r s from a u t h o r i t a t i v e and n o n - b i a s e d s o u r c e s , e.g. t h e ' A u s t r a l i a n P r e s c r i b e r ' ( A u s t r a l i a n D e p a r t m e n t o f H e a l t h , 1978: 66). T h e citizen a s b o t h t a x p a y e r and c o n s u m e r o f d r u g s w o u l d benefit from g o v e r n m e n t a c t i o n t o force d o w n p r o m o t i o n a l e x p e n d i t u r e a n d use a p r o p o r t i o n of t h o s e savings on c o n t i n u i n g p h a r m a c o l o g i cal e d u c a t i o n for t h e m e d i c a l p r o f e s s i o n . T h e r e can n e v e r b e effective c o n t r o l o v e r t h e b i a s e d oral p r e s e n t a t i o n s o f sales r e p r e s e n t a t i v e s . T h e only s o l u t i o n is g r a d u a l l y to do a w a y with t h e m and substitute objective non-commercial information sources. Gradualism is n e c e s s a r y b e c a u s e p h a r m a c e u t i c a l p r o m o t i o n d o e s fulfil an u n d e n i a b l e p h y s i c i a n e d u c a t i o n function. I f o n e w e r e t o ban sales r e p r e s e n t a t i v e s overnight, there would be no government or p r o f e s s i o n a l s o u r c e o f effective i n f o r m a t i o n c o m m u n i c a t i o n ready t o s t e p into t h e v a c u u m . T i g h t e n i n g t h e f i n a n c i a l s c r e w s o n p r o m o t i o n has t h e j o i n t a d v a n t a g e s o f g r a d u a l i s m and g e n e r a t i o n o f s a v i n g s to finance o b j e c t i v e p r e s c r i b i n g i n f o r m a t i o n . If part of this funding w e n t to e s t a b l i s h a t e r t i a r y c o u r s e for g o v e r n m e n t ' d e t a i l e r s ' , it might be desirable to require c o m p a n y detailers to qualify in t h e s a m e c o u r s e . H o p e f u l l y such a c o u r s e w o u l d c o n t a i n a hefty c o m p o n e n t o n p r o f e s s i o n a l e t h i c s . C o m p l e m e n t a r y m e a s u r e s are also n e c e s s a r y , h o w e v e r . Imp r o v e d q u a l i t y can g o h a n d i n h a n d with r e d u c e d q u a n t i t y . O t h e r c o u n t r i e s should adopt the F D A w e a p o n s of remedial advertisem e n t s a n d D e a r D o c t o r l e t t e r s a s t h e basic t o o l s t o c o n t r o l p r o m o t i o n a l e x c e s s e s . M o r e o v e r , t h e r e is no r e a s o n < ihy r e m e d i a l a d v e r t i s e m e n t s i n m e d i c a l j o u r n a l s s h o u l d not b e used t o r e d r e s s e x c e s s i v e oral c l a i m s m a d e b y c o m p a n y sales r e p r e s e n t a t i v e s . I n the C h l o r o m y c e t i n c a s e , for e x a m p l e , this w o u l d have b e e n a singularly a p p r o p r i a t e r e m e d y t o t h e oral d i s c l a i m e r b y t h e P a r k e - D a v i s sales r e p r e s e n t a t i v e a b o u t t h e effect o f t h e d r u g o n b l o o d d i s e a s e . In a d d i t i o n , we s h o u l d n o t forget t h a t false a d v e r t i s i n g to p u s h t h e e x c e s s i v e u s e of d a n g e r o u s d r u g s is so s e r i o u s a m a t t e r as to d e s e r v e t h e s t i g m a o f t h e c r i m i n a l label. E x e m p l a r y p r o s e c u t i o n s o f c o m p a n i e s , p e r h a p s m a r k e t i n g m a n a g e r s , and c e r t a i n l y sales r e p r e s e n t atives are necessary to maintain stigma. Unlike many o f t h e matters d i s c u s s e d i n p r e v i o u s c h a p t e r s , t h e s e a r e not c o m p l e x f e a t u r e s o f c o r p o r a t e c o n d u c t w h i c h are difficult t o e x p l a i n i n c o u r t . T h e p r i n t e d a d v e r t i s e m e n t is t h e r e for all to s e e , and it is not difficult to 239

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b r i n g a n u m b e r of d o c t o r s into c o u r t to testify t h a t a p a r t i c u l a r c o m p a n y sales r e p r e s e n t a t i v e m a d e c e r t a i n specific claims t o t h e m . P o l i c e officers w o u l d wish t h e y had it so easy in i n v e s t i g a t i n g m o s t o t h e r t y p e s of c r i m i n a l offences. R e m e m b e r i n g that all I am s u g g e s t i n g i s e x e m p l a r y p r o s e c u t i o n s , t h e task o f c o n v i c t i o n would be e v e n e a s i e r by s e l e c t i n g o u t t h e m o s t b l a t a n t cases for court action. A n e n f o r c e m e n t a p p r o a c h i s n e c e s s a r y b e c a u s e t h e self-regul a t o r y t r a c k r e c o r d of i n d u s t r y in c o n t r o l l i n g p r o m o t i o n is not g o o d . S e l f - r e g u l a t i o n has b e e n tried and failed. It can c o m p l e m e n t g o v e r n m e n t r e g u l a t i o n , b u t , i n this a r e a , can n e v e r b e a n a l t e r n a t i v e to it.

Abolishing mass media advertising of drugs
M o s t c o u n t r i e s p e r m i t t h e a d v e r t i s i n g o f p r e s c r i p t i o n d r u g s only i n m e d i a o u t l e t s d i r e c t e d specifically a t d o c t o r s ( e . g . medical j o u r n a l s ) , and not t h r o u g h m a s s m e d i a . H o w e v e r , e x c e p t in a few E u r o p e a n c o u n t r i e s , the advertising of non-prescription drugs ( O T C d r u g s ) i s p e r m i t t e d t h r o u g h all m e d i a o u t l e t s . T h e m a i n c o n c e r n a b o u t m a s s m e d i a a d v e r t i s i n g o f d r u g s i s not specific c l a i m s w h i c h a r e f r a u d u l e n t o r i n a c c u r a t e , b u t t h e c o n t r i b u t i o n the a d v e r tising m a k e s to producing a pill-popping culture. Mass advertising f o s t e r s t h e ' m e d i c a l i z a t i o n o f e v e r y d a y life': O n c e a h u m a n p r o b l e m is defined as a d i s e a s e , t h e t e c h n o l o g i c a l a p p a r a t u s m a y be b r o u g h t in for its c u r e . It is t h e r e f o r e in the i n t e r e s t s o f t h e p h a r m a c e u t i c a l i n d u s t r y t o e x p a n d its m a r k e t b y e n c o u r a g i n g d o c t o r s t o e x p a n d t h e m e d i c a l m o d e l and t o m a i n t a i n a p u b l i c belief t h a t h u m a n suffering and pain are not o r d i n a r y c o n c o m i t a n t s o f living but a r e d i s e a s e s w h i c h m e d i c i n e c a n be e x p e c t e d to end ( W i n k l e r , 1977: 7 ) . T h e r e is a d r u g to put you to s l e e p , a d r u g to w a k e you u p , a drug t o m a k e y o u feel g o o d , a n o t h e r t o h e l p you r e l a x , o n e t o k e e p the k i d s q u i e t , still o t h e r s to c u r e a t e n s i o n h e a d a c h e , and best of all, t h e r e a r e pills to m a k e you slim and beautiful. Little c o l o u r e d pills to s o l v e all ills. If we w a n t to m o v e a w a y from a p i l l - p o p p i n g c u l t u r e , t h e n it is n o t t o o r e p r e s s i v e to b a n all m a s s m e d i a a d v e r t i s i n g of d r u g s . It is not an u n c o n s c i o n a b l e t h r e a t to o u r liberalism t h a t we forbid t h e a d v e r t i s i n g of m a r i j u a n a a n d h e r o i n : so why could we not a c c e p t t h e b a n n i n g o f all m a s s a u d i e n c e d r u g a d v e r t i s i n g ( i n c l u d i n g 240

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o f a l c o h o l a n d t o b a c c o ) ? W h y e x p o s e c h i l d r e n t o the guiles o f p u s h e r s of d r u g s , illegal or legal? A g a i n , this t y p e of r e g u l a t i o n w o u l d r e d u c e costs, not increase t h e m . If people need information about chemical solutions to problems t h e y m i g h t h a v e , t h e n t h e y can go to t h e i r d o c t o r , or at least to a p h a r m a c i s t w h o could p r o v i d e t h e m w i t h o b j e c t i v e l i t e r a t u r e and a d v i c e a b o u t O T C d r u g s . T e l e v i s i o n a d v e r t i s i n g o f d r u g s has b e e n b a n n e d in S w e d e n for m o r e t h a n a d e c a d e . A r g u i n g that t e l e v i s i o n d r u g a d v e r t i s i n g fosters drug a b u s e a m o n g c h i l d r e n , t h e a t t o r n e y s g e n e r a l o f e i g h t e e n A m e r i c a n states o n c e p e t i t i o n e d t h e U S F e d e r a l C o m m u n i c a t i o n s C o m m i s s i o n t o halt T V a d v e r t i s i n g o f O T C d r u g s b e t w e e n 6 a . m . a n d 9 p . m . daily ( K a t z , 1 9 7 6 : 2 9 ) . C o r p o r a t i o n s use t h e r h e t o r i c o f l i b e r a l i s m t o defend t h e i r r i g h t t o a d v e r t i s e . B u t l i b e r a l i s m i s t r a d i t i o n a l l y c o n c e r n e d with t h e right o f t h e individual to do a n y t h i n g he or she likes so long as it d o e s no h a r m to o t h e r s , n o t w i t h t h e right of powerful c o r p o r a t i o n s to do i m m e n s e h a r m to i n d i v i d u a l s and t o society with i m p u n i t y .

Toward a more informed public
The p u r p o s e of b a n n i n g television advertising of drugs is to protect c h i l d r e n from a w o r l d view w h i c h is s u i t a b l e to t h e d r u g p u s h e r , not t o s h e l t e r a d u l t s from i n f o r m a t i o n a b o u t d r u g s . T h e p r i m a r y s o u r c e o f i n f o r m a t i o n m u s t r e m a i n t h e p h y s i c i a n , but the e v i d e n c e i s o v e r w h e l m i n g t h a t this i s not e n o u g h . M a n y s t u d i e s have d e m o n s t r a t e d t h e r e m a r k a b l e e x t e n t t o which p a t i e n t s forget t o t a k e d r u g s or t a k e t h e m in q u a n t i t i e s and f r e q u e n c i e s t o t a l l y at o d d s with the i n s t r u c t i o n s o f t h e i r p h y s i c i a n ( M a r s t o n , 1970; B o y d e t a l . , 1974; S a c k e t t , 1976; M o r r i s and H a l p e r i n , 1979; B a r o f s k y , 1980). E r r o n e o u s a n d wilful n o n c o m p l i a n c e with t h e d o c t o r ' s i n s t r u c t i o n s p r o f o u n d l y u n d e r m i n e t h e effectiveness o f c h e m i c a l t h e r a p i e s effectiveness established by studies conducted on patients who do c o m p l y . T h e s t u d i e s listed a b o v e s h o w r a t e s o f n o n c o m p l i a n c e r a n g i n g from 30 p e r cent to a s t a g g e r i n g 80 p e r c e n t . T h e p r o b l e m has its r o o t s i n h o w ill-informed p e o p l e are a b o u t d r u g s . O n e m a n i n H e i l b r o n n , W e s t G e r m a n y , c o m p l a i n e d t h a t his wife had had six c h i l d r e n in seven y e a r s d e s p i t e t h e use of oral c o n t r a c e p t i v e s - t h a t is, his use o f t h e Pill. B e c a u s e he did not trust his wife to t a k e t h e Pill r e g u l a r l y , he had b e e n t a k i n g it himself ( S h a p o , 1979: 9 0 ) . O n e A m e r i c a n s u r v e y found t h a t i n spite o f t h e e x p l i c i t b o x e d w a r n i n g o n t h e p a c k a g e label and t h e e x t e n s i v e 241

6 July 1979: 40019). and o t h e r g e n e r a l i n f o r m a t i o n a b o u t t h e use o f p r e s c r i p t i o n d r u g s . I n a d d i t i o n t o this d e t a i l e d i n f o r m a t i o n . 4 4 ( 1 3 1 ) . (2) p e r m i t t h e p a t i e n t t o a v o i d i n t e r a c t i o n s with o t h e r d r u g s or f o o d s . T h e r e w o u l d b e i n f o r m a t i o n o n the c i r c u m s t a n c e s u n d e r which t h e d r u g should not b e u s e d . (5) p e r m i t t h e p a t i e n t t o share i n t h e d e c i s i o n t o use t h e d r u g p r o d u c t . In an a t t e m p t to improve patient understanding of their prog r a m m e of m e d i c a t i o n . Ley and S p e l l m a n . 1965).t e c h n i c a l l a n g u a g e . . 4 p e r cent of Pill users w e r e a w a r e that it c o u l d c a u s e b l o o d c l o t t i n g a b n o r m a l i t i e s (cited in S h a p o . (4) i n f o r m t h e p a t i e n t of p o s i t i v e and n e g a t i v e effects from t h e use o f t h e d r u g p r o d u c t . i n f o r m a t i o n a b o u t side-effects. (6) e n h a n c e t h e p a t i e n t / p h y s i c i a n r e l a t i o n s h i p . only 6 4 . not be p r o m o t i o n a l in t o n e or c o n t e n t . p a t i e n t l a b e l l i n g is said to e n c o u r a g e self-diagnosis and t r a n s f e r o f p r e s c r i p t i o n d r u g s b e t w e e n p a t i e n t s . H o w e v e r . I t m i g h t e v e n b e t h a t t h e w a r n i n g i n p a t i e n t labelling 242 . T h e F D A p r e f a c e d its a r g u m e n t s for t h e r e g u l a t i o n s with survey r e s e a r c h e v i d e n c e i n d i c a t i n g t h a t m o s t p a t i e n t s did d e s i r e m o r e i n f o r m a t i o n a b o u t d r u g s they w e r e u s i n g . " T h e s e w o u l d insist t h a t t h e m a n u f a c t u r e r p r e p a r e and d i s t r i b u t e p a t i e n t information with the drug package. (3) p r e p a r e t h e p a t i e n t for possible side effects. The information would be w r i t t e n in n o n . S t u d i e s c o n d u c t e d in a clinic s h o w that p a t i e n t s r e m e m b e r o n l y a b o u t half o f t h e s t a t e m e n t s m a d e t o t h e m a b o u t their t r e a t m e n t . e v e n w h e n t h e p a t i e n t s are i n t e r v i e w e d within m i n u t e s after l e a v i n g t h e p h y s i c i a n ( J o y c e et a l . the F D A is trying to introduce patient l a b e l l i n g r e q u i r e m e n t s for all p h a r m a c e u t i c a l p r o d u c t s . and (7) p r o v i d e t h e p h a r m a c i s t and p h y s i c i a n w i t h a basis for d i s c u s s i n g t h e use of a p r e s c r i p t i o n drug p r o d u c t w i t h t h e p a t i e n t (Federal Register.The corporation as pusher p u b l i c i t y in t h e p r e s s . a n u m b e r of o b j e c t i o n s h a v e b e e n raised t o t h e p a t i e n t labelling r e g u l a t i o n s . 1960. T h i s o f c o u r s e goes o n a l r e a d y . p r e c a u t i o n s the p a t i e n t should t a k e w h e n using t h e p r o d u c t . T h e p r i m a r y r e a s o n s for the r e g u l a t i o n s were given as to (1) p r o m o t e p a t i e n t u n d e r s t a n d i n g o f and a d h e r e n c e t o t h e drug t h e r a p y . a s u m m a r y w o u l d be p r o v i d e d to e n c o u r a g e a m o d i c u m of u n d e r s t a n d i n g a m o n g less diligent or less l i t e r a t e patients. F i r s t . and be based primarily on the information provided to p h y s i c i a n s o n t h e p r o d u c t . T h e s e justifications are self-explanatory. 1979: 132). s e r i o u s a d v e r s e r e a c t i o n s .

i t i s a r g u e d that p a t i e n t l a b e l l i n g could p r o d u c e a d v e r s e r e a c t i o n s i n p a t i e n t s t h r o u g h s u g g e s t i o n . K a n o u s e and M o r r i s . P a u l s o n et a l .i n d u c e d r e a c t i o n s . . 6 July 1979: 4 0 0 2 3 ) . Surely such a p a t i e n t / p h y s i c i a n d i a l o g u e is p r e c i s e l y w h a t is lacking at the m o m e n t and explains much o f t h e a p p a r e n t patient ignorance. A n o t h e r p s y c h o l o g i c a l factor. 1977. 1 9 7 6 . 6 July 1979: 4 0 0 2 3 ) . 1977. 1976. A n o t h e r a t t a c k o n p a t i e n t labelling i s t h a t i t w o u l d c a u s e p a t i e n t s a t t i m e s t o b e a l a r m e d . W e i b e r t . and put m o r e p r e s s u r e o n t h e t i m e o f d o c t o r s w h o will h a v e to r e a s s u r e t h e m a b o u t c e r t a i n m a t t e r s . p a r t i c u l a r l y i f t h e d o c t o r ' s s t a t e m e n t s conflict w i t h w h a t is said on t h e p a t i e n t i n f o r m a t i o n s h e e t . i s t h a t informed p a t i e n t s m a y be less likely to be a m e n a b l e to a d v a n t a g e o u s p l a c e b o effects. and t r e a t m e n t s c o u l d b e o n m o r e p r e c i s e i n f o r m a t i o n . the F D A reply. a n u m b e r of s t u d i e s suggest t h a t t h e actual i n c i d e n c e of a d v e r s e r e a c t i o n s will n o t i n c r e a s e ( M y e r s and C a l v e r t . While patient l a b e l l i n g m i g h t i n c r e a s e t h e reported i n c i d e n c e of a d v e r s e r e a c t i o n . F D A a r g u e s t h a t s u g g e s t i o n effects play a minimal role in causing serious adverse reactions. T h e p a t i e n t m a y also b e b e t t e r able t o i n t e r p r e t and identify m o r e a c c u r a t e l y t h e c a u s e o f d r u g . at a p s y c h o l o g i c a l level t h e a d v a n t a g e s of p a t i e n t information outweigh the disadvantages.The corporation as pusher w h i c h i n d i c a t e s t h a t t h e p r o d u c t has b e e n p r e s c r i b e d for a p a r t i c u l a r i n d i v i d u a l a n d s h o u l d not be given to o t h e r s will do m o r e to disc o u r a g e t h a n e n c o u r a g e t h e p r a c t i c e . A r e l a t e d c o n c e r n i s t h a t p a t i e n t s m i g h t lose confidence i n their d o c t o r ' s j u d g m e n t . t h e possible p o s i t i v e effects of s u p p l y i n g a c c u r a t e side effect i n f o r m a t i o n s u b s t a n t i a l l y o u t w e i g h t h e p o s s i b l e n e g a t i v e o n e s (Federal Register 44(131). A c c o r d i n g l y . t h e F D A a r g u e d . A c c u r a t e e x p e c t a t i o n s m a y help r e d u c e u n c e r t a i n t y and a n x i e t y a b o u t p o s s i b l e effects o f t r e a t m e n t . E k l u n d and W e s s l i n g . ' (Federal Register 4 4 ( 1 3 1 ) . 1 9 7 3 . information in p a t i e n t l a b e l l i n g a b o u t t h e effects o f t h e d r u g may e v e n i n c r e a s e the p l a c e b o effect of a d r u g p r o d u c t . 1976. Surely if t h e d o c t o r c a n n o t r e c o n c i l e and e x p l a i n a d i s c r e p a n c y b e t w e e n w h a t 243 . t h o u g h . ' B e c a u s e the patient would know w h a t effects t o e x p e c t from t h e d r u g and b e c a u s e p a t i e n t labelling may e n h a n c e patient/physician c o m m u n i c a t i o n s . S e c o n d . B a s s and S u v e g e s . 1978). P a t i e n t s m a y b e m o r e sensitive t o ' w a r n i n g signals' o f s e r i o u s a d v e r s e effects. On the c o n t r a r y . M o r e o v e r .

t h e y a m o u n t to a fairly feeble case against a n e e d e d reform. t h e d o c u m e n t says: trust u s . ' I n a q u i t e s u b t l e w a y . T h e w a r n i n g w a s e n c l o s e d with only one o f t h e purchases. t h a t ' E x t e n s i v e t e s t i n g i n t h e d e v e l o p m e n t a l stage of a m e d i c a t i o n ' s life p r e d i c t s q u i t e a c c u r a t e l y w h a t it will do for m o s t p a t i e n t s . and all will be well.The corporation as pusher s/he says a n d a s t a t e m e n t in t h e p a t i e n t l a b e l l i n g . If i n t e r e s t in h e a l t h d i e t s . t h e n s/he d o e s not d e s e r v e the confidence o f t h e patient. are e m p t y g e s t u r e s u n l e s s t h e r e i s f o l l o w . . a m o n g s o m e o t h e r q u i t e cons t r u c t i v e t h i n g s . S o t h e drug c o m p a n i e s w e r e told t h a t a w r i t t e n w a r n i n g w o u l d have to be e n c l o s e d w i t h the m e d i c a t i o n . I n d e e d . c a n c e r s c a r e s and keep-fit p r o g r a m m e s i s any i n d i c a t i o n . T h e r e i s a n e e d for d e m y s t i f i c a t i o n of s o m e o f t h i s 'information*.u p t o e n s u r e that t h e y are i m p l e m e n t e d . like m o s t r e g u l a t i o n s . C o m m u n i t y e d u c a t i o n is p o s i t e d as a trite solution to m a n y social p r o b l e m s w h e n t h e reality i s t h a t the c o m m u n i t y often c a n n o t be b o t h e r e d to b e c o m e e d u c a t e d . p e r h a p s e n o u g h p e o p l e h a v e a n o b s e s s i v e c o n c e r n a b o u t t h e i r b o d i e s t o m a k e this o n e a r e a w h e r e e d u c a t i o n can w o r k . The Australian Health D e p a r t m e n t became concerned in t h e late 1970s o v e r t h e risk of c a n c e r from p r o l o n g e d o e s t r o g e n r e p l a c e m e n t t h e r a p y . t h e r e i s e v i d e n c e that t h e c r e s c e n d o of p u b l i c criticism of o v e r p r e s c r i b i n g of p s y c h o a c t i v e d r u g s has a l r e a d y j o l t e d c o m m u n i t y c o n c e r n t o the point w h e r e c o n s u m p t i o n of t h e s e d r u g s has d r o p p e d o v e r t h e last few y e a r s in t h e U n i t e d S t a t e s ( R e i n h o l d . . . 1 0 T h e o n l y p r i n t e d i n f o r m a t i o n p a t i e n t s r e c e i v e d i n t h e past has b e e n from d r u g c o m p a n y p u b l i c r e l a t i o n s d e p a r t m e n t s . On a r e c e n t visit to San F r a n c i s c o a p h a r m a c i s t g a v e me a R o c h e ' M e d i c a t i o n E d u c a t i o n ' p a m p h l e t w h i c h told m e . W h i l e s o m e o f t h e o b j e c t i o n s t o p a t i e n t labelling are not w i t h o u t s u b s t a n c e . P a t i e n t l a b e l l i n g r e g u l a t i o n s . do w h a t d o c t o r tells y o u . A F o u r C o r n e r s t e l e v i s i o n t e a m b o u g h t t h e m e d i c a t i o n from t e n S y d n e y p h a r m a c i s t s i n late 1978. Difficult as it is. 1980). 244 . c o m m u n i t y e d u c a t i o n i s the only u l t i m a t e s o l u t i o n t o p e o p l e b e c o m i n g n e e d l e s s f o d d e r for pill p u s h e r s .

and t o p r e v e n t t h e f o r m a t i o n o f t r a d e u n i o n s a m o n g their e m p l o y e e s . A j o y o u s t i r a d e o f S p a n i s h a c c o m p a n i e d t h e feat. Scoffing r e f e r e n c e t o ' A m e r i c a n o ' w a s all I could u n d e r s t a n d . A n d indeed the behaviour of pharmac e u t i c a l t r a n s n a t i o n a l s in c o u n t r i e s like G u a t e m a l a is difficult to d i s t i n g u i s h from t h a t o f o t h e r t r a n s n a t i o n a l s . It is s u r p r i s i n g h o w i n f o r m e d (ill-informed the c o m p a n i e s w o u l d s a y ) m a n y o r d i n a r y p e o p l e i n t h e T h i r d W o r l d are a b o u t w h a t they see a s t h e a b u s e s o f t r a n s n a t i o n a l p h a r m a c e u t i c a l c o m p a n i e s .m i l i t a r y u n i f o r m . F o r t u n a t e l y t h e tin c l a n g e d u n d e r the l i m o u s i n e w i t h o u t t o u c h i n g t h e t y r e s and I w a s saved t h e e x p e r i e n c e of e x p l a i n i n g t h a t I w a s ' A u s t r a l i a n o . W h e n I e x p l a i n e d in very c a u t i o u s t e r m s w h a t I w a s d o i n g to a G u a t e m a l a n taxi d r i v e r . ' T h e r e s e n t m e n t a g a i n s t t h e p h a r m a c e u t i c a l i n d u s t r y i s o f c o u r s e part o f the w i d e r r e s e n t m e n t against exploitative activities by transnational c o r p o r a t i o n s in g e n e r a l . A n A m e r i c a n c o m p a n y I visited i n M e x i c o City w a s l o c a t e d i n t h e midst o f o n e o f t h e city's w o r s t s l u m s . I c o u l d see a h e a d a g r o u p of c h i l d r e n p o i n t i n g at our car in c o n s p i r a t o r i a l f a s h i o n . A s w e a p p r o a c h e d t h e y rolled u n d e r t h e l i m o u s i n e a tin c a n w h i c h had b e e n i n g e n i o u s l y modified to p r o t r u d e s h a r p e d g e s w h i c h w o u l d p u n c t u r e any t y r e . T h e y c o n s p i r e and use t h e i r p o l i t i c a l influence t o s u b v e r t e g a l i t a r i a n tax r e f o r m s . h e s a i d .i m a g e p r o b l e m i n t h e T h i r d W o r l d . ' W h a t you should k n o w i s t h a t t h e s e c o m p a n i e s u s e o u r p e o p l e a s g u i n e a pigs t o try out t h e i r n e w d r u g s . A s w e w o u n d our way t h r o u g h t h e n a r r o w s t r e e t s o f the s l u m . T h e c o m p a n y w a s kind e n o u g h t o h a v e m e d r i v e n back t o m y hotel in a h u g e w h i t e l i m o u s i n e d r i v e n by a g e n t l e m a n in a p a r a .7 Drug companies and the Third World T h e i n t e r n a t i o n a l p h a r m a c e u t i c a l i n d u s t r y has a p u b l i c . no A m e r i c a n o ' . they 245 .

p a r t i c u l a r l y with p s y c h o t r o p i c drugs. All t h i s d e t r a c t s from t h e fact t h a t t r a n s n a t i o n a l p h a r m a c e u t i c a l c o m p a n i e s i n t h e T h i r d W o r l d tend t o h a v e h i g h e r s t a n d a r d s o f q u a l i t y c o n t r o l t h a n local f i r m s . T h e s t a r k reality of m e d i c a t i o n for most p e o p l e on this p l a n e t is a q u e u e of sick p e o p l e p a t i e n t l y w a i t i n g their t u r n o u t s i d e a village d i s p e n s a r y w i t h virtually n o m o d e r n d r u g s o n its s h e l v e s . Undermedicated societies T h e r e i s o n e f u n d a m e n t a l way i n which t h e d r u g p r o b l e m i n the T h i r d W o r l d is t h e r e v e r s e of t h a t in t h e d e v e l o p e d w o r l d .o p e r a t e w i t h t h e C I A and t h e r i g h t . In C h a p t e r 6 w e saw t h a t while p o o r s e g m e n t s o f t h e A m e r i c a n p o p u l a t i o n c a n n o t afford t h e d r u g s t h e y n e e d . A l t h o u g h t h e s e facts may say m o r e a b o u t t h e l a m e n t a b l e s t a n d a r d s o f local capitalists t h a n t h e u p r i g h t n e s s of t r a n s n a t i o n a l . and pay their w o r k e r s h i g h e r w a g e s t h a n local firms. often t e n d t o b e m o r e c i r c u m s p e c t t h a n locals i n t h e c l a i m s m a d e i n p r o d u c t p r o m o t i o n .w i n g military d i c t a t o r s h i p w h i c h c o n t r o l s t h e c o u n t r y t o m a i n t a i n 'political stability'. and i n m a n y w a y s b e t t e r . S e n a t o r K e n n e d y c a p t u r e d this reality in a 1979 a d d r e s s : W e a r e h e r e . t h a n t h o s e o f i n d i g e n o u s e n t e r p r i s e s . t h e latter often r e s p o n d t o c o m p l a i n t s from A m e r i c a n c o m p a n i e s a b o u t s u b v e r s i v e w o r k e r s b y h a v i n g t h e m shot. the Third World is overwhelmingly u n d e r m e d i c a t e d . W o n d e r d r u g s a r e little use t o p e a s a n t s w h o c a n n o t afford t o b u y t h e m .1 p e r cent as m a n y a n t i h y p e r t e n s i v e d r u g s as B e l g i u m (Gereffi. T h e b u s i n e s s p r a c t i c e s of t r a n s n a t i o n a l s i n t h e T h i r d W o r l d are n o w o r s e . U n f o r t u n a t e l y . i n t h i s I n t e r n a t i o n a l Y e a r o f t h e C h i l d . i n m a n y cases h a v e a l e s s e r p r o c l i v i t y to b r i b e h e a l t h officials. In contrast. t h e m o r e f u n d a m e n t a l p r o b l e m i n t h e U n i t e d S t a t e s i s o v e r m e d i c a t i o n . b e c a u s e 2. T h e r e will be 72 m i l l i o n c a s e s of m e a s l e s in t h e w o r l d this y e a r . an appreciation of them is necessary for a b a l a n c e d p e r c e p t i o n . T h e m o r a l failure o f the t r a n s n a t i o n a l s lies in t h e i r w i l l i n g n e s s to settle for m u c h l o w e r s t a n d a r d s a b r o a d than at h o m e . A n d at a t i m e w h e n m e a s l e s is n e a r i n g e x t i n c t i o n in t h e U n i t e d 246 . H o l l a n d c o n s u m e s a g r e a t e r q u a n t i t y o f a n t i d i a b e t i c d r u g s t h a n t h e w h o l e o f L a t i n A m e r i c a .Drug companies and the Third World c o .6 m i l l i o n c h i l d r e n will die this year from i m m u n i z a b l e d i s e a s e s b e c a u s e they won't have access to already-developed vaccines. I n d i a uses only 0. 1979: 9 7 ) .

w h e n S i l v e r m a n a p p e a r e d before t h e U S S e n a t e t o discuss 247 .D a v i s p r o m o t e d chlora m p h e n i c o l for a d d i t i o n a l c o n d i t i o n s m a n y of w h i c h w e r e far from l i f e . We h a v e seen t h a t c h l o r a m p h e n i c o l is a d r u g w h i c h can h a v e d a n g e r o u s side-effects and w h i c h s h o u l d only be used for a n a r r o w r a n g e o f l i f e . ulcerative colitis. b u t no w a r n i n g s a r e listed for t h e same p r o d u c t in C e n t r a l A m e r i c a ( S i l v e r m a n . W o r s e . o r e x c e s s i v e for. Promotion in the Third World T h i r d W o r l d c o u n t r i e s are not u n d e r m e d i c a t e d for a w a n t of efforts t o i n f o r m t h e i r c i t i z e n s o f t h e benefits o f m e d i c i n e . m o s t n o t a b l y t y p h o i d fever. w h o o p i n g c o u g h . F o r m a n y y e a r s c h l o r a m p h e n i c o l has b e e n p r o m o t e d i n t h e U n i t e d S t a t e s for only t h e s e limited i n d i c a t i o n s . t h e i r c o n d i t i o n . T h e classic d e m o n s t r a t i o n o f t h e l o w e r p r o m o t i o n a l s t a n d a r d s set by t r a n s n a t i o n a l p h a r m a c e u t i c a l c o m p a n i e s in the Third World was S i l v e r m a n ' s ( 1 9 7 6 ) The Drugging of the Americas. and 3 0 0 . w h a t t h e y get i s often t h o r o u g h l y i n a p p r o p r i a t e t o . y a w s . b r o n c h i t i s . 0 0 0 from w h o o p i n g c o u g h . 0 0 0 will die from p o l i o . t e t a n u s . 1979). p h y s i c i a n s are w a r n e d t h a t use o f c h l o r a m p h e n i c o l m a y result in s e r i o u s or fatal a p l a s t i c a n e m i a a n d o t h e r b l o o d d y s c r a s i a s . w h i l e t h e r a n g e o f side-effects and c o n t r a . staphylococcus infections. Six h u n d r e d t h o u s a n d p e o p l e .i n d i c a t i o n s m e n t i o n e d was much narrower in Latin A m e r i c a .t h r e a t e n i n g d i s e a s e s . will die from t e t a n u s this y e a r . E c u a d o r a n d C o l o m b i a . I n d e e d t h e t r a g e d y o f p h a r m a c e u t i c a l s i n the T h i r d W o r l d i s t h a t m i s l e a d i n g p r o m o t i o n m e a n s t h a t w h e n p a t i e n t s can afford m e d i c a t i o n . streptoc o c c u s i n f e c t i o n s . P a r k e . p o l i o . and g o n o r r h e a .t h r e a t e n i n g : t o n s i l l i t i s . Silverman was a b l e to s h o w for a w i d e r a n g e of d r u g s h o w t h e i n d i c a t i o n s a p p r o v e d in t h e U n i t e d S t a t e s Physician's Desk Reference e x p a n d e d into a m u c h w i d e r array of indications in the c o m p a r a b l e Latin A m e r i c a n p u b l i c a t i o n s .we h a v e v a c c i n e s for all of t h e m ( K e n n e d y . for t h e d a t a on w h i c h this s t a t e m e n t is b a s e d see F o e g e . eye i n f e c t i o n s .D a v i s ' C h l o r o m y c e t i n . m o s t o f t h e m c h i l d r e n . B u t S i l v e r m a n found that i n M e x i c o . T h e b a r r i e r i s s i m p l y cost. 2 0 0 . M e a s l e s . 1. 1977: 159). 1979: 4.2 m i l l i o n c h i l d r e n a r o u n d t h e w o r l d will fall victim to it this y e a r . u r i n a r y tract infections. p h a r y n g i t i s .Drug companies and the Third World S t a t e s . P h y s i c i a n s in M e x i c o are given a s i m i l a r w a r n i n g i n t h e p r o m o t i o n a l m a t e r i a l for P a r k e . I n t h e U n i t e d S t a t e s .

i f you t a k e this f i n e c o m b i n a t i o n . I n t h e few c a s e s w h e r e r e a c t i o n s h a v e o c c u r r e d . in effect. t h e y are o p e n l y r e c o m m e n d e d for c o n t r a c e p t i o n . 1976: 1 5 3 8 5 .D a v i s of S p a i n .Drug companies and the Third World his f i n d i n g s .6 ) . In t h e L a t i n A m e r i c a n c o u n t r i e s . D r W e g m a r followed u p with a n e v e n m o r e r e m a r k a b l e revelat i o n from S p a i n : I n 1 9 7 3 .c o n t r a c e p t i o n . a p r o d u c t of P a r k e . T a k e C h l o r o s t r e p at t h e first p r o b l e m . S e n a t o r B e a l l p o i n t e d o u t t h a t the I t a l i a n labelling for P a r k e . ' D o n ' t a l l o w d i a r r h e a t o interfere w i t h y o u r v a c a t i o n . a l t h o u g h n o t c o m m o n l y i n small d o s e s . J o h n s o n and J o h n s o n .L a m b e r t and A m e r i c a n H o m e Products: I n P D R [ P h y s i c i a n ' s D e s k R e f e r e n c e ] . P r o f e s s o r a n d M r s . a n d also for t h e c o n t r o l o f p r e m e n s t r u a l t e n s i o n . A n d its u s e f u l n e s s for m o s t c a u s e s of d i a r r h e a c o m m o n l y seen is n e g l i g i b l e ( S u b c o m m i t t e e o n M o n o p o l y . C h l o r a m p h e n i c o l i s a n i n v a l u a b l e treatm e n t for t y p h o i d fever. Z a n d e r t r a v e l l e d i n Spain and b r o u g h t h o m e this poster which was on the drugstore c o u n t e r s . The greatest tragedy o f t h e overuse of c h l o r a m p h e n i c o l in the T h i r d W o r l d w a s i l l u s t r a t e d w h e n in 1972-3 t h e r e was a t y p h o i d fever e p i d e m i c i n M e x i c o . 248 . B u t m a n y of t h e 100. A n o t h e r d i s t u r b i n g p i c t u r e w a s p a i n t e d b y S i l v e r m a n with r e s p e c t t o o r a l c o n t r a c e p t i v e s m a r k e t e d b y S e a r l e . t h e y e a r after t h e tragic d e a t h o f their d a u g h t e r .000 victims of the M e x i c a n o u t b r e a k could not b e h e l p e d b e c a u s e the p a r t i c u l a r t y p h o i d b a c t e r i a c o n c e r n e d had built up a r e s i s t a n c e to chlora m p h e n i c o l t h r o u g h long e x p o s u r e . s t r e p t o m y c i n . T h u s . T h e m e d i c a t i o n enjoys a h i g h d e g r e e o f t o l e r a n c e with b o t h a d u l t s and c h i l d r e n . C h l o r o s t r e p . ' T h i s d r u g is a c o m b i n a t i o n of c h l o r a m p h e n i c o l and d i h y d r o e s t r e p t o m i c i n e . t h e s e are g e n e r a l l y limited to mild n a u s e a or d i a r r h e a and only rarely d o e s their gravity impose suspension of treatment (Subcommittee on Monopoly. c a r r i e s t h e risk o f c a u s i n g d e a f n e s s . A s you may k n o w . 0 0 0 t y p h o i d victims died i n the o u t b r e a k . y o u r u n t h e risk o f b e c o m i n g deaf before you d i e . 1976: 15359). W a r n e r . all o f t h e s e are d e s c r i b e d as i n d i c a t e d for only o n e use . 2 0 . T h e p o s t e r says.D a v i s c h l o r a m p h e n i c o l said: It is a very significant fact t h a t C h l o r o m y c e t i n t h e r a p y is c o n s p i c u o u s l y d e v o i d of side effects.

1976: 1 5 3 6 3 . T h i r d W o r l d g o v e r n m e n t s b e g a n to e v i d e n c e a less t r u s t i n g a t t i t u d e to t h e p r o m o t i o n a l c l a i m s o f d r u g c o m p a n i e s . F u r t h e r . p h y s i c i a n s are w a r n e d o f t h e possibility o f m a n y s i d e .e f f e c t s . I t w a s simply t h a t t h e r e w e r e n o r e s o u r c e s for e n f o r c i n g t h e m . S i l v e r m a n p o i n t s o u t . C o l o m b i a . inability t o a d a p t i n s c h o o l . F o u r K o r e a n p h a r m a c e u t i c a l e x e c u t i v e s w e r e a r r e s t e d i n late 1979 a n d c h a r g e d in o n e c a s e with p r o m o t i n g a p r e p a r a t i o n officially 249 . I n t h e U n i t e d S t a t e s . I n s o m e o f t h e L a t i n A m e r i c a n c o u n t r i e s t h e r e w e r e r e l e v a n t laws r e q u i r i n g t h e d i s c l o s u r e o f h a z a r d s . p r o b l e m s o f t h e m e n o p a u s e . i n s o m n i a . S i l v e r m a n ' s b o o k w a s o n e of t h o s e rare h a p p e n i n g s . I n 1978 t h e S o u t h K o r e a n M i n i s t r y of H e a l t h r e v i e w e d 2. e s p e c i a l l y t h r o m b o e m b o l i c c h a n g e s t h a t can lead to s e r i o u s or fatal b l o o d c l o t s . hostility r e a c t i o n s . T h e r e m a i n i n g 1. t h e risk of t h r o m b o e m b o l i c c h a n g e s i s i g n o r e d . N o a d v e r s e r e a c t i o n s o f any k i n d a r e g i v e n for t h e S e a r l e p r o d u c t i n E c u a d o r . b e d . but n o n e in Central America. C o l o m b i a . B u t S i l v e r m a n p o i n t s o u t t h a t this w a s not a l w a y s t h e c a s e . O n l y 50.w e t t i n g and nail b i t i n g . for all t h e p r o d u c t s s t u d i e d h e r e . and a host o f o t h e r conditions. T h e i n d u s t r y d e f e n c e w a s t h a t they had not v i o l a t e d any local laws by t h e i r p o l i c i e s of disclosing as little as t h e y could get a w a y w i t h . In L a t i n A m e r i c a . o r Brazil ( S u b c o m m i t t e e o n M o n o p o l y .2 p e r c e n t o f t h e i n d i c a t i o n s w e r e found t o b e valid. M a n y a d v e r s e r e a c t i o n s o f Mellaril w e r e d i s c l o s e d in t h e U n i t e d S t a t e s .4 ) . sleep w a l k i n g .058 i n d i c a t i o n s for 1.Drug companies and the Third World m e n s t r u a l p a i n . In some cases.r e s e a r c h by an i n t e l l e c t u a l w h i c h had an influence on t h e c o u r s e o f e v e n t s . S a n d o z ' s p o w e r f u l a n t i p s y c h o t i c t r a n q u i l l i s e r Mellaril w a s found to be p r o m o t e d in C e n t r a l A m e r i c a for a host of m i n o r n e u r o t i c d i s o r d e r s n o t m e n t i o n e d i n U S p r o m o t i o n . T h e s e a d d i t i o n a l indicat i o n s i n c l u d e d use for c h i l d r e n w i t h b e h a v i o u r a l d i s o r d e r s . and for t h e W y e t h p r o d u c t i n E c u a d o r . Colombia or Ecuador. a few in M e x i c o .D a v i s p r o d u c t in C e n t r a l A m e r i c a .024 i n d i c a t i o n s w e r e d r o p p e d from p r o m o t i o n a l litera t u r e . Silverman d o c u m e n t s many many other examples. o r B r a z i l for t h e P a r k e .097 p r o d u c t s . while s e r i o u s and p o t e n t i a l l y fatal r e a c t i o n s w e r e not m e n t i o n e d . t r i v i a l side-effects w e r e d e s c r i b e d i n g r e a t d e t a i l . t h e r e i s little r e a l i s t i c p o s s i b i l i t y of civil a c t i o n against large p h a r m a c e u t i c a l c o m p a n i e s for d a m a g e s i n p o o r c o u n t r i e s w h e r e t h e r e i s n o p r o vision in law for class a c t i o n s .

A n a b o l i c steroids may produce stunting of growth. and a p l a s t i c a n a e m i a . t e r m i n a l m a l i g n a n t d i s e a s e . I . I n A f r i c a n M . T h e d r u g s had b e e n i m p o r t e d from G e r m a n and Italian firms and resold at o v e r t e n t i m e s the i m p o r t p r i c e .Drug companies and the Third World i n d i c a t e d for night b l i n d n e s s as b e i n g effective against c a n c e r . I . M . S c h e r i n g . S . O r g a n o n ) . A s t a W e r k e ) or that t h e i r 'safety has b e e n p r o v e n and c o n f i r m e d in o v e r 500 p u b l i c a t i o n s t h r o u g h o u t the world' ('Buscopan C o m p o s i t u m ' containing dipyrone. w e i g h t loss. Y u d k i n ' s m e t h o d o l o g y w a s t o c o m p a r e t h e i n f o r m a t i o n p l a c e d b y m a n u f a c t u r e r s i n the B r i t i s h a n d A f r i c a n v e r s i o n s of MIMS (Monthly Index of Medical Specialties).(KK) p e r d o c t o r . In the U n i t e d S t a t e s t h e y a r e licensed for use only in p a t i e n t s with t e r m i n a l m a l i g n a n t d i s e a s e i n w h o m safer a n t i p y r e t i c s h a v e b e e n u n s u c c e s s f u l . 5 7 % . . a l m o s t as high as t h e o n e to t h r e e ratio S i l v e r m a n had f o u n d i n G u a t e m a l a . T h e y are used in Britain to t r e a t o s t e o p o r o s i s . In Tanzania pharmaceutical promotional expenditure averages o v e r S4.W e l l c o m e ! B e l o w a r e t h r e e o t h e r s t a g g e r i n g e x a m p l e s from Y u d k i n ' s ( 1 9 7 8 : 811) work: A m i n o p y r i n e and d i p y r o n e a r e a n t i p y r e t i c a n a l g e s i c s which may p r o d u c e a g r a n u l o c y t o s i s with a m o r t a l i t y as high as 0 . I n A f r i c a n M . Y u d k i n found that t h e r e was o n e d r u g c o m p a n y sales r e p r e s e n t a t i v e for e v e r y four T a n z a n i a n d o c t o r s . and k w a s h i o r k o r ( ' D e c a d u r a b o l i n ' . t h e y are p r o m o t e d a s t r e a t m e n t for m a l n u t r i t i o n . as appetite stimulants ('Winstrol'. w a s included in A f r i c a n MIMS as a c o u g h s u p p r e s s a n t by B u r r o u g h s . Chloramphenicol was promoted by Lepetit for r e s p i r a t o r y tract a n d a w i d e r a n g e of o t h e r m i n o r infections. P a c k a g e i n s e r t s claim that they h a v e a "wide m a r g i n of safety' ( ' A v a f o r t a n ' . M . and in a n o t h e r case w i t h m a r k e t i n g a p r o d u c t with the a p p r o v e d indicat i o n of liver d i s e a s e in a d u l t s for t h e p r o m o t i o n of g r o w t h in c h i l d r e n . 250 . 3 1 p r e p a r a t i o n s c o n t a i n i n g these drugs are r e c o m m e n d e d as a n a l g e s i c s for m i n o r c o n d i t i o n s . S . 1977). and liver t u m o u r s . M e t h a d o n e . ( N o v e m b e r . renal failure. L i k e S i l v e r m a n . irreversible v i r i l i s a t i o n in g i r l s . W i n t h r o p ) . T h e s e T h i r d W o r l d d e t a i l e r s have enorm o u s influence o v e r d o c t o r s w h o d o not h a v e access t o the latest m e d i c a l l i t e r a t u r e a n d are often paid m o r e t h a n t h e d o c t o r s . A n i m p o r t a n t e x t e n s i o n o f S i l v e r m a n ' s work w a s c o n d u c t e d b y Y u d k i n ( 1 9 7 8 ) i n T a n z a n i a . for e x h a u s t i o n states ( ' P r i m o b o l a n D e p o t ' . Boehringer Ingelheim). r e c o m m e n d e d i n B r i t a i n for s e v e r e p a i n .

7 ) . M u l l e r ( 1 9 8 2 : 55) h a s . B o e h r i n g e r I n g e l h e i m h a v e only n o w a g r e e d t o m e n t i o n t h e d a n g e r i n future package inserts. S . M . African M . t r a n s p o r t difficulties and a d m i n i s t r a t i v e p r o b l e m s may h i n d e r the r e g u l a r supply o f d r u g s d u r i n g t h e r a p y . before i t w a s a v a i l a b l e t h r o u g h the G o v e r n m e n t c e n t r a l m e d i c a l s t o r e s ( C . For e x a m p l e . d o e s not m e n t i o n t h e d a n g e r o f s u d d e n l y s t o p p i n g c l o n i d i n e t h e r a p y . a form of childh o o d m a l n u t r i t i o n . M u l l e r q u o t e s from a B B C i n t e r v i e w with a h e a l t h w o r k e r from B a n g l a d e s h : t h e d r u g rep w a s t r y i n g t o p e r s u a d e this r a t h e r y o u n g d o c t o r that f u r o s e m i d e . . . B o e h r i n g e r I n g e l h e i m ) w a s i n t r o d u c e d i n t o the c o u n t r y i n 1975. S . in o n e s t u d y only 2 0 % of p a t i e n t s w e r e found t o t a k e t h e i r t a b l e t s r e g u l a r l y . T h e m o s t r e c e n t c o n t r i b u t i o n s t o t h i s t r a d i t i o n have b e e n b y M e l r o s e ( 1 9 8 2 ) and M u l l e r ( 1 9 8 2 ) . .c o m p a r e d to fifty in A m e r i c a n a d v e r t i s e m e n t s . A p a r t i c u l a r c o n t r i b u t i o n of M e d a w a r ' s w o r k is in showing that r e c o m m e n d e d dosage is a n o t h e r area of abuse. t h e m a x i m u m r e c o m m e n d e d d o s a g e for B u r r o u g h s W e l l c o m e ' s Migril (for m i g r a i n e ) w a s t w i c e a s high. pills being t a k e n only for relief of s y m p t o m s . s e v e r e r e b o u n d h y p e r t e n s i o n and s o m e t i m e s c e r e b r a l h a e m o r r h a g e m a y result. C i b a G e i g y ) . 1979: 1 1 6 . These are deficiency diseases which p r o d u c e s w e l l i n g all o v e r t h e b o d y and t h e r e p w a s s u g g e s t i n g that this d r u g w a s very g o o d at r e d u c i n g t h i s o e d e m a .Drug companies and the Third World ' D i a n a b o l ' . sufficient for only t w o o r t h r e e w e e k s ' u s e . I . and for ' e x c e s s i v e fatiguability' i n school children ('Dianavit'. I t s h o u l d t h u s b e a v o i d e d w h e n p a t i e n t s a r e likely t o t a k e p r e s c r i b e d d r u g s i r r e g u l a r l y . w a s a very good d r u g to use for c h i l d r e n w h o had k w a s h i o r k o r or m a r a s m u s . o r m o r e t h a n t w i c e as h i g h . ) . . I . M . a m o n g o t h e r r e v e l a t i o n s . A f u r t h e r long list of d o u b l e s t a n d a r d s h a s b e e n d o c u m e n t e d by M e d a w a r ( 1 9 7 9 ) . I n Africa. Ciba G e i g y ) . d e m o n s t r a t e d t h e a b u s e o f d i u r e t i c s t o deal with t h e b l o a t i n g and puffing s y m p t o m s of k w a s h i o r k o r . in A f r i c a and A s i a as in t h e U n i t e d S t a t e s and U n i t e d K i n g d o m ( M e d a w a r . M . . t h e c o m p a n y d i s t r i b u t e d free s a m p l e s o f t h e d r u g . although British M . W h e n it w a s p o i n t e d o u t t h a t t h e swelling m i g h t g o d o w n but the child 251 . If a d o s e o f t h e a n t i h y p e r t e n s i v e d r u g c l o n i d i n e is missed by as little as 12 h. I n a d d i t i o n . S . C l o n i d i n e ( ' C a t a p r e s ' . t h e c o n c e p t o f a s y m p t o m a t i c d i s e a s e i s not w i d e l y a c c e p t e d . d o e s .b u t n o t t h i s risk. in the manufacturers' b o o k l e t t w o side-effects are m e n t i o n e d .

m y c o l l e a g u e and I still c a n n o t a g r e e w h e t h e r this assistant w a s aged 14 or 13 or 12. A f t e r w e got o u t o f t h e s t o r e . collected the p r o p e r n u m b e r o f c o l o n e s from t h e l a d y . and . It is widely u s e d . I n a l m o s t all c o u n t r i e s in L a t i n A m e r i c a you can get practically any d r u g from a p h a r m a c y w i t h o u t a p r e s c r i p t i o n . I t h i n k . All this a d d s up to a d e a d l y t e n d e n c y for Third W o r l d c o n s u m e r s t o get i n a p p r o p r i a t e m e d i c a t i o n . S o m e p h y s i c i a n s will e v e n h o s p i t a l i z e their p a t i e n t s b e f o r e t h e y start t h e m o n this d r u g . W h e n she c a m e up to the m a n to wait on h e r . p h y s i c i a n s in t h e U n i t e d S t a t e s w o u l d not p r e s c r i b e a d r u g like this u n l e s s t h e y had s u b j e c t e d t h e p a t i e n t t o t h o r o u g h d i a g n o s t i c s t u d i e s . t h e capital o f C o s t a R i c a .a n d she a s k e d for a d r u g called L a r g a c t i l . 1976: 15569).it w a s not a p r e s c r i p t i o n . b u t i t has k n o w n h a z a r d s . very p o t e n t t r a n q u i l i z e r used in t h e c o n t r o l of p s y c h o s i s . he did not c o n s u l t with any of his c o l l e a g u e s . t h e child is g o i n g to die a n y w a y . it w a s a piece of b u t c h e r p a p e r . She w a s n e r v o u s . I w a t c h e d him carefully. I w o u l d p r o b a b l y say that she w a s suffering from a s e v e r e t h y r o i d d i s e a s e . the d r u g r e p r e s e n t a t i v e said. w h i c h is o n e o f t h e t r a d e n a m e s for a very effective.Drug companies and the Third World w o u l d be killed . we n e e d e d s o m e o v e r . I s t o o d in line b e h i n d o n e nice little old lady. O r d i n a r i l y . and very t h i n .e x i s t e n t . . she r e a c h e d into h e r d r e s s and b r o u g h t out a scrap of p a p e r . A n d w e w a t c h e d this i n a m a z e m e n t . that he had s o m e t h i n g m u c h b e t t e r . He w e n t to a s h e l f b e h i n d h i m . ' W e l l . a n d j i t t e r y . i f m y t r a n s l a t i o n w a s right. . ' O n e o f t h e m o s t d i s t u r b i n g r e v e l a t i o n s b y M e l r o s e (1982: 102-6) c o n c e r n e d the p r o m o t i o n of anabolic steroids as appetite stimulants for c h i l d r e n in t h e T h i r d W o r l d . t e n s e . very e f f e c t i v e . T h e p h a r m a c i s t ' s a s s i s t a n t said. o n w h i c h she had w r i t t e n s o m e t h i n g r e c o m m e n d e d b y s o m e b o d y or o t h e r . 252 . . i n a d e q u a t e o r rarely e n f o r c e d p r e s c r i p t i o n laws. . T h e t e n d e n c y i s reinforced b y n o n . and he b r o u g h t d o w n a bottle of one o f t h e more potent antithyroid drugs. I k n o w he had not b e g u n to shave yet ( S u b c o m m i t t e e o n M o n o p o l y . t h e clerk j u s t c o u n t e d out the prerequisite n u m b e r of tablets. . .t h e . B u t i n this c a s e .c o u n t e r d r u g . w h o w a l k e d o u t . . S i l v e r m a n told the U S S e n a t e o f t h e following e x p e r i e n c e : We w e r e in San J o s e . If I had to m a k e a c u r b s t o n e d i a g n o s i s . He did n o t look at any b o o k . T h e r e w a s a long c o u n t e r w i t h a g r e a t m a n y p e o p l e in w h i t e j a c k e t s w a i t i n g on the c u s t o m e r s .

The corporate response to Silverman W i t h i n m o n t h s after t h e p u b l i c a t i o n o f S i l v e r m a n ' s b o o k the council 253 . J a p a n e s e c o u r t s h a v e a l r e a d y a w a r d e d S M O N v i c t i m s o f c l i o q u i n o l $456 million i n c o m p e n s a t i o n . C i b a . At t h r e e of t h e p h a r m a c i e s I w a s offered L o m o t i l . a p r e s c r i p t i o n d r u g w i t h w o r r y i n g side-effects. a n d at a n o t h e r . m a n u f a c t u r e d b y t h e K a l o s c o m p a n y . T h e n e x t p h a r m a c y offered m e T r e d a . C l i o q u i n o l is b a n n e d in m a n y c o u n t r i e s . t h e n e r v e s o f t h e b o d y surfaces and t h e o p t i c n e r v e . a v a r i a t i o n on t h i s . c l i o q u i n o l used i n t h e t r e a t m e n t o f d i a r r h o e a w a s a s s o c i a t e d w i t h s o m e 9.G e i g y M e x a f o r m a . i n the light o f t h e S M O N d i s a s t e r it is a g r o s s a b u s e to use c l i o q u i n o l for simple d i a r r h o e a . T h e d r u g is a s s o c i a t e d with s e r i o u s n e u r o t o x i c effects on t h e spinal c o r d .G e i g y E n t e r o v i o f o r m ) . O c t . 1977: 9 . s u b s t i t u t i n g c h l o r a m p h e n i c o l for a t e t r a c y c l i n e p r e s c r i p t i o n b e c a u s e t h e s h o p had run o u t of t e t r a c y c l i n e . T h i s m y s t e r i o u s p r o d u c t i s not listed in t h e M e x i c a n Diccionario de Especialidades Farmaceuticas.t r a v e l l e r ' s d i a r r h o e a .D a v i s C h l o r o m y c e t i n . I visited e i g h t p h a r m a c i e s in t h e affluent Z o n a R o s a a r e a of t h e city c o m p l a i n i n g in b r o k e n S p a n i s h of 'la t o u r i s t a ' ( t r a v e l l e r ' s d i a r r h o e a ) . and in most c o u n t r i e s w h e r e o n e can get c l i o q u i n o l on p r e s c r i p t i o n it is specifically w a r n e d t h a t t h e d r u g s h o u l d not be a p p l i e d to its historical use . I d e c i d e d to e x p e r i e n c e this p h e n o m e n o n myself in M e x i c o City t h e l a r g e s t m e t r o p o l i s of t h e T h i r d W o r l d and surely o n e of t h e p l a c e s w h e r e o n e w o u l d e x p e c t t o see o b s e r v a n c e o f p r e s c r i p t i o n l a w s . A n d l o and b e h o l d .000 cases of a d i s e a s e called S M O N (Subacute myelo-optic neuropathy) (WHO Drug Information. w h a t should b e the last p r o d u c t d r a g g e d o u t o f t h e r e f r i g e r a t o r for m y M e x i c a n d i a r r h o e a ? N o n e o t h e r t h a n o u r old friend. T h e sixth p h a r m a c y offered a d r u g called Y o d o z o n o . P a r k e . 1976: 125). I w a s offered c l i o q u i n o l ( C i b a . At a fourth p h a r m a c y . W h i l e t h e p r o b a b i l i t y of t h e s e side-effects is a p p a r e n t l y not so high as to justify b a n n i n g t h e d r u g for limited u s e s .D e c . I n J a p a n .d a y supply of an a n t i b i o t i c ( w h e n it is e s s e n t i a l to use t h e d r u g for at least a w e e k ) b e c a u s e ' s h e only had t h e m o n e y to buy e n o u g h for o n e d a y ' . .1 5 ) . and similar p r a c t i c e s ( S i l v e r m a n .Drug companies and the Third World S i l v e r m a n also g a v e a c c o u n t s o f L a t i n A m e r i c a n p h a r m a c i s t s p r o v i d i n g a p a t i e n t with only a o n e . but n o d o u b t s o m e t h i n g a d o c t o r m i g h t h a v e given me a p r e s c r i p t i o n for. a n a n t i b i o t i c p r o d u c e d b y t h e S a n f e r c o m p a n y .

' p a r t i c u l a r c a r e should b e t a k e n t h a t essential i n f o r m a t i o n as to m e d i c a l p r o d u c t s ' safety. I n p a r t this c h a n g e has b e e n m e d i a t e d b y s t r o n g i n t e r n a t i o n a l c o n s u m e r a t t a c k s against p h a r m a c e u t i c a l m a r k e t i n g p r a c t i c e s b y such c o a l i t i o n s a s H e a l t h A c t i o n I n t e r n a t i o n a l . I w a s s u r p r i s e d a t the a d v e r s a r y stance they occasionally evidenced t o w a r d s subsidiary general m a n a g e r s in their own corporation. I t c e r t a i n l y s h a t t e r s t h e m o n o l i t h i c i m a g e that outsiders have ofthe corporation. and r e q u i r e d w a r n i n g s for t h e p r o d u c t . Of course in these intra-corporate struggles b e t w e e n t h e forces o f ' g o o d ' and ' e v i l ' . They seemed to a p p r o a c h the challenge of t i g h t e n i n g t h e p r o m o t i o n a l c l a i m s b e i n g m a d e i n s u b s i d i a r i e s from G u a t e m a l a t o G h a n a w i t h a l m o s t m i s s i o n a r y zeal. t h e e n e m y . it is often the l a t t e r w h o win o u t . I n s o m e c o m p a n i e s . The other interesting point is t h a t e a c h o f t h e s e c o r p o r a t e g r o u p s r e s p o n s i b l e for r e g u l a t i n g p r o m o t i o n a r o u n d t h e w o r l d typically has m o r e staff r e s o u r c e s and 254 . a n d t h e c o m p a n y w a s going t o b e p u r g e d of their a b u s e s . c o n t r a . c o n t r a i n d i c a t i o n s and side-effects is a p p r o p r i a t e l y c o m m u n i c a t e d . I n a d d i t i o n . w h a t s u r p r i s e d m e w a s t h a t the fight w a s being f o u g h t w i t h such i n t e n s i t y . All subsidiary p r o m o t i o n a l m a t e r i a l . e n t r i e s in MIMS. M a n y of t h e A m e r i c a n c o m p a n i e s I visited c l a i m e d t h a t Silverm a n ' s b o o k had forced t h e m t o put t h e i r h o u s e i n o r d e r .Drug companies and the Third World o f t h e International Federation of Pharmaceutical Manufacturers' A s s o c i a t i o n s a d o p t e d a r e s o l u t i o n s u b m i t t e d by t h e US d e l e g a t i o n c a l l i n g for p r e s c r i p t i o n d r u g labelling to be c o n s i s t e n t with 'the b o d y o f scientific and m e d i c a l e v i d e n c e p e r t a i n i n g t o t h a t p r o d u c t ' . affiliates n o w m u s t g o t h r o u g h q u i t e a n a r d u o u s p r o c e s s t o use v a r i a t i o n s from the p r o m o t i o n a l c l a i m s a p p r o v e d b y h e a d q u a r t e r s . I c o u l d n o t h e l p but be i m p r e s s e d by s o m e of t h e s e c o r p o r a t e medical g r o u p p e o p l e . N e v e r t h e l e s s . T h e basis o f t h e d e l i b e r a t i o n s o f such medical g r o u p s i s s o m e form o f i n t e r n a t i o n a l p r o d u c t d i s c l o s u r e d o c u m e n t w h i c h c o n t a i n s all t h e i m p o r t a n t side-effects. ' Even t h o u g h the u n a n i m o u s I F P M A v o t e w a s not on a t o u g h l y w o r d e d r e s o l u t i o n ( i n d e e d it w a s m e r e l y a r e c o m m e n d a t i o n with no binding status) some change seems to have followed.j o u r n a l a d v e r t i s i n g . Often t h e l a t t e r m i g h t not be as s t r i n g e n t as F D A r e q u i r e m e n t s . b u t t h e y w o u l d set a fairly high i n t e r n a t i o n a l minimum standard. The latter were t h e e x p l o i t e r s . T o varying d e g r e e s t r a n s n a t i o n a l s h a v e pulled a t i g h t e r reign on t h e p r o m o t i o n a l c l a i m s m a d e b y s u b s i d i a r i e s . p a t i e n t l a b e l l i n g in s o m e c o m p a n i e s m u s t be a p p r o v e d by a h e a d q u a r t e r s m e d i c a l g r o u p .i n d i c a t i o n s .

E v e n t h o u g h t h e s e intrac o r p o r a t e c r u s a d e r s for t h e c o n s u m e r i n t e r e s t often lose their b a t t l e s . for e x a m p l e . T h e c o r p o r a t e o r r e g i o n a l ' m e d i c a l g r o u p frequently d o not have t h e i r way b e c a u s e s u b s i d i a r y g e n e r a l m a n a g e r s m i g h t have t o c o m p e t e w i t h local c o m p a n i e s w h o are n o t e n c u m b e r e d b y 'corp o r a t e s t a n d a r d s ' a n d ' c o r p o r a t e d i s c l o s u r e d o c u m e n t s ' .t r a i n e d p e o p l e t h a n t h e i r c o u n t e r p a r t s i n any r e g u l a t o r y a g e n c y i n t h e w o r l d . t o t h e e x t e n t t h e y e x i s t . . i n t h e w o r l d ' s r e g u l a t o r y a g e n c i e s . 1969: 4 4 9 6 ) . i n c l u d i n g t h e F D A (with five p r o f e s s i o n a l s r e s p o n s i b l e for r e g u l a t i n g p r o m o t i o n ) . o n e s u s p e c t s t h a t t h e y save m o r e lives and p r e v e n t m o r e u n n e c e s s a r y suffering t h a n t h e i r c o u n t e r p a r t s . I refused to a p p r o v e t h e t e n t a t i v e copy and m a d e it clear t h a t I w o u l d t e n d e r my r e s i g n a t i o n b e f o r e I w o u l d a p p r o v e the c o p y . e s p e c i a l l y i n n o n . . A p p a r e n t l y my c o l l e a g u e s t h o u g h t I w a s sufficiently v a l u a b l e and i n s t e a d of m a k i n g a c o n f r o n t a t i o n out o f t h e issue t h e y d e c i d e d to use a n end p l a y . as I u n d e r s t o o d it. S q u i b b ' s former Medical Director: T h e real e r u p t i o n o c c u r r e d in a b o u t 1955 w h e n . . it's e c o n o m i c a l l y suicidal for you to disclose t h e h a z a r d s of y o u r s .Drug companies and the Third World b e t t e r . ' W h i l e e c o n o m i c suicide w o u l d r a r e l y b e t h e c o n s e q u e n c e o f h o n e s t d i s c l o s u r e . C o n s i d e r a n o t h e r e x a m p l e from m y interviews: In c o u n t r i e s like Brazil [our p r o d u c t ] has to c o m p e t e w i t h 20 [sic] p i r a t e c o m p e t i t o r s . I w a s p r e s e n t e d with t h e p r o s p e c t of m a r k e t i n g c h l o r a m p h e n i c o l u n d e r t h e S q u i b b label m a k i n g all t h e excessive c l a i m s for t h e d r u g and e x c l u d i n g a w a r n i n g s t a t e m e n t since it w a s n o t r e q u i r e d in t h e c o u n t r i e s in w h i c h sale is p r o p o s e d . T h e i r s t r u g g l e s are not e a s y . T h e following i n c i d e n t .c o m p e t i t i v e s e c t o r s o f t h e pharm a c e u t i c a l i n d u s t r y . i f y o u r c o m p e t i t o r isn't d i s c l o s i n g t h e s e r i o u s side effects of his p r o d u c t . w a s r e p o r t e d b y D a l e C o n s o l e . A s one p r o m o t i o n a l e x p e r t from E c u a d o r said t o S i l v e r m a n (1976: 112).D a v i s h a d offered S q u i b b a license to m a r k e t c h l o r a m p h e n i c o l in some of Squibb's South A m e r i c a n m a r k e t s . O r g a n i z a t i o n a l c h a n g e s can b e m a d e t o isolate and n e u t r a l i z e e x e c u t i v e s w h o h a v e t o o m u c h zeal for r e f o r m . P a r k e . it is this r h e t o r i c w h i c h t h e local g e n e r a l m a n a g e r s h a v e o n t h e i r side. T h e O v e r s e a s D i v i s i o n a p p o i n t e d its o w n Medical D i r e c t o r who was in no way responsible to me (US S e n a t e . N o w t h e s e p e o p l e p r o m o t e the p r o d u c t for 255 .

Of course our Brazilian m a n a g e r then wants us to e x p a n d the indications too. S i l v e r m a n . T h e cost o f t h e subsidiary red o i n g t h e w o r k often c a u s e s t h e m t o use our m a t e r i a l . T h e y t h e r e f o r e get b e t t e r sales t h a n w e w h o d e v e l o p e d t h e p r o d u c t .Drug companies and the Third World e v e r y infection i m a g i n a b l e . C o r p o r a t e m e d i c a l g r o u p s can use t h e c a r r o t o f cost s a v i n g as well as t h e stick of h e a d q u a r t e r s c o n t r o l : W e p r o v i d e p a c k a g e i n s e r t s and a d v e r t i s i n g p a c k a g e s from [ h e a d q u a r t e r s ] . o t h e r s p r o d u c e d g e n u i n e 256 .i n d i c a t i o n s . T h e i r n a m e gets b e t t e r k n o w n a s t h e i r v e r s i o n g e t s m o r e w i d e l y p r e s c r i b e d . T h e r e a r e a s m a n y t r a n s n a t i o n a l c o m p a n i e s a s t h e r e are w a y s i n w h i c h a t t e m p t s a r e m a d e t o i m p o s e c o r p o r a t e p r o m o t i o n a l stand a r d s o n s u b s i d i a r i e s . W h i l e t h e r e have b e e n efforts b y t r a n s n a t i o n a l c o r p o r a t i o n s since the a p p e a r a n c e o f S i l v e r m a n ' s first book t o e s t a b l i s h i n t e r n a t i o n a l m i n i m u m p r o m o t i o n a l s t a n d a r d s for their far-flung o p e r a t i o n s . but h a v e total a u t o n o m y o v e r local m e d i c a l j o u r n a l a d v e r t i s i n g . B u t it's a h i g h e r s t a n d a r d t h a n t h e s u b s i d i a r y w o u l d d o t h e m s e l v e s . O n e c o m p a n y has a n i n t e r n a t i o n a l p r o d u c t d i s c l o s u r e d o c u m e n t from w h i c h s u b s i d i a r i e s c a n n o t d e l e t e c o n t r a i n d i c a t i o n s and side-effects. T h e s e a r e not a s e x h a u s t i v e s t a n d a r d s a s r e q u i r e d by F D A . Lilly and S y n t e x w e r e singled o u t for t h e i m p r o v e m e n t s t o labelling and p r o m o t i o n t h e y had m a d e . T h e n they even begin to t a k e a w a y sales from us in the a r e a s w h e r e we t h i n k the drug is indicated. Just a s with g o v e r n m e n t regulation. L e e and L y d e c k e r ( 1 9 8 2 : 150) recently did a follow-up to c h e c k if t h i n g s really had i m p r o v e d in L a t i n A m e r i c a . T h e y found t h a t t h e r e had b e e n a s u b s t a n t i a l e x p a n s i o n of d i s c l o s u r e of w a r n i n g s . M i n o r side effects m i g h t be put u n d e r a g e n e r a l h e a d i n g r a t h e r t h a n listed s e p a r a t e l y . corporate rule-making without the provision of a d e q u a t e e n f o r c e m e n t resources is no more than a gesture. it w o u l d be a m i s t a k e to paint t o o rosy a p i c t u r e o f w h a t has b e e n a c h i e v e d . M e r c k . side-effects and c o n t r a . M a n y t r a n s n a t i o n a l s are tightly r e g u l a t e d from h e a d q u a r t e r s as to w h a t t h e y can p u t in semi-official p u b l i c a t i o n s like MIMS. C o r p o r a t i o n s have w r i t t e n rules specifying t h a t v a r i a t i o n s from c o r p o r a t e d i s c l o s u r e r e q u i r e m e n t s m u s t be a p p r o v e d by h e a d q u a r t e r s only to find that s u b s i d i a r y g e n e r a l m a n a g e r s i g n o r e t h e rules and c o n t i n u e t o m a k e idiosync r a t i c p r o d u c t c l a i m s w i t h o u t a p p r o v a l . Some c o m p a n i e s h a v e m a d e only g e s t u r e s . Yet they may use their d i s c r e t i o n to a d d i n d i c a t i o n s .

shiploads of defective medical devices. S .r e g u l a t o r y efforts .he w a s a b o r n l e a d e r w h o . The escape clauses in the code a r e a l s o i m a g i n a t i v e : for e x a m p l e . Bright. the International Federation of P h a r m a c e u t i c a l M a n u f a c t u r e r s ' A s s o c i a t i o n s in 1981 a d o p t e d a c o d e o f e t h i c a l s t a n d a r d s i n m a r k e t i n g . ' At an industry-wide level. M o r e often t h a n n o t . 257 . S . 1979: 2 3 ) .t h e r e is no p r o v i s i o n for effective e n f o r c e m e n t a g a i n s t v i o l a t i o n s of the r a t h e r vague provisions o f t h e c o d e . . . . . T h e p a t i e n t died. .1 ) . p o p u l a r and inclined to be d e m o c r a t i c . ' s t a t e m e n t s i n p r o m o t i o n a l c o m m u n i c a t i o n s s h o u l d be b a s e d on s u b s t a n t i a l scientific e v i d e n c e or other responsible medical opinion' (italics a d d e d ) . t h e real p r o b l e m i s c o n v i n c i n g corp o r a t i o n s t h a t t h e y s h o u l d s t o p m a k i n g a n u n w a r r a n t e d claim a s quickly in t h e T h i r d W o r l d as in d e v e l o p e d c o u n t r i e s w h e r e they are s u b j e c t to t h e s c r u t i n y of r e g u l a t o r s and p u b l i c interest g r o u p s . T h e i n d u s t r y self-regulatory c o d e has t h e s a m e defect as c o r p o r a t e s e l f . k n o w n c a r c i n o g e n s . . w o u l d rise t o p o w e r i n K e n y a a n d h e l p k e e p Africa safe for U n i t e d S t a t e s c o m m e r c e . I n 1969 he w a s shot d o w n in t h e s t r e e t s of N a i r o b i . A s L e d o g a r ( 1 9 7 5 : 39) c o n c l u d e s : ' J u s t a s m a n u f a c t u r e r s are often q u i c k to r e c o m m e n d a drug for a n e w i n d i c a t i o n . mostly to Third W o r l d n a t i o n s . W h a t the r e s c u e t e a m d i d n ' t k n o w a s they w a t c h e d T o m M b o y a ' s life slip a w a y w a s t h a t this m a r v e l o u s d e v i c e had b e e n recalled from the A m e r i c a n m a r k e t by t h e U . L o s i n g M b o y a . Dumping T o m M b o y a was the hope o f t h e western world. An e m e r g e n c y r e s c u e s q u a d w a s by his side in m i n u t e s . In t h e classic i l l u s t r a t i o n .Drug companies and the Third World r e f o r m . g o v e r n m e n t . 1979. for to t h i s day we allow o u r b u s i n e s s l e a d e r s to sell. toxic p e s t i c i d e s . W a s h i n g t o n h o p e d . G r i i n e n t h a l w a r n e d l i c e n s e e s in late 1961 to s t o p m a k i n g c l a i m s that t h a l i d o m i d e w a s ' n o n . l e t h a l d r u g s . But i n p u b l i c i t y m a t e r i a l for W e s t Africa t h a l i d o m i d e c o n t i n u e d to be d e s c r i b e d a s ' c o m p l e t e l y h a r m l e s s ' ( K n i g h t l e y e t a l . e n e r g e t i c . . T h e y plugged him into t h e latest g a d g e t in r e s u s c i t a t i v e t e c h n o l o g y . they can be very slow to modify or r e m o v e o u t d a t e d i n d i c a t i o n s from their foreign labelling and p r o m o t i o n . 4 0 .t o x i c ' . . c o n t a m i n a t e d foods and o t h e r p r o d u c t s found unfit for A m e r i c a n c o n s u m p t i o n ( D o w i e . w a s p e r h a p s a s u b t l e r e t r i b u t i o n for the U . .

T h e D a l k o n Shield i s a n i n t r a .P r o v e r a w i t h o u t a p r e s cription. specifically U p j o h n ' s D e p o .P r o v e r a i s a n i n j e c t a b l e drug w h i c h p r e v e n t s c o n c e p t i o n in w o m e n for t h r e e to six m o n t h s . N o n e of these 'unfavourable reports' . R o b i n s has d u m p e d D a l k o n S h i e l d s i n s o m e 4 0 Third W o r l d c o u n t r i e s . P r o b l e m s with t h e d e v i c e w e r e t h e s u b j e c t of s o m e t h i n g of a coverup by A. It w a s found t h r o u g h early A m e r i c a n r e s e a r c h to be a s s o c i a t e d with such a w e l t e r o f side-effects t h a t t h e F D A has not only i n d i c a t e d t h a t the p r o d u c t i s n o t a p p r o v a b l e i n t h e U S . On 12 J u n e 1973 in t e s t i m o n y before t h e H o u s e of R e p r e s e n t a t i v e s I n t e r g o v e r n m e n t a l Relations s u b c o m m i t t e e . least of all in j u n g l e clinics. A I D p u r c h a s e d the c o n t r a c e p t i v e d e v i c e a t d i s c o u n t r a t e s for ' a s s i s t a n c e ' t o d e v e l o p i n g c o u n t r i e s after t h e p r o d u c t w a s b a n n e d i n t h e U S . T h e sale of an u n s t e r i l i s e d d e v i c e for i m p l a n t i n g within the h u m a n body is an unconscionable underc u t t i n g o f any n o t i o n o f m i n i m u m safety s t a n d a r d s . A . H. H u g e q u a n t i t i e s are being d u m p e d o n t h e T h i r d W o r l d . R o b i n s ' s D a l k o n Shield. R o b i n s . D o w i e p r o d u c e d a list of s t r a t e g i e s used in d u m p s which s h a r e s 258 . O n e simply c a n n o t c o u n t on h e a l t h w o r k e r s . T h r o u g h o u t C e n t r a l A m e r i c a o n e can w a l k i n t o a p h a r m a c y and p u r c h a s e D e p o . 1973: 3 6 4 ) . B u t surely this is p u s h i n g t h e r a t i o n a l i t y of coste f f e c t i v e n e s s b e y o n d its limits. T h e s t a g g e r i n g t h i n g a b o u t this has b e e n t h e i n v o l v e m e n t o f t h e U S g o v e r n m e n t ' s Office o f P o p u l a t i o n with t h e A I D . D e p o . 2 8 e c t o p i c p r e g n a n c i e s and a t least o n e d e a t h .w e r e v o l u n t a r i l y r e p o r t e d b y t h e c o m p a n y t o the ( S u b c o m m i t t e e o n H e a l t h . but has f o r b i d d e n h u m a n t e s t i n g o f t h e d r u g i n t h e U n i t e d S t a t e s .u t e r i n e d e v i c e w h i c h w a s recalled from t h e A m e r i c a n m a r k e t after it had killed at least 17 w o m e n . T h e i r m a i n p h a r m a c e u t i c a l case s t u d i e s are c o n t r a c e p t i v e s . to effectively and c o n s c i e n t i o u s l y sterilise d e v i c e s which t h e y h a v e c o m e to expect to be pre-sterilised.including 75 i n s t a n c e s o f u t e r i n e p e r f o r a t i o n . A I D justifies t h e d i s c o u n t D a l k o n d u m p o n t h e g r o u n d s o f g e t t i n g m o r e c o n t r a c e p t i o n for the aid d o l l a r . H . a R o b i n s r e p r e s e n t a t i v e a d m i t t e d t h a t t h e c o m p a n y ' s files c o n t a i n e d o v e r 4 0 0 ' u n f a v o r a b l e r e p o r t s ' from p h y s i c i a n s and o t h e r s a b o u t t h e D a l k o n Shield.P r o v e r a and A . D o u b l e s t a n d a r d s for T h i r d W o r l d c o n s u m e r s w e r e e v e n m o r e r e m a r k a b l e w h e n R o b i n s sold A I D unsterilised Shields i n bulk p a c k a g e s a t a 4 8 p e r c e n t d i s c o u n t .Drug companies and the Third World D o w i e ( 1 9 7 9 ) a n d his t e a m from Mother Jones m a g a z i n e have s u b j e c t e d t h e d u m p i n g p h e n o m e n o n t o p e n e t r a t i n g scrutiny. H .

S .a p r i m e d r u g m a r k e t w i t h its large p o p u l a t i o n a n d v i r u l e n t t r o p i c a l d i s e a s e s . C h a n g i n g a f o r m u l a slightly by a d d i n g or s u b t r a c t i n g a n i n e r t i n g r e d i e n t p r e v e n t s d e t e c t i o n b y s p e c t r o m e t e r s and o t h e r scanning devices keyed to certain molecular structures. or in a c o u n t r y a l o n g t h e w a y . 1979: 2 5 ) . H o w d o e s he do it? G u a t e m a l a h a s no such l a w . in fact. p a r t i c u l a r l y p e s t i c i d e m a n u f a c t u r e r s . T H E L A S T M I N U T E P U L L O U T : W h e n it looks as if a chemical being tested by the E n v i r o n m e n t a l Protection Agency won't p a s s .p e r h a p s via different r o u t e s . r e c e i v i n g a lot of bad publicity in the p r o c e s s . S o . ' T h a t w a y .to a small r e c o m b i n i n g facility or a s s e m b l y p l a n t you have set up w h e r e y o u ' r e d u m p i n g it.a s s r e p o r t e r from Mother Jones will find a bill of l a d i n g and e x p o s e y o u . D U M P T H E W H O L E F A C T O R Y : Many companies. t h e a s t u t e d u m p e r simply c h a n g e s its n a m e . D o n ' t d u m p it. O n e of the reasons why so many transnationals have p h a r m a c e u t i c a l manufacturing plants in G u a t e m a l a is that product r e g i s t r a t i o n is rapid and really only a f o r m a l i t y . i s simply a w o r l d w i d e s p r e a d o f m a n u f a c t u r i n g p l a n t s w h i c h always e n a b l e s the p h a r m a c e u t i c a l c o m p a n y to s o u r c e d r u g s for a region from a conv e n i e n t l y l o c a t e d p l a n t in a c o u n t r y w h i c h will quickly g r a n t a p p r o v a l . G u a t e m a l a s p e n d s very little e a c h y e a r r e g u l a t i n g d r u g s . which b e c o m e s the export nation. T H E F O R M U L A C H A N G E : A favorite w i t h drug and p e s t i c i d e c o m p a n i e s . To my k n o w l e d g e a 259 . E x p o r t t h e i n g r e d i e n t s s e p a r a t e l y .has a law t h a t says no o n e m a y i m p o r t a d r u g t h a t is n o t a p p r o v e d for use in t h e c o u n t r y of o r i g i n . a s D o w i e d e s c r i b e s it. T H E S K I P : Brazil .Drug companies and the Third World r e m a r k a b l e s i m i l a r i t y with a list I c o l l e c t e d from my i n t e r v i e w s w i t h pharmaceutical executives: T H E N A M E C H A N G E : W h e n a p r o d u c t i s w i t h d r a w n from the A m e r i c a n m a r k e t . T H E I N G R E D I E N T D U M P : Y o u r p r o d u c t w i n d s u p being b a n n e d . A real c h a l l e n g e for t h e wily d u m p e r . t h e m a n u f a c t u r e r will w i t h d r a w t h e a p p l i c a t i o n for r e g i s t r a t i o n and t h e n label t h e c h e m i c a l 'for e x p o r t o n l y . t h e d r u g i s first s h i p p e d t o G u a t e m a l a . will simply close d o w n their A m e r i c a n p l a n t s and b e g i n m a n u f a c t u r i n g a h a z a r d o u s p r o d u c t i n a c o u n t r y c l o s e to a g o o d m a r k e t . t h e m a n u f a c t u r e r d o e s n ' t h a v e t o notify the i m p o r t i n g c o u n t r y that the chemical is banned in the U . M o r e c o m m o n t h a n 'the s k i p ' . R e a s s e m b l e t h e m a n d d u m p t h e p r o d u c t ( D o w i e . S o m e w i s e .

D r u g . did a d m i t t h a t w h e n a J a p a n e s e c o n t r a c t had fallen t h r o u g h . P e r h a p s t h e m o s t c o m m o n form o f p h a r m a c e u t i c a l d u m p i n g i s o f p r o d u c t s w h o s e shelf life has e x p i r e d . ' A n o t h e r p h e n o m e n o n that s o m e e x e c u t i v e s w e r e p r e p a r e d t o c o n c e d e m i g h t h a p p e n from t i m e t o t i m e w a s t h e d u m p i n g i n t h e T h i r d W o r l d of d r u g s w h i c h fail to m e e t t h e quality specifications of the developed country w h e r e they are manufactured. a V i c e .7 ) cites c a s e s from M a l a y s i a w h e r e i m p o r t e d U S m e d i c i n e s had their date s t a m p o b l i t e r a t e d . w h o d e n i e d t h a t his c o m p a n y w o u l d ever d u m p a b a t c h w h i c h fell b e l o w s p e c i f i c a t i o n s . and other reported cases of expired drugs ( i n c l u d i n g o u r friend c h l o r a m p h e n i c o l ) i n t h e W e s t I n d i e s and India. t h e e x p o r t of c a p i t a l . An A u s t r a l i a n e x e c u t i v e . M e d a w a r (1979: 7 5 . O n e e x e c u t i v e w a s i n s i s t e n t t h a t this w o u l d n e v e r h a p p e n quite so blatantly with an A m e r i c a n c o m p a n y : T h i s c o m p a n y w o u l d n e v e r e x p o r t e x p i r e d d r u g s . t h e p r o d u c t w a s sold t o 260 . u n n e c e s s a r i l y . has p l e a d e d b e f o r e t h e U S S e n a t e : ' T o t h e e x t e n t that t h e F e d e r a l F o o d . t e c h n o l o g y . It is difficult t o e s t i m a t e t h e e x t e n t t o w h i c h t r a n s n a t i o n a l d u m p e x p i r e d d r u g s . E v e n publicly.Drug companies and the Third World p r o d u c t s u b m i t t e d for a p p r o v a l by a t r a n s n a t i o n a l c o m p a n y h a s n e v e r b e e n r e j e c t e d . t h e r e is wide scope for e c o n o m i s i n g on quality control checks which would be mandatory in t h e U n i t e d S t a t e s . and j o b s ' ( S u b c o m m i t t e e o n H e a l t h and the E n v i r o n m e n t . G u a t e m a l a is a l s o an a t t r a c t i v e l o c a t i o n b e c a u s e t h e r e is effectively no r e g u l a t i o n of t h e p h a r m a c e u t i c a l i n d u s t r y . A d o u b l e s t a n d a r d of m a n u f a c t u r i n g quality is a l s o f r e q u e n t l y p e r p e t r a t e d by t h e t r a n s n a t i o n a l which g r a n t s a l i c e n c e for m a n u f a c t u r e to local T h i r d W o r l d c o m p a n i e s n o t o r i o u s for c u t t i n g c o r n e r s on quality. it c a u s e s . Since factories are n e v e r i n s p e c t e d by g o v e r n m e n t officials. All o f t h i s is fairly freely a d m i t t e d by all but the public r e l a t i o n s staff of p h a r m a c e u t i c a l c o m p a n i e s . B u t i t m i g h t send off p r o d u c t w h i c h is n e a r e x p i r y k n o w i n g full well t h a t by t h e t i m e it got to t h e c o n s u m e r it w o u l d be past e x p i r y . 1976: 5 2 7 ) .P r e s i d e n t o f o n e o f t h e m o s t r e s p o n s i b l e p h a r m a c e u t i c a l c o m p a n i e s . and C o s m e t i c A c t limits t h e e x p o r t o f d r u g s a p p r o v e d for use a b r o a d . Lilly. I m m e d i a t e l y the c o m p a n y is in a p o s i t i o n to say t h a t t h e p r o d u c t is a p p r o v e d in the c o u n t r y of m a n u f a c t u r e . Two Hoffman-La Roche executives were jailed in Morocco in 1981 for o b l i t e r a t i n g t h e e x p i r y d a t e s on a n u m b e r of p r o d u c t s to e n a b l e t h e m to be sold after the d u e d a t e ( M u l l e r . 1982: 147).

S a m p l e s o f t h e final p r o d u c t w o u l d s i m p l y b e t a k e n out and tested while the product was in transit.Drug companies and the Third World M a l a y s i a with J a p a n e s e l a b e l l i n g w h i c h M a l a y s i a n s w o u l d n o t h a v e b e e n able t o r e a d . b e c a u s e o f its strict r e q u i r e m e n t s for e s t a b l i s h i n g local m a n u f a c t u r i n g p l a n t s . or even to m a k e some m o n e y o n t h e side b y sales o n t h e black m a r k e t . T h e r e i s only o n e c a s e w h e r e a n a l l e g a t i o n o f s m u g g l i n g by a r e p u t a b l e c o m p a n y h a s g o n e p u b l i c : I n C h i l e u n d e r t h e A l l e n d e g o v e r n m e n t . ' T h e p r a c t i c e c u t s d o w n d e l i v e r y d e l a y s . American attitudes to dumping [My c o m p a n y ] a d o p t s t h e view that w h e n it has satisfied itself of t h e safety a n d efficacy o f a d r u g . t h e r e m i g h t be a s i t u a t i o n a l i n d u c e m e n t to sell it to i m p a t i e n t c u s t o m e r s who resent d e l a y s . B u t t h e p r o b l e m a r i s e s w h e n t h e foreign s u b s i d i a r y is told t h a t t h e b a t c h has failed to p a s s q u a l i t y c o n t r o l . Unfortunately the m i l i t a r y c o u p o f S e p t e m b e r 1973 p r e v e n t e d t h e legal c a s e r e a c h i n g any c o n c l u s i o n ( H e l l e r . I n s t e a d of d e s t r o y i n g t h e b a t c h . T w o s e n i o r A u s t r a l i a n executives of one A m e r i c a n transnational brazenly admitted that their c o m p a n y entered the Indonesian m a r k e t by the A u s t r a l i a n subsidiary posting the product to an agent in Singapore w h o w o u l d s m u g g l e it into I n d o n e s i a for b l a c k m a r k e t s a l e s on a o n e . Trythall (1977) estimates that 15 p e r c e n t of t h e d r u g s sold in I n d o n e s i a are s m u g g l e d from S i n g a p o r e . w h e n i t h a s r e a c h e d t h a t b e n c h 261 . is a victim of m u c h s m u g g l i n g past c u s t o m s officials. An executive of the A u s t r a l i a n subsidiary of a n o t h e r transn a t i o n a l a d m i t t e d t h a t b a t c h e s o f p r o d u c t w o u l d often b e s h i p p e d from t h e U n i t e d S t a t e s t o A u s t r a l i a b e f o r e q u a l i t y c o n t r o l c h e c k s w e r e c o m p l e t e d . I n d o n e s i a .o n e basis t o I n d o n e s i a n p h a r m a c i s t s . 1977: 5 5 ) . T h e G o v e r n m e n t felt t h a t t h e o n l y w a y t o p r e v e n t such activities w a s state control o f t h e c o m p a n y .t o . I n this s i t u a t i o n . He claimed t h a t 'All d r u g c o m p a n i e s o r p h a r m a c e u t i c a l c o m p a n i e s i n A u s t r a l i a i m p o r t d r u g s i n a n t i c i p a t i o n like t h i s . T h e c o r p o r a t i o n can d e n y r e s p o n s i b i l i t y for p o o r quality p r o d u c t d u m p e d t h r o u g h t h e black m a r k e t . R e p u t a b l e p h a r m a c e u t i c a l c o m p a n i e s d o e n g a g e i n illegal drug s m u g g l i n g . Pfizer's s u b s i d i a r y w a s a c c u s e d o f s m u g g l i n g d r u g s illegally a c r o s s t h e b o r d e r t o Bolivia a n d P e r u . any a d v e r s e r e a c t i o n s a r i s i n g from p o o r q u a l i t y i n t h e p r o d u c t c o u l d easily be blamed on 'counterfeiters'.

B u t if t h e d i s e a s e a g a i n s t w h i c h t h a t d r u g is m o s t useful is a s c o u r g e in t r o p i c a l c o u n t r i e s . t h e n t h o s e c o u n t r i e s m i g h t be justified in d e c i d i n g t h a t . US law d o e s not p e r m i t p h a r m a c e u t i c a l c o m p a n i e s t o e x p o r t d r u g s from t h e U n i t e d S t a t e s w h i c h a r e not a p p r o v e d for m a r k e t i n g within the U n i t e d S t a t e s . t h e y are m a n u f a c t u r i n g o v e r s e a s in a m u c h less efficient way t h a n t h e y w o u l d i f t h e y w e r e a b l e t o m a n u f a c t u r e and e x p o r t from t h e U n i t e d S t a t e s ( S u b c o m m i t t e e o n H e a l t h . Pfizer. ' I n the last few y e a r s g r e a t p r e s s u r e has b e e n b u i l d i n g up to c h a n g e this law. B u t i t has a l s o b e e n a r g u e d t h a t d o i n g a w a y w i t h t h e e x p o r t p r o h i b i t i o n w o u l d e n a b l e U S c o m p a n i e s t o m a k e a m o r e meaningful cont r i b u t i o n t o solving h e a l t h p r o b l e m s w h i c h a r e not significant within the U n i t e d States but i m p o r t a n t e l s e w h e r e : A g o o d e x a m p l e of this situation is a Pfizer d r u g . I t h a s b e e n c o r r e c t l y p o i n t e d o u t t h a t different c o u n t r i e s have d i f f e r e n t b e n e f i t . T h i s d o e s not p r e v e n t m a n y c o m p a n i e s from b l a t a n t l y v i o l a t i n g t h e law. for t h e m . I f G u a t e m a l a will let us in first b e c a u s e t h e y h a v e no r e g u l a t i o n s . P e r h a p s in t h e U n i t e d S t a t e s t h e a b u s e p o t e n t i a l of a d r u g with s e r i o u s side-effects is so g r e a t t h a t b a n n i n g it is justified. but t h e y could n o t d o t h a t b e c a u s e o f t h e U . S .t h i r d o f t h e p o p u l a t i o n . M a n c i l . So t h e D r u g R e g u l a t i o n R e f o r m Bills of 1978 and 1979 p r o p o s e d to the C o n g r e s s that export of drugs not a p p r o v e d in the United 262 . So once satisfied of safety. In Brazil a l o n e it affects 2 0 t o 4 0 m i l l i o n p e o p l e . ' U n l e s s t h e p a c k a g e b u r s t s o p e n o n t h e d o c k .Drug companies and the Third World m a r k . you have n o c h a n c e o f b e i n g c a u g h t . " At p r e s e n t . A s o n e e x e c u t i v e r e m a r k e d . for s c h i s t o s o m i a s i s . t h e n we will go to get it r e g i s t e r e d in e v e r y m a r k e t we can i r r e s p e c t i v e o f w h a t t h e r e g u l a t i o n s of any c o u n t r y say. t h e benefits outweigh the risks. c o m p a n y w a n t e d t o s y n t h e s i z e t h e d r u g h e r e and e x p o r t i t t o B r a z i l . t h e U . 1978: 1618). largely because it e n c o u r a g e s t h e shifting of m a n u f a c t u r i n g o p e r a t i o n s offshore for d r u g s not a p p r o v e d i n the U n i t e d S t a t e s . law.r i s k ratios for p a r t i c u l a r m e d i c i n e s . T h e a b o v e view of a senior A m e r i c a n e x e c u t i v e reflects t h e m o r a l s t a n c e t h a t i s m o s t typical o f p h a r m a c e u t i c a l e x e c u t i v e s w i t h r e s p e c t to p r o d u c t r e g i s t r a t i o n : ' W e k n o w w h e n a d r u g is safe.b o r n e d i s e a s e t h a t affects 2 0 0 to 500 m i l l i o n p e o p l e t h r o u g h o u t t h e w o r l d . t h e n we will get it r e g i s t e r e d in G u a t e m a l a i n t h e f i r s t six m o n t h s . S o . we go for b r o k e . o n e . T h i s is a s n a i l . S . satisfied o u r c o r p o r a t e c o n s c i e n c e if you like.

1978: 1619). Slightly u n d e r 20 r e q u i r e r e g i s t r a t i o n . a n e x p o r t could b e c o n t r a r y t o t h e p u b l i c h e a l t h o f t h e U n i t e d S t a t e s if a d r u g of a b u s e could be e x p o r t e d and t h e n s m u g g l e d b a c k into t h e U n i t e d S t a t e s . H o w e v e r . rather than by p u b l i c h e a l t h officials. but only a small n u m b e r do medical review o f t h e drugs. I w a s in C u b a last m o n t h and d i s c o v e r e d . I n a d d i t i o n . Two of these are medical reviews by doctors' trade associations. The drug c o m p a n i e s are in a p o s i t i o n w h e r e t h e y c a n g o d o w n t h e r e and lobby foreign officials. that the N a t i o n a l M e d i c a l L i b r a r y o f C u b a has n o m e d i c a l l i t e r a t u r e b e y o n d the time o f t h e revolution. T h o s e d e v e l o p i n g c o u n t r i e s t h a t d o h a v e any kind o f drug c o n t r o l a r e l o o k i n g at c h e m i c a l p u r i t y of d r u g e n t i t y . T h e large m a j o r i t y d o not h a v e t h e t o p quality m e d i c a l l i b r a r i e s e v e n . claims w h i c h w e k n o w h a v e not b e e n p r o v e n . for e x a m p l e . T h e q u e s t i o n i s h o w high d o a b s t r a c t d e m o c r a t i c v a l u e s like national sovereignty rate c o m p a r e d to protection of consumers 263 . 1978: 6 4 9 ) . to my s h o c k . O f 2 2 L a t i n A m e r i c a n c o u n t r i e s . r a t h e r t h a n at the d e s i g n a n d c o n d u c t of safety and effectiveness s t u d i e s ( S u b c o m m i t t e e o n H e a l t h . M a n y of t h e s e c o u n t r i e s do not have s p e c i a l i s t s t o e v a l u a t e d r u g c o m p a n y p r o m o t i o n s . A n i t a J o h n s o n of the E n v i r o n m e n t a l Defense Fund argued that national sovereignty o f T h i r d World health regulatory a g e n c i e s to m a k e t h e i r o w n c h o i c e s is a c h i m e r a : C e r t i f i c a t i o n by foreign g o v e r n m e n t s in d e v e l o p i n g c o u n t r i e s is a n e g l i g i b l e p r o t e c t i o n for c o n s u m e r s t h e r e .b e n e f i t d e c i s i o n s c o n c e r n i n g t h e h e a l t h o f their own c i t i z e n s . and t h e officials are essentially helpless ( S u b c o m m i t t e e o n H e a l t h . T h e a r g u m e n t s for d o i n g a w a y with t h e e x p o r t p r o h i b i t i o n s e e m c o n v i n c i n g . A m e r i c a s h o u l d g r a n t o t h e r g o v e r n m e n t s t h e s o v e r e i g n t y t o m a k e their o w n r i s k . provided that the recipient g o v e r n m e n t is notified o f t h e r e g u l a t o r y s t a t u s o f t h e d r u g i n t h e U n i t e d S t a t e s and signifies t h a t i t d o e s n o t object t o t h e i m p o r t a t i o n o f t h e d r u g . only 12 r e q u i r e any kind of r e g i s t r a t i o n of i m p o r t e d d r u g s . m a k e e x t r a v a g a n t c l a i m s for their d r u g s . B u t w h a t ' c o n t r a r y t o t h e p u b l i c h e a l t h o f t h e foreign c o u n t r y ' m i g h t m e a n w a s not clear. C l e a r l y . t h e 1978 D r u g R e f o r m Bill i n c l u d e d r e f e r e n c e to a vaguely d e f i n e d right o f t h e F D A t o p r o h i b i t e x p o r t i f this w a s "contrary t o t h e p u b l i c h e a l t h o f t h e foreign c o u n t r y o r t h e U n i t e d S t a t e s ' .Drug companies and the Third World States be allowed. T h e y h a v e a nice liberal ring a b o u t t h e m .

C o l l i n s . 30 p e r c e n t said w i t h t h e e x p o r t i n g c o u n t r y . D o e s the U n i t e d States no longer have pride in national standards? A final w e a k n e s s o f t h e n a t i o n a l s o v e r e i g n t y a r g u m e n t is t h a t it p r e s u p p o s e s that Third W o r l d g o v e r n m e n t s want sovereignty over t h e safety o f i m p o r t e d p r o d u c t s . 1978: 1332). J.Drug companies and the Third World from p r o d u c t s m a d e i n o n e ' s c o u n t r y ? O p p o n e n t s o f t h e reform a r g u e t h a t t h e suffering o f c o n s u m e r s has s u b s t a n c e w h i l e n a t i o n a l s o v e r e i g n t y has no s u b s t a n c e for w a n t of t r a i n e d g o v e r n m e n t officials t o a p p l y t h e s o v e r e i g n t y . G a e d e k e and U d o . B u t m a n y o f u s identify m o r e strongly with the c o n s u m e r s w h o will die i n t h e T h i r d W o r l d t h a n with their g o v e r n m e n t s w h o s o often a r e t o t a l i t a r i a n and c o r r u p t . ' I n saying t h a t . P e r h a p s a n a c c e p t a b l e a n s w e r t o t h e m o r a l d i l e m m a w a s put f o r w a r d by an A m e r i c a n c i t i z e n . T h e g o v e r n m e n t r e p r e s e n t a t i v e s w e r e a s k e d : ' W h o should set q u a l i t y and safety s t a n d a r d s for p r o d u c t s sold i n t e r n a t i o n a l l y ? ' Forty-five per cent said the r e s p o n s i b i l i t y s h o u l d lie with t h e i m p o r t i n g c o u n t r y . s a i d : ' A s a m a t t e r of p a t r i o t i s m . F o r e i g n g o v e r n m e n t s w h o plead for a l l o w i n g e x p o r t of a p r o d u c t w h i c h has a m o r e f a v o u r a b l e 264 . but w e will n o t g i v e t h e m a n y t h i n g w h i c h d o e s not m e e t o u r c o r p o r a t e s t a n d a r d . I o b j e c t w h e n they w o u l d be m a r k e d . Less national sovereignty than t h e s o v e r e i g n t y o f t h e dollar! I t d o e s s e e m t h a t liberal A m e r i c a n s a r e b e i n g s e d u c e d by a high political p r i n c i p l e into s u p p o r t i n g a p o l i c y w h i c h will a l l o w powerful d r u g c o m p a n i e s t o h e a p u n t o l d e x p l o i t a t i o n on the c o n s u m e r s of the Third World.d e v e l o p e d and T h i r d W o r l d .A k a (1974) c o n d u c t e d a s u r v e y of g o v e r n m e n t r e p r e s e n t a t i v e s from 58 c o u n t r i e s . S u r e l y n a t i o n s o w e t h e m s e l v e s t h e s a m e kind o f p r i d e a s t h e c o m p a n y w h i c h says: 'In G u a t e m a l a t h e y ' l l t a k e a n y t h i n g . The choice b e t w e e n n a t i o n a l s o v e r e i g n t y and c o n s u m e r p r o t e c t i o n i s a m o r a l l y p e r p l e x i n g o n e . S u r e l y t h e p r o p e r p o s i t i o n is for g o v e r n m e n t s as a m a t t e r of c o u r s e not t o a l l o w t h e e x p o r t o f p r o d u c t s w h i c h are r e g a r d e d a s unsafe for t h e i r o w n citizens. O n e m u s t also q u e s t i o n t h e i m p o r t a n c e o f t h e liberal d e m o c r a t i c ideal o f n a t i o n a l s o v e r e i g n t y w h e n one is considering undemocratic regimes w h o . t h e c o m p a n y i s q u i t e r i g h t l y d e n y i n g national sovereignty in the name of pride in corporate standards. w h o in o p p o s i n g t h e e x p o r t o f d r u g s w h i c h w e r e not fit for A m e r i c a n c o n s u m p t i o n . " M a d e in the United States" ' (Subcommittee on Health. m a k e many of their decisions about the pharmaceutical i n d u s t r y on the strength of bribes. as demonstrated in C h a p t e r 2. Mr L. and 25 per c e n t o p t e d for c o n t r o l by an i n d e p e n d e n t international body.

J o h n s o n a n d J o h n s o n and S y n t e x followed with testing i n P u e r t o R i c o . 1982: 1 1 0 .b e n e f i t ratios vary s o m e w h a t with g e o g r a p h y . t h e n t h e F D A w o u l d n o t b e i n u n d a t e d w i t h foreign g o v e r n m e n t s k n o c k i n g a t t h e i r d o o r . T h e first major U S clinical trials w e r e c o n d u c t e d o n w o m e n from l o w . B u t t h e b u r d e n o f p e r s u a s i o n should b e o n t h e foreign g o v e r n m e n t w h i c h w a n t s t h e e x p o r t e r t o c o m p r o m i s e its n a t i o n a l s t a n d a r d s . S i m p l y notifying t h e foreign g o v e r n m e n t t h a t t h e p r o d u c t i s b a n n e d in t h e U S .1 1 ) .b e n e f i t r a t i o i n t h e i r p a r t o f t h e w o r l d s h o u l d b e listened t o . If this d o e s not h a p p e n . T h e s e are j u s t s o m e of the r e a s o n s why risk-benefit ratios are almost invariably w o r s e in the Third W o r l d . I f t h e r e really w e r e a b u r d e n o f p r o o f placed o n g o v e r n m e n t s w h o w a n t e d t o i m p o r t b a n n e d d r u g s from t h e U S . 8 4 p e r cent o f w h o m w e r e of M e x i c a n e x t r a c t i o n and 6 p e r cent black ( H e l l e r . A m e r i c a n p a t i e n t s w h o are a d m i n i s t e r e d d r u g s with a high risk and high benefits h a v e t h e i r s y m p t o m s m o n i t o r e d carefully by a qualified p h y s i c i a n . 1977: 5 2 . and s a y i n g ' t a k e it at y o u r o w n peril' is not placing t h e b u r d e n o f p r o o f o n t h e foreign g o v e r n m e n t . L a t e r r e f i n e m e n t s i n t h e form o f l o w . and p r o b a b l y t a k e i n a p p r o p r i a t e d o s a g e s ( M u l l e r . T h e first l a r g e . Third World guinea pigs A g r e a t e r s o u r c e o f r e s e n t m e n t i n t h e T h i r d W o r l d t h a n the d u m p ing of old or u n s a f e d r u g s h a s b e e n t h e t e s t i n g of n e w d r u g s w h i c h a r e r e g a r d e d a s h a v i n g r i s k s t o o high for t e s t i n g i n d e v e l o p e d countries. A G u a t e m a l a n will typically buy t h e s a m e d r u g from a p h a r m a c y w i t h o u t a p r e s c r i p t i o n . C o n c e i v a b l y t h e e x p i r y d a t e w h i c h w a s o n c e s t a m p e d o n the b o t t l e will h a v e b e e n e r a s e d .Drug companies and the Third World r i s k .d o s e oral p r o g e s t e r o n e s 265 .s c a l e clinical trials o n oral c o n t r a c e p t i v e s w e r e c o n d u c t e d b y S e a r l e i n P u e r t o R i c o a r o u n d 1953. influenced b y c o m p a n y sales r e p r e s e n t a t i v e s w h o s e c l a i m s are not subject t o g o v e r n m e n t r e g u l a t i o n . m a y r e c o m m e n d t h e p o t e n t d r u g for a n u n a p p r o v e d use u n t h i n k a b l e i n t h e U n i t e d S t a t e s . The most celebrated example is the development of c o n t r a c e p t i v e s . W h i l e i t m i g h t b e t r u e t h a t r i s k . t h e p h y s i c i a n can be sued. T h e u n t r a i n e d ' p h a r m a c i s t ' . H a i t i a n d M e x i c o .4 ) .i n c o m e g r o u p s . T o m a k e t h i n g s w o r s e . t h e u n s u p e r v i s e d p a t i e n t m i g h t t a k e t h e d r u g with a l c o h o l o r s o m e o t h e r d r u g w h i c h i n t e r a c t s d a n g e r o u s l y with it. t h e m o r e f u n d a m e n t a l reality i s t h a t risk-benefit ratios a c r o s s t h e b o a r d a r e a l m o s t i n v a r i a b l y w o r s e i n t h e Third W o r l d t h a n i n t h e U n i t e d S t a t e s .

Drug companies and the Third World w e r e initially t e s t e d i n C h i l e b y S y n t e x and M e r c k ( G e r m a n y ) . t e s t i n g in a d e v e l o p e d c o u n t r y . i f t h e p r o d u c t i s found to be unsafe by s u b s e q u e n t . given t h a t t h e p a t e n t life of a n e w d i s c o v e r y is finite. G r a b o w s k i and V e r n o n . W h e n r e s e a r c h into its possible effect on t h e w e i g h t and b l o o d p r e s s u r e o f w o m e n t a k i n g the injections w a s c a r r i e d o u t in S o u t h Africa. t h e e m p h a s i s w a s o n illiterate l o w e s t . t h e r e a r e i n c e n t i v e s for c o m p a n i e s to get a p r o d u c t r e g i s t e r e d w h e r e v e r t h e y can as early as t h e y can. P h i l i p p i n e s .i n c o m e p e o p l e . i n c l u d i ng v a r i o u s t e c h n i q u e s for t h e use of i n t r a . m o r e s o p h i s t i c a t e d . B u t t h e r e are o t h e r m o r e p r a c t i c a l r e a s o n s for g o i n g to t h e T h i r d W o r l d first with d r u g s for which fears of sideeffects a r e g r e a t . and m o r e recently the addition of copper to these devices. P e r u . . Clinical d a t a from T h i r d W o r l d c o u n t r i e s d o e s c o u n t for s o m e t h i n g . I n f o r m e d c o n s e n t r e g u l a t i o n s for d r u g t e s t i n g do not exist in t h e T h i r d W o r l d .u t e r i n e d e v i c e s . 1968). M e x i c o and P a k i s t a n . [ D e p o . d i s t r i b u t i o n o f t h e d r u g i n t h e T h i r d W o r l d can act as a d e v i c e for s c r e e n i n g o u t d r u g s w h i c h are o b v i o u s l y i n a p p r o p r i a t e for e v e n a t t e m p t i n g r e g i s t r a t i o n i n d e v e l o p e d c o u n t r i e s . . Sri L a n k a . t h e s e c o n s t i t u t i n g 345 o f t h e 390 w o m e n t e s t e d ( Z a n a r t u . t w o p r o . H e l l e r ' s s t a t e m e n t s e e m s t o imply t h a t d r u g c o m p a n i e s opt t o test particularly d a n g e r o u s drugs in the Third World because poor p e o p l e a r e r e g a r d e d a s m o r e d i s p e n s a b l e . and i n s o m e m e a s u r e this i s u n d o u b t e d l y t r u e . E g y p t . . T h a i l a n d . H o w e v e r . t h e r e s e a r c h e r s saw fit to e x a m i n e t h e s e f e a t u r e s b y e x p e r i m e n t i n g with N e g r o (75 p e r c e n t ) a n d A s i a t i c (25 per c e n t ) w o m e n . I f G u a t e m a l a n I n d i a n s fall ill at t h e first sniff of t h e d r u g .i n d u s t r y e c o n o m i s t s .P r o v e r a ] has b e e n t e s t e d i n B r a z i l . but not very m u c h . This w a s initially t e s t e d in C h i l e w i t h large scale followup s u r v e y s in C o l u m b i a . H o n g K o n g . M o r e i m p o r t a n t l y . I r o n i c a l l y . t h e n t h e c o s t s o f m u c h e x p e n s i v e t e s t i n g i n t h e U n i t e d S t a t e s can b e s a v e d . T a i w a n and T h a i l a n d . I r a n . P e a s a n t s do not sue g l o b a l c o r p o r a t i o n s for injury. r a t h e r t h a n o n w o m e n w i t h t h e s a m e c o l o u r e d skin a s t h e r e s e a r c h e r s ( H e l l e r . t h e n a t least t h e c o m p a n y has m a d e s o m e m o n e y i n t h e T h i r d W o r l d w h i l e t h e going w a s g o o d . 2 266 . E v e n w i t h i n C h i l e . C h i l e . and t h a t m o n o p o l y profits will only a c c r u e while t h e p a t e n t lives. w i t h a g e n c i e s like t h e F D A . O t h e r m e t h o d s o f c o n t r a c e p t i o n r e c e i v e d their t e s t i n g i n this w a y . M o r e o v e r . H o n d u r a s . K o r e a . 1977: 52-4).

I n d e e d . M u l t i n a t i o n a l firms t h e r e f o r e h a v e t h e o p t i o n o f s c r e e n i n g n e w d r u g s a b r o a d and p e r f o r m i n g d u p l i c a t e U . C l i n i c a l d a t a from a T h i r d W o r l d c o u n t r y m i g h t assist r e g i s t r a t i o n 267 . G r a b o w s k i a n d V e r n o n g o o n t o cite L a s a g n a and W a r d e l l ' s e v i d e n c e that because o f t h e 'regulatory n i g h t m a r e ' in the U n i t e d S t a t e s . I t has a l r e a d y b e e n p o i n t e d o u t that T h i r d W o r l d clinical d a t a are n o t a g r e a t d e a l of use in influencing r e g i s t r a t i o n d e c i s i o n s in d e v e l o p e d c o u n t r i e s . A m e r i c a n firms a r e i n c r e a s i n g l y shifting t h e i r initial clinical t e s t i n g o f f s h o r e . t h e r e can b e indirect influences.Drug companies and the Third World c o n f i r m t h a t t h e s e k i n d s o f c o n s i d e r a t i o n s d o c o m e into play with drug research and d e v e l o p m e n t decisions. S . T h e y can also p e r f o r m different p h a s e s o f d e v e l o p m e n t a l t e r n a t i v e l y h e r e a n d a b r o a d i n o r d e r t o r e d u c e r e g u l a t o r y lags a n d b o t t l e n e c k s ( G r a b o w s k i and V e r n o n . L a s a g n a and W a r d e l l (1975) studied new d r u g c o m p o u n d s clinically tested b y 1 5 large A m e r i c a n c o m p a n i e s b e t w e e n 1960 a n d 1974.9 ) . 1979: 4 8 . T h u s U . N e v e r t h e l e s s only a small fraction of c o m p o u n d s e n t e r i n g clinical t e s t i n g i n t h e U n i t e d States ever b e c o m e c o m m e r c i a l p r o d u c t s ( W a r d e l l and L a s a g n a indicate that t h i s fraction is n o w less t h a n 10 p e r c e n t ) . . N e v e r t h e l e s s . F i r s t . . M u l t i n a t i o n a l firms h a v e s o m e significant a d v a n t a g e s i n their ability t o r e s p o n d t o t h e m o r e s t r i n g e n t r e g u l a t o r y c o n d i t i o n s that h a v e e v o l v e d i n this c o u n t r y . S . S o m e i m p o r t a n t i n s t i t u t i o n a l b a r r i e r s t o this strategy d o e x i s t . h o w e v e r . trials o n t h e relatively small fraction o f d r u g s for w h i c h n e w d r u g a p p l i c a t i o n s ( N D A s ) are s u b m i t t e d t o t h e F D A . t h e y can i n t r o d u c e n e w drug p r o d u c t s i n foreign m a r k e t s ( w h e r e r e g u l a t o r y c o n d i t i o n s a r e less s t r i n g e n t ) p r i o r to (or in lieu of) i n t r o d u c t i o n in the U n i t e d S t a t e s . by 1974 m o r e w e r e b e i n g t e s t e d a b r o a d initially t h a n w e r e b e i n g t e s t e d first i n t h e U S . H i s t o r i c a l l y t h e F D A has b e e n unwilling t o a c c e p t d a t a from foreign clinical trials or p a t i e n t e x p e r i e n c e s . W h e r e a s b e f o r e 1966 t h e s e firms ( w h i c h a c c o u n t for 80 per c e n t of US R & D e x p e n d i t u r e ) did virtually all t h e i r clinical t e s t i n g first in t h e U n i t e d S t a t e s . e v e n i f t h e y c h o o s e t o i n t r o d u c e t h e i r n e w d r u g s first and in g r e a t e r n u m b e r s a b r o a d . T h i s a l l o w s t h e m t o gain k n o w l e d g e and realize sales r e v e n u e s w h i l e a n e w d r u g c o m p o u n d r e m a i n s u n d e r r e g u l a t o r y r e v i e w and d e v e l o p m e n t in this c o u n t r y . m u l t i n a t i o n a l firms a l s o c a n p e r f o r m R & D a c t i v i t i e s i n foreign c o u n t r i e s i n o r d e r t o r e d u c e t i m e d e l a y s and t h e overall costs o f d e v e l o p i n g n e w p r o d u c t s . . In a d d i t i o n . f i r m s h a v e i n c e n t i v e s t o p e r f o r m t h e i r R & D i n this c o u n t r y .

manufacturing paths. E x p e r t s t h r o w d a t a o n all o f t h e v a r i a b l e s into the c o m p u t e r t o c o m e up w i t h an o p t i m a l s o l u t i o n . s a y . 1 . which would include registration paths. a n d m o d i f i c a t i o n s t o t h e g r a n d plan w o u l d b e m a d e a c c o r d i n g l y . T h e r e a r e a m y r i a d of factors to c o n s i d e r in d e c i d i n g in which c o u n t r i e s to c o m m e n c e clinical trials: w h e r e to go for a p p r o v a l first. skill o f t h e pharmaceutical workforce in that country.1 is an oversimplified v e r s i o n of a realistic o n e .e x p o r t i n g o p e r a t i o n s . Different sections o f t h e P E R T m o d e l would be circulated to various constituencies in the c o r p o r a t i o n w h o w o u l d send back c o m m e n t s o n h o w silly t h e c o m p u t e r h a d b e e n . B e l g i u m is in fact often c h o s e n by p h a r m a c e u t i c a l c o m p a n i e s as a s t r a t e g i c link in their i n t e r n a t i o n a l m a r k e t i n g m a n o e u v r e s b e c a u s e it is a d e v e l o p e d c o u n t r y w i t h rapid n e w d r u g a p p r o v a l ( n o r m a l l y six t o eight m o n t h s ) . T h e figure i m a g i n e s t h a t a sensible solution t o t h e h y p o t h e t i c a l p r o b l e m w o u l d be to first m a r k e t and clinically test the drug in P a r a g u a y (where new product registration generally t a k e s only a m o n t h ) . and n u m e r o u s o t h e r s . B e l g i u m o r s o m e o t h e r c o u n t r y w i t h m o d e r a t e but not high r e g u l a t o r y s t a n d a r d s . a simplified e x a m p l e of which is illust r a t e d i n F i g u r e 7 . must be considered. T o l e r a n c e s have t o b e built into t h e m o d e l with " e x p e c t e d d a t e s ' qualified b y ' p r o b a b l e d e l a y s ' and ' p o s s i b l e d e l a y s ' . S o m e E u r o p e a n c o m p a n i e s g o for r e g i s t r a t i o n i n t h e i r h o m e c o u n t r y first. Large c o r p o r a t i o n s p u t s y s t e m s analysis g r o u p s o n t o t h e s e p r o b l e m s . T h e n the d a t a from this clinical t e s t i n g ( p r e s u m a b l y t o g e t h e r w i t h a n i m a l t e s t i n g from t h e U n i t e d S t a t e s ) w o u l d be used to a t t e m p t registration in Belgium. F i n a l l y . it s h o u l d be p o i n t e d o u t t h a t m a n y large c o r p o r a t i o n s do not go in for this kind of g r a n d p l a n n i n g very m u c h at all. cost o f m a n u f a c t u r e . T h e h y p o t h e t i c a l P E R T d i a g r a m in F i g u r e 7. s e c o n d and t h i r d . The Belgian approval w o u l d t h e n be used to gain e n t r y to a n u m b e r of large T h i r d W o r l d m a r k e t s such a s B r a z i l . V a r i a b l e s such a s a v e r a g e length o f t i m e before new d r u g a p p r o v a l i n t h e c o u n t r y . T h e t r a n s n a t i o n a l will t h e n be able to start m a n u f a c t u r e in B e l g i u m w i t h the benefit of a certificate of free sale ( i n d i c a t i n g that t h e p r o d u c t is a p p r o v e d for sale in the c o u n t r y of o r i g i n ) from a d e v e l o p e d country. and s o on. marketingp r o m o t i o n a l p a t h s . O f t e n t h e solution will c o m e o u t in t h e form of a P E R T d i a g r a m .Drug companies and the Third World in. T h e fact t h a t a d e v e l o p e d c o u n t r y such as B e l g i u m has a p p r o v e d t h e drug m i g h t t h e n influence a p p r o v a l in a r a n g e o f o t h e r c o u n t r i e s . w h e r e t o set u p t h e first m a n u f a c t u r i n g . c e n t r a l i t y o f t h e a p p r o v a l for w i n n i n g a p p r o v a l i n o t h e r c o u n t r i e s . 268 .

.

1979: 134). T h e fact that A m e r i c a n and E u r o p e a n c o n t r o l o f t h e i n t e r n a t i o n a l p h a r m a c e u t i c a l i n d u s t r y has i m p o s e d t h e cost b u r d e n s w h i c h put d r u g s b e y o n d t h e r e a c h o f their c i t i z e n s has p r o m p t e d t h e T h i r d W o r l d t o strike back a t t h e global c o r p o r a t i o n s . In t i m e this will h e l p to r e d r e s s t h e m e a g r e 5 per cent of the research e x p e n d i t u r e of the US pharmaceutical i n d u s t r y w h i c h i s d e v o t e d t o T h i r d W o r l d h e a l t h p r o b l e m s such a s t r o p i c a l d i s e a s e s ( S a r e t t . C o r p o r a t i o n s t h e r e f o r e e x p l o i t t h e fact t h a t r e g u l a t o r y g o a l s only h a v e c o h e r e n c e at a n a t i o n a l level w h i l e c o r p o r a t e c o h e r e n c e is transnational. w i t h t h e value o f local m a n u f a c t u r e r e a c h i n g U S $ 1 . 1979a).8 . a r e d u c t i o n of p a t e n t p r o t e c t i o n . A l l t h a t h a s b e e n a t t e m p t e d h e r e is to s h o w that using p e o p l e in t h e T h i r d W o r l d as ' g u i n e a pigs' is often part of a very c o m p l e x t o t a l i t y . W h i l e t h e t r a n s n a t i o n a l ' s w o r l d w i d e goals are c o h e r e n t .Drug companies and the Third World a n d t h e n s u b s i d i a r i e s m o r e or less h a v e a u t o n o m y to m a r k e t a n e w p r o d u c t w h e n e v e r they decide. I n d i a n o w has effectively set up its o w n ' m i n i m u l t i n a t i o n a l s ' which are exporting pharmaceutical technology to other parts o f t h e T h i r d W o r l d . the g o a l s of t h e r e g u l a t o r y a g e n c i e s of t h e world are conflicting. T r a n s n a t i o n a l s use system against nons y s t e m . I n d i a D r u g s and P h a r m a c e u t i c a l s L t d . 0 0 0 . T h e l e a d e r i n this m o v e m e n t has b e e n I n d i a . 0 0 0 i n 1 9 7 7 . 1979: 9 5 ) .s y s t e m . a p u b l i c . 3 0 0 . i n d i a n i s a t i o n ' of p h a r m a c e u t i c a l p r o d u c t i o n has p r o c e e d e d at a r e m a r k a b l e r a t e . F u r t h e r . O n l y t r a n s n a t i o n a l s w h i c h m a k e hight e c h n o l o g y d r u g s a r e t o b e a l l o w e d t o r e t a i n m a j o r i t y equity p a r t i c i p a t i o n i n t h e i r s u b s i d i a r i e s . It is a c o m p l e x i t y w h i c h m a n i f e s t s t h e r a t i o n a l i t y of t h e t r a n s n a t i o n a l c o r p o r a t i o n in finding t h e line of least r e s i s t a n c e to early m a r k e t i n g t h r o u g h the c o m p l e x j u n g l e of the international r e g u l a t o r y n o n . foreign c o m p a n i e s are t o b e r e q u i r e d to i n v e s t at least 4 p e r c e n t of their local t u r n o v e r in r e s e a r c h w i t h i n I n d i a .s e c t o r firm. The Third World push in pharmaceuticals The W o r l d H e a l t h O r g a n i s a t i o n estimates that 60-80 p e r c e n t o f t h e p o p u l a t i o n s o f m a n y d e v e l o p i n g c o u n t r i e s d o not have c o n s i s t e n t access to even the most essential drugs ( U N Centre on Transn a t i o n a l C o r p o r a t i o n s . O t h e r e l e m e n t s o f t h e I n d i a n s t r a t e g y a r e strict p r i c e c o n t r o l s on d r u g s . is selling t u r n k e y p l a n t t e c h n i c a l a s s i s t a n c e and t r a i n i n g 270 . a n d a liberal i n t e r p r e t a t i o n of p a t e n t laws to favour d o m e s t i c i m i t a t o r s o f f o r e i g n t e c h n o l o g y ( L a l l .

has h e l p e d e s t a b l i s h a t u r n k e y plant i n C u b a u n d e r a U N I D O p r o g r a m m e ( L a l l . 1 0 0 to 6 0 0 . T h e r e l a t i o n s h i p b e t w e e n the S P C and t h e foreign f i r m s w a s bad. A l r e a d y the reforms were breaking d o w n when the election of a n o n . t h e S P C . D u r i n g 1974 Pfizer refused an S P C r e q u e s t to m a k e t e t r a c y c l i n e c a p s u l e s from r a w m a t e r i a l w h i c h t h e g o v e r n m e n t had a l r e a d y p u r c h a s e d from H o e c h s t . o r excessively toxic. t o o e x p e n s i v e c o m p a r e d with a l t e r n a t i v e t h e r a p i e s . 1978). Sales r e p r e s e n t a t i v e s b e c a m e l o b b y i s t s a n d political o r g a n i s e r s .n a m e i m p o r t e r s . D r u g s w e r e not i m p o r t e d by t h e S P C w h i c h did not c a r r y q u a l i t y certification from a b r o a d or w h i c h failed to satisfy their o w n quality c o n t r o l labora t o r y . and t h e s e i n s t a n c e s w e r e highly p u b l i c i s e d b y t h e t r a n s n a t i o n a l b r a n d . T h i s k i n d of flexing of m u s c l e s by m u l t i n a t i o n a l s in the T h i r d W o r l d i s all t o o c o m m o n . 1978). W o r l d w i d e c o m p e t i t i v e t e n d e r i n g for large q u a n t i t i e s of d r u g s on t h e limited list r e d u c e d t h e n a t i o n ' s drug bill b y o v e r 4 0 p e r c e n t (Lall and B i b i l e . S a r a b h a i C h e m i c a l s . I n t h e final a n a l y s i s . a p r i v a t e c o m p a n y . T h e result w a s t h a t t e t r a c y c l i n e c a p s u l e s h a d to be airlifted into t h e c o u n t r y at g r e a t e x p e n s e (Lall and B i b i l e . 1978: 3 1 4 ) . I n r e t a l i a t i o n . A n o t h e r part o f t h e p r o g r a m m e o f reform was the r e p l a c e m e n t of brand n a m e s with generic prescribing. and B a n g l a d e s h .s o c i a l i s t g o v e r n m e n t i n 1977 saw t h e a l m o s t total d i s m a n t l i n g ofthe SPC. B u t s o m e s u b s t a n d a r d g e n e r i c p r o d u c t s did slip t h r o u g h t h e n e t . t h e s m a l l c o u n t r y p r o v e d n o m a t c h for t h e m i g h t o f t h e m u l t i n a t i o n a l s . m o v e d for t h e n a t i o n a l i s a t i o n o f Pfizer. t h e U S g o v e r n m e n t a c t e d decisively t o p r e v e n t n a t i o n a l i s a t i o n . T h e o t h e r d r a m a t i c T h i r d W o r l d reform initiative i n r e c e n t t i m e s b e g a n in Sri L a n k a in 1972 with t h e e s t a b l i s h m e n t of a S t a t e P h a r maceuticals C o r p o r a t i o n ( S P C ) . The SPC introduced centralised b u y i n g o f p h a r m a c e u t i c a l i m p o r t s for t h e w h o l e c o u n t r y . The t r a n s n a t i o n a l s successfully f o m e n t e d s t r o n g o p p o s i t i o n t o this a m o n g t h e Sri L a n k a n m e d i c a l p r o f e s s i o n . 1979b: 2 3 8 ) . Sri L a n k a . H o w e v e r . ' T h e U S A m b a s s a d o r p e r s o n a l l y i n t e r v e n e d with t h e P r i m e M i n i s t e r i n t h e m a t t e r ' (Lall a n d B i b i l e .Drug companies and the Third World s e r v i c e s t o A r a b c o u n t r i e s . with t h e s u p p o r t o f t h e M i n i s t e r for I n d u s t r i e s . The result was a reduction o f t h e n u m b e r of imported drugs from 2 .8 ) has p r o v i d e d o n e a c c o u n t of a w a r n i n g from t h e W e s t G e r m a n e m b a s s y to a T a n z a n i a n u n i v e r s i t y a b o u t t h e i r d e p e n d e n c e o n G e r m a n aid t o b u i l d a n e w e n g i n e e r i n g school after t w o of its m e d i c a l faculty 271 . M u l l e r ( 1 9 8 2 : 3 7 . I m p o r t a t i o n w a s s t o p p e d for d r u g s r e g a r d e d a s t h e r a p e u t i c a l l y i r r a t i o n a l .

N e v e r t h e l e s s . a m o n g o t h e r s ( G e r e f f i . have the highest G M P s t a n d a r d s . O v e r a n e i g h t . Brazil.c o n t i n e n t . T h e m o s t d r a m a t i c r e c e n t initiative has b e e n b y the B a n g l a d e s h i g o v e r n m e n t w h i c h . w i t h d r e w 4 0 per cent of t h e d r u g s on t h e m a r k e t (a total of 1. and s u p e r i o r p r o d u c t information-gathering. C e r t a i n l y t h e e v i d e n c e is. A n u m b e r o f c o u n t r i e s h a v e i n s t i t u t e d a c e n t r a l drug p r o c u r e m e n t system: Algeria.500 small drug p r o d u c e r s o n the s u b .b a s e d T h i r d W o r l d a s s a u l t on drug prices s u p p o r t e d b y t h e U n i t e d N a t i o n s . for m a r k e t i n g in Africa a d r u g which had b e e n b a n n e d in t h e UK a n d U S o n safety g r o u n d s .792 p r o d u c t s ) w h i c h t h e g o v e r n m e n t v i e w e d as d a n g e r o u s .G e i g y ) . Egypt. it is p o s s i b l e to find individual g e n e r i c m a n u f a c t u r e r s w h o h a v e s t a n d a r d s t o m a t c h the t r a n s n a t i o n a l s . w h e n P a k i s t a n p r e c i p i t o u s l y a t t e m p t e d t o a b o l i s h b r a n d n a m e s i n 1973. t h e d r a m a t i c e v e n t s o f Sri L a n k a have n o w b e e n r e p l a c e d by a b r o a d . a d e q u a t e quality c h e c k s o n t h e g e n e r i c s u b s t i t u t e s w h i c h f l o o d e d t h e m a r k e t w e r e not p r o v i d e d for. R w a n d a . The interesting conseq u e n c e of such a shift from t h e point of view of this b o o k w o u l d be a higher incidence of Good Manufacturing Practice violations. India. o r license o u t p r o d u c t i o n t o . O b v i o u s l y . o n a v e r a g e . c a u s e d t h e e x p e r i m e n t t o fail. b a r g a i n i n g p o w e r . Q u a l i t y p r o b l e m s on a large scale a r e not i n e v i t a b l e if a d e q u a t e G M P i n s p e c t i o n a n d a well-staffed n a t i o n a l t e s t i n g l a b o r a t o r y are p r o v i d e d for. nearly o n e fifth of t h e d r u g s a n a l y s e d in I n d i a w e r e found to be s u b s t a n d a r d ( A g a r w a l . a s w e saw i n C h a p t e r 4 . that i t i s t h e t r a n s n a t i o n a l s w h o . 1978b: 6 1 ) . W H O has p r o d u c e d a list o f 2 2 5 ' e s s e n t i a l d r u g s ' w h i c h form a g u i d e l i n e for t h e g r o w i n g n u m b e r of c o u n t r i e s w h i c h w i s h t o r e d u c e drug costs b y p r u n i n g n o n . i n d i a n i s a t i o n ' has p r o d u c e d o v e r 2. 1979: 7 3 ) . u s e l e s s or o v e r p r i c e d . Chad. N e v e r t h e l e s s .e s s e n t i a l i m p o r t s . T a n z a n i a and U g a n d a . I r a q . A s t a W e r k e .y e a r p e r i o d e n d i n g i n 1968. g e n e r i c m a n u f a c t u r e r s . I n d e e d t h e t r a n s n a t i o n a l s t h e m s e l v e s r e c o g n i s e this w h e n t h e y buy from. c o m b i n e d w i t h l o b b y i n g b y t h e t r a n s n a t i o n a l s ( i n c l u d i n g total withd r a w a l from P a k i s t a n b y C i b a . t h e u l t i m a t e s o l u t i o n t o i m p o s s i b l e d r u g costs is for t h e rest o f t h e T h i r d W o r l d to follow t h e I n d i a n e x a m p l e and d e v e l o p their own manufacturing capacity. T h e r e s e n t m e n t o f d o c t o r s o v e r the quality p r o b l e m s . Ethiopia. C e n t r a l i s e d b u y i n g p r o v i d e s t h e cost a d v a n t a g e s o f bulk p u r c h a s e s . Guinea. S y r i a .Drug companies and the Third World c i r c u l a t e d a p a p e r criticizing t h e G e r m a n c o m p a n y . S i m i l a r l y . i n J u n e 1982. t h o u g h . 272 .

They developed s t a n d a r d s o f e x c e l l e n c e w h e n t h e y w e r e given o p p o r t u n i t i e s t o e x p a n d .o f f b e t w e e n public e x p e n d i t u r e o n d r u g s and e x p e n d i t u r e o n o t h e r h e a l t h p r i o r i t i e s .Drug companies and the Third World A m e r i c a n t r a n s n a t i o n a l s have e v e n b e e n k n o w n o n o c c a s i o n s t o b u y d r u g s from E a s t e r n E u r o p e a n m a n u f a c t u r e r s . T h e T h i r d W o r l d has a n i n t e r e s t i n e n t i c i n g t h e t r a n s n a t i o n a l s t o d e v o t e m o r e than the m i n u s c u l e p r o p o r t i o n o f t h e i r r e s e a r c h t a l e n t w h i c h they c u r r e n t l y a l l o c a t e t o t r o p i c a l d i s e a s e s . W h y should d e v e l o p i n g c o u n t r i e s pay a gross p r e m i u m for r e s e a r c h and d e v e l o p m e n t e x p e n d i t u r e w h i c h i s p r i m a r i l y d i r e c t e d a t 'rich m a n ' s d i s e a s e s ' ? T h e r e a r e t w o s o u n d r e a s o n s why i t i s d e f e n s i b l e for d e v e l o p i n g c o u n t r i e s t o cut t h e i r d e p e n d e n c y o n the t r a n s n a t i o n a l s . At one t i m e all the t r a n s n a t i o n a l s were b a c k r o o m o p e r a t o r s . I n c o u n t r i e s w h e r e t h e r e i s not e n o u g h m e d i c i n e t o g o a r o u n d . clean w a t e r is m o r e i m p o r t a n t t h a n 273 . 1982: 2 2 ) ) o f t h e i r small h e a l t h b u d g e t s o n d r u g s . M o s t o f t h e t o p r e s e a r c h and d e v e l o p m e n t e x p e r t i s e in t h e w o r l d is a c c u m u l a t e d w i t h i n t h e t r a n s n a t i o n a l s . S e c o n d l y . u n l e s s r e g u l a t e d . N e v e r t h e l e s s . T h i r d W o r l d g o v e r n m e n t s w h o m o v e t o foster i n d i g e n o u s p r o d u c t i o n c a n n o t afford t o lose sight o f t h e reality t h a t . n e i t h e r can it afford to buy d r u g s on the t r a n s n a t i o n a l s ' t e r m s . W h i l e t h e T h i r d W o r l d c a n n o t afford to cut itself off c o m p l e t e l y from the flow of i n n o v a t i o n s from t h e t r a n s n a t i o n a l s . t h e c u t t i n g of c o r n e r s on quality will be e n d e m i c in small-scale drug production. e v e n w h e n t h a t r e s u l t s in t h e i r c o n s u m e r s g e t t i n g d r u g s w h i c h have a higher i n c i d e n c e o f q u a l i t y failure. T h e first i s t h a t i n d i g e n o u s p r o d u c t i o n s t a n d a r d s will r e m a i n low so long as local m a n u f a c t u r e r s are a l l o w e d to o p e r a t e only on t h e fringe o f t h e i n d u s t r y . t h e T h i r d W o r l d c a n n o t d o w i t h o u t the t r a n s n a t i o n a l s . w h e n d r u g s a r e far from t h e highest p r i o r i t y . T h e g r e a t e s t a t t e n t i o n n e e d s to be d e v o t e d to the underlying causes of Third World health p r o b l e m s i n m a l n u t r i t i o n and p o o r s a n i t a t i o n . O b v i o u s l y t h e r e is a cut-off point b e y o n d w h i c h such a t e r r i b l e trade-off could not be c o u n t e n a n c e d . I n t h e final a n a l y s i s . it is not really p u t t i n g m o n e y a h e a d of p e o p l e to justify t o l e r a t i n g c h e a p d r u g s which d o not a l w a y s r e a c h the h i g h e s t s t a n d a r d s o f q u a l i t y . d r u g s b e l o w half price can m e a n twice a s m a n y p e o p l e g e t t i n g m e d i c i n e . E v e n m o r e i m p o r t a n t i s t h e t r a d e . P r e v e n t i v e m e d i c i n e is a h i g h e r p r i o r i t y t h a n pills. It will c o n t i n u e t o b e t h e t o p t w e n t y c o m p a n i e s w h o will p r o v i d e most o f t h e i m p o r t a n t t h e r a p e u t i c b r e a k t h r o u g h s . Third W o r l d c o u n t r i e s s p e n d a n u n a c c e p t a b l y high p r o p o r t i o n (often o v e r 4 0 per c e n t ( M e d a w a r .

m o r e lives will be saved. nor o f t h e p a t i e n t ' s ability to buy t h e d r u g or t a k e it as i n s t r u c t e d . one e x e c u t i v e e x p l a i n e d : ' S o long as we h a v e t h e right a p p l i c a t i o n form and fill it o u t c o r r e c t l y . ' A n o t h e r d e s c r i b e d the situation as 'practical a n a r c h y ' . N o n e of t h e m w a s a b l e to lay h a n d s on a copy o f t h e r e g u l a t i o n s . T h i s implies t h a t p e r h a p s only o n e in e i g h t t i m e s is t h e right p e r s o n going to get t h e right m e d i c i n e at t h e right t i m e . S o i r r e l e v a n t w e r e g o v e r n m e n t health regulations to the running of the c o m p a n y that some even doubted w h e t h e r t h e c o m p a n y had a c o p y . Towards effective regulation in the Third World P h a r m a c e u t i c a l c o r p o r a t i o n s a r e forever k e e n t o p o i n t out t h a t they a l w a y s a b i d e by t h e laws o f t h e c o u n t r y in w h i c h they o p e r a t e . Such l a w s as do exist a r e not e n f o r c e d . I a d o p t e d t h e p r a c t i c e of asking e x e c u t i v e s in G u a t e m a l a w h a t t h e r e g u l a t i o n s (basically a health c o d e d a t i n g from 1946) had to say a b o u t a p a r t i c u l a r q u e s t i o n w h i c h w a s u n d e r d i s c u s s i o n . E v e n if it w e r e .Drug companies and the Third World a n t i b i o t i c s . W i t h r e s p e c t to drug r e g i s t r a t i o n . and s h o w t h a t it is effective. w e n e v e r get o u r a p p l i c a t i o n r e j e c t e d . less t h a n half their p a t i e n t s t a k e t h e i r m e d i c i n e a s i n s t r u c t e d . their p r e s c r i p t i o n s err s i m i l a r l y . nor o f t r e a t m e n t . E v i d e n c e from t h e d e v e l o p e d c o u n t r i e s is not e n c o u r a g i n g in t h i s r e g a r d . W h e n s o m e o f t h e m o n e y n o w b e i n g s p e n t o n d r u g s can b e r e d i r e c t e d t o c l e a n i n g up t h e s e u n d e r l y i n g p r o b l e m s . T h e r e is e v e r y r e a s o n to e x p e c t t h e situation in the developing world to be w o r s e . t h e y did not k n o w h o w to g e t hold of it. I am n o t a w a r e o f a n y p h a r m a c e u t i c a l t r a n s n a t i o n a l for which that w o u l d be t r u e . It is quite a n o t h e r thing to l a u n c h a d r u g into a c o m m u n i t y w h e r e t h e r e is no c o n t r o l o v e r t h e q u a l i t y o f t h e d i a g n o s i s . W h a t s t u d i e s h a v e b e e n d o n e suggest that d o c t o r s ' d i a g n o s e s a r e often right only 5 0 p e r c e n t o f t h e t i m e . further. M o r e o v e r . or if it d i d . it can be s o u n d h e a l t h policy even to k e e p d r u g s off the m a r k e t which have b e e n p r o v e n effective in clinical studies w h e n s t a n d a r d s of medical p r a c t i c e a r e m o r e likely t o d e l i v e r t h e side-effects t h a n t h e c u r e : It is so e a s y to select a g r o u p of p a t i e n t s all suffering from t h e s a m e c o m p l a i n t . for m a n y T h i r d W o r l d c o u n t r i e s this a m o u n t s t o s a y i n g t h a t t h e y d o n ' t b r e a k laws which d o n ' t exist. as M u l l e r (1982: 112-13) has persuasively a r g u e d . t r e a t t h e m with a drug u n d e r c o n t r o l l e d c o n d i t i o n s . food m o r e i m p o r t a n t t h a n v i t a m i n pills. 274 .

G L P s . The World Health Organisation is d e v e l o p i n g s i m p l e t e s t s for d r u g quality w h i c h can confirm the i d e n t i t y a n d basic efficacy of d r u g s in s i t u a t i o n s w h e r e l a b o r a t o r i e s d o n o t exist. T a k e B r a z i l . E v e n i n the m o s t s o p h i s t i c a t e d p h a r m a c e u t i c a l m a r k e t s i n t h e T h i r d W o r l d t h e s i t u a t i o n i s frightening. 1978b)). T h e s e t w o i n s p e c t o r s have r e s p o n s i b i l i t i e s that r a n g e o v e r r e c o r d s for p r i c e c o n t r o l s .200 drug firms and testing t h e $ 1 . 275 . with U n i t e d N a t i o n s a s s i s t a n c e . T h e e m e r g i n g i n t e r n a t i o n a l and r e g i o n a l c o . U N C T A D . U N I D O . t h e l a r g e s t d r u g m a r k e t i n the T h i r d W o r l d and t h e second largest m a n u f a c t u r e r o f d r u g s b e h i n d I n d i a .-' In addition to United Nations i n i t i a t i v e s t o t r a n s f e r quality c o n t r o l t e c h n o l o g y t o t h e T h i r d W o r l d . as is t h e c o n s t r u c t i v e role b e i n g played by an array of UN agencies ( W H O . 0 0 0 o f d r u g s c o n s u m e d per year b y their c i t i z e n s ' ( Y a k o w i t z . W H O i s also assisting b e l e a g u e r e d T h i r d W o r l d r e g u l a t o r y a g e n c i e s b y t h e p u b l i c a t i o n of a q u a r t e r l y b u l l e t i n p r o v i d i n g i n f o r m a t i o n on t h e r e g u l a t o r y s t a t u s i n different p a r t s o f t h e w o r l d o f n e w and old d r u g s . M o s t L a t i n A m e r i c a n c o u n t r i e s h a v e n o i n s p e c t o r s . G M P s . It has by far t h e m o s t s o p h i s t i c a t e d n a t i o n a l t e s t i n g l a b o r a t o r y i n L a t i n A m e r i c a . B u t for t h e w h o l e c o u n t r y t h e r e are only two p h a r m a c e u t i c a l i n s p e c t o r s . 4 9 2 . 1979: 114). t h e lot. 1971). T h e i d e a i s t h a t p r i m a r y h e a l t h care w o r k e r s a l o n g the d i s t r i b u t i o n c h a i n can d o p e r i o d i c basic t e s t i n g . Third World countries which c a n n o t afford effective r e g u l a t i o n n a t i o n a l l y h a v e most to gain from i n t e r n a t i o n a l r e g u l a t o r y initiatives such a s t h e Certification S c h e m e on the Quality of Pharmaceutical P r o d u c t s Moving in International C o m m e r c e (see C h a p t e r 4 ) and W H O ' s i n t e r n a t i o n a l d r u g a d v e r s e reaction-reporting scheme. Brazil c o n s u m e s m o r e d r u g s than the United Kingdom (James. staffed b y fourteen s c i e n t i s t s . 0 0 0 p e r y e a r for i n s p e c t i n g their 2. 0 0 0 . U N D P and U N I C E F (see A g a r w a l . T h e s i t u a t i o n has not i m p r o v e d g r e a t l y since t h e P a n A m e r i c a n H e a l t h O r g a n i s a t i o n c o n d u c t e d a s u r v e y of L a t i n A m e r i c a i n c l u d i n g the C a r i b b e a n in 1968: ' T h e c o u n t r i e s o f L a t i n A m e r i c a are e x p e n d i n g only $ 3 . T h e C a r i b b e a n c o m m u n i t y . R e a l i s i n g t h a t the c o s t s o f effective n a t i o n a l r e g u l a t o r y a g e n c i e s are b e y o n d their r e a c h . 2 2 1 . in UN Centre on Transnational C o r p o r a t i o n s . N e v e r t h e l e s s . is l e a d i n g t h i s m o v e m e n t by setting up a r e g i o n a l drug testing laboratory in Jamaica.Drug companies and the Third World P r a c t i c a l a n a r c h y d e s c r i b e s the r e g u l a t o r y s i t u a t i o n i n most Third W o r l d c o u n t r i e s .o p e r a t i o n i n the T h i r d W o r l d is e n c o u r a g i n g . t h e r e a r e r u m b l i n g s o f r e f o r m . T h i r d W o r l d c o u n t r i e s are b e g i n n i n g t o d e v e l o p r e g i o n a l r e g u l a t o r y s y s t e m s .

a d o c u m e n t i n d i c a t i n g t h a t t h e drug is a p p r o v e d for c o n s u m p t i o n in t h e e x p o r t i n g c o u n t r y .Drug companies and the Third World t h e S w e d i s h g o v e r n m e n t is p l a y i n g an i m p o r t a n t r o l e . 1980) I have d e s c r i b e d law evasion as a more p r e d o m i n a n t m o d u s operandi of transnational c o r p o r a t i o n s t h a n b l a t a n t law v i o l a t i o n . but e v a d e d ) . W h i l e cynicism is t h e m o s t c o m m o n r e s p o n s e t o such U N a g r e e m e n t s . T h e c o r p o r a t i o n e x p l o i t s d i f f e r e n c e s in n a t i o n a l laws to find t h e line of least r e s i s t a n c e to a c h i e v i n g its e n d s . T h e s o l u t i o n to t h e p r o b l e m of global c o r p o r a t i o n s p l a y i n g off the r e g u l a t o r y s t a n d a r d s of o n e c o u n t r y a g a i n s t t h o s e of a n o t h e r is a d e g r e e of h a r m o n i s a t i o n of those standards. A r e g i s t r a t i o n . 4 276 . E l s e w h e r e ( B r a i t h w a i t e .that i s . T r a n s f e r p r i c i n g . G r o w i n g n u m b e r s o f d e v e l o p i n g c o u n t r i e s are d e m a n d i n g certific a t e s of free sale b e f o r e t h e y will a l l o w d r u g s to be i m p o r t e d .m a r k e t i n g strategy can b e d e v e l o p e d t h a t c o n c e n t r a t e s o n early s t r a t e g i c n e w drug a p p r o v a l s in foreign c o u n t r i e s from w h i c h initial e x p o r t s will be sourced. p r o t e c t i o n o f t h e subjects o f h u m a n e x p e r i m e n t a t i o n . t h e y d o have v a l u e w h e n t h e a c c o r d is struck w i t h i n t h e c o n t e x t of a w i d e r will to r e f o r m . O n e e v a d e s laws on h o w a p r o d u c t s h o u l d be i n t r o d u c e d to t h e m a r k e t . is a n o t h e r classic i l l u s t r a t i o n of a law e v a s i o n strategy ( t a x l a w s a r e n o t v i o l a t e d . and industrial h e a l t h and safety. we h a v e seen in this c h a p t e r t h a t t r a n s n a t i o n a l c o r p o r a t i o n s h a v e g r e a t flexibility in p l a y i n g t h e w o r l d system to c i r c u m v e n t such p r o t e c t i o n s . T h e r e is a will in m o s t c o u n t r i e s t o d a y to t i g h t e n up the u n e v e n n e s s in the regulatory stringency applied to the p h a r m a c e u t i c a l i n d u s t r y . W h i l e this p r o v i d e s s o m e g u a r a n t e e s for a g o v e r n m e n t w h i c h c a n n o t afford its o w n e x h a u s t i v e scientific evalua t i o n of a p r o d u c t . I n s o m e cases e v e n t h e t r a n s n a t i o n a l c o m p a n i e s a r e p r e p a r e d t o s u p p o r t t o u g h e r r e g u l a t o r y c o n t r o l s w h e r e t h e y can see t h a t this will i m p o s e costs on local c o m p e t i t o r s w h i c h t h e t r a n s nationals already meet. 1979a. the o t h e r e v a d e s a law t h a t t h e p r o d u c t s h o u l d b e w i t h d r a w n from the m a r k e t . t e s t i n g o f d r u g q u a l i t y . The United Nations is a l r e a d y f o s t e r i n g i n t e r n a t i o n a l m i n i m u m s t a n d a r d s with r e s p e c t t o G M P s . A S w e d i s h s t a t e .o w n e d p h a r m a c e u t i c a l company is helping developing count r i e s to e s t a b l i s h p l a n t s to m a n u f a c t u r e their o w n essential d r u g s of high quality. w h i c h will be discussed in t h e n e x t c h a p t e r . T h e c o n d u c t o f clinical t e s t i n g o n T h i r d W o r l d ' g u i n e a p i g s ' w h i c h w o u l d not b e p e r m i t t e d as safe in d e v e l o p e d c o u n t r i e s and d u m p i n g are i l l u s t r a t i o n s of i n t e r n a t i o n a l law e v a s i o n par e x c e l l e n c e .

it is the guardian o f t h e health o f t h e w o r l d . W e d o n ' t w a n t t o b e forced b y C o s t a R i c a and o t h e r s t o suggest only t h r e e i n d i c a t i o n s worldw i d e w h e n w e b e l i e v e i n 10. little C o s t a R i c a can s u c c e e d i n a c h i e v i n g s o m e i n t e r n a t i o n a l h a r m o n i s i n g o f minimum standards. South A m e r i c a a n d so on c l a i m s s o m e 10 i n d i c a t i o n s for t h e p r o d u c t . C o s t a R i c a h a s ruled t h a t all d i s c l o s u r e s and w a r n i n g s m a d e o n t h e drug p a c k a g e s a n d i n s e r t s in t h e c o u n t r y of origin should be identically m a d e i n C o s t a R i c a .' E v e n t h o u g h C o s t a R i c a d o e s not push u p s t a n d a r d s t o t h e level o f t h e U n i t e d S t a t e s . It w o u l d not be in our i n t e r e s t s to l o c a t e m o r e of o u r m a n u f a c t u r i n g in the U n i t e d States. For [one o f t h e c o m p a n y ' s main p r o d u c t s ] our literature in E u r o p e . W h e r e i n t e r n a t i o n a l c o n v e n t i o n s fail. the U n i t e d S t a t e s can a c h i e v e m o r e t h a n any c o u n t r y i n raising regul a t o r y s t a n d a r d s w o r l d w i d e . t h e e n c o u r a g i n g t h i n g is t h a t t h e y can p u s h t h e m up to s o m e d e g r e e a c r o s s the w h o l e of C e n t r a l A m e r i c a .' A g a i n . t h e c o m p a n y t o o k o u t t h e a d d i t i v e from all p r o d u c t s being d i s t r i b u t e d in all C e n t r a l A m e r i c a n c o u n t r i e s since t h e cost o f special p r o d u c t i o n r u n s for t h e C o s t a R i c a n m a r k e t w a s p r o h i b i t i v e . T h e s a m e e x e c u t i v e e x p l a i n e d : ' F r o m o u r point of v i e w t h a t m e a n s t h e y all h a v e to say w h a t we say in [our h o m e c o u n t r y ] b e c a u s e t h e cost of h a v i n g different p a c k a g i n g for t h e different C e n t r a l A m e r i c a n countries is too great. In t h e U S . t h e r e are limits to h o w high C o s t a R i c a can p u s h u p all C e n t r a l A m e r i c a n s t a n d a r d s : ' L e t m e put it t h i s w a y . T h e F D A i s n o l o n g e r only t h e g u a r d i a n ofthe health of A m e r i c a n s . t h o u g h . t h e F D A a p p r o v e s only t h r e e . Australia. B e c a u s e the F D A is the world's p r e m i e r regulatory agency. F o r e x a m p l e . A s soon a s t h e F D A a p p r o v e s a d r u g . B r i t i s h c o n t r a c t l a b o r a t o r i e s p l e a d e d with t h e m 277 . a C e n t r a l A m e r i c a n r e g i o n a l d i r e c t o r for a t r a n s n a t i o n a l said t h a t w h e n C o s t a Rica b a n n e d a s u s p e c t e d c a r c i n o g e n i c a d d i t i v e i n o n e o f its p r o d u c t s . S i m i l a r l y . I n C h a p t e r 4 w e saw t h a t w h e n t h e F D A i n t r o d u c e d G L P r e g u l a t i o n s .Drug companies and the Third World G o v e r n m e n t s o f t h e w o r l d d o not have t o h a r m o n i s e their laws perfectly to p r e v e n t t r a n s n a t i o n a l s from p l a y i n g o n e set of laws off a g a i n s t a n o t h e r . because of the capacity of the transnational to shift its a c t i v i t i e s a r o u n d t h e w o r l d . Africa. m a n y c o u n t r i e s follow t h e i r lead. I n d e e d t h e p r a c t i c a l e c o n o m i c c o n s t r a i n t s o f law e v a s i o n are often such t h a t o n e c o u n t r y t h a t sets h i g h e r r e g u l a t o r y s t a n d a r d s can effectively i m p o s e its h i g h e r s t a n d a r d s on all o t h e r c o u n t r i e s i n t h e r e g i o n . S t r a t e g i c g o v e r n m e n t a c t i o n can c h a n g e lowest-common-denominator regulation into highest-commonfactor r e g u l a t i o n .

T h e U n i t e d States e n j o y s t h e e c o n o m i c benefits from d o m i n a t i n g the w o r l d ' s p h a r m a c e u t i c a l m a r k e t s .L a R o c h e p l a n t s i n I n d o n e s i a . a n d S w i t z e r l a n d itself all o p e r a t e to m e e t m a n y s t a n d a r d s w h i c h w e r e w r i t t e n i n W a s h i n g t o n . F o r m a n y m a t t e r s i t m a k e s e c o n o m i c sense t o m e e t t h e h i g h e s t s t a n d a r d s e v e r y w h e r e r a t h e r t h a n t o confuse e m p l o y e e s b y c h o p p i n g and c h a n g i n g . t h e P h i l i p p i n e s . H o f f m a n . 278 .Drug companies and the Third World for an i n s p e c t i o n so t h a t t h e y m i g h t a n n o u n c e to their c u s t o m e r s t h a t t h e y h a d b e e n certified a s m e e t i n g F D A s t a n d a r d s . E v e n t h e S w i s s t r a n s n a t i o n a l set m a n y o f t h e i r w o r l d w i d e p r o c e d u r e s i n a r e a s like t e s t i n g for sterility and p o t e n c y t o m e e t F D A r e q u i r e m e n t s . I t c a n n o t enjoy t h o s e benefits w h i l e d e n y i n g its r e s p o n s i b i l i t y for uplifting w o r l d w i d e standards of c o n s u m e r protection.

but h a r d l y a h i g h flyer on t h e stock e x c h a n g e . a n old and r e s p e c t e d p h a r m a c e u t i c a l c o m p a n y .c o l l a r c r i m e b y a n i n d i v i d u a l e m p l o y e e against his or h e r e m p l o y e r . o f c o u r s e . E a c h r e p l i e d ' F o u r . ' W h a t n u m b e r did y o u h a v e i n m i n d ? ' A b o o k on c o r p o r a t e c r i m e in i n t e r n a t i o n a l b u s i n e s s w o u l d not be c o m p l e t e w i t h o u t m e n t i o n o f t h e r a n g e o f financial a b u s e s w h i c h t a k e p l a c e .8 Fiddling Briloff ( 1 9 7 2 : 1-2) tells o f t h e o w n e r of a g r o w i n g c o m p a n y w h o w a n t e d to i n c r e a s e its r e s p e c t a b i l i t y by h a v i n g t h e b o o k s a u d i t e d by o n e o f t h e l a r g e s t a c c o u n t i n g f i r m s . W h i l e i t i s t h e k i n d s o f w h e e l i n g s and d e a l i n g s fleetingly c o v e r e d in this c h a p t e r which constitute the layperson's e p i t o m e of c o r p o r a t e c r i m e . ' By 1938 he had built up t h e c o m p a n y to o n e o f t h e 279 . i n m a n y cases t h e y i n v o l v e a mix of c o r p o r a t e c r i m e by o n e c o r p o r a t i o n against a n o t h e r a n d w h i t e . T h e l a t t e r on its o w n w o u l d not c o n s t i t u t e c o r p o r a t e c r i m e a s i t has b e e n defined h e r e . The making ofthe McKesson empire I n t h e 1920s. i n m a n y w a y s t h e y a r e t h e least s e r i o u s forms o f l a w b r e a k i n g i n t h e p h a r m a c e u t i c a l i n d u s t r y . D r F . t h e p a r t n e r a n s w e r e d . I n d e e d . w a s a f i n a n c i a l g e n i u s . I n most cases they p o s e no d i r e c t t h r e a t to h u m a n life and l i m b . after s e r i o u s reflection. T h e p a r t n e r s o f t h e first t h r e e firms i n t e r v i e w e d w e r e a s k e d . e v e r y o n e b e l i e v e d . ' W h a t d o e s 2 plus 2 e q u a l ? ' . ' T h e n e x t firm i n t e r v i e w e d w o n t h e client w h e n . In m a n y cases t h e y involve the victimisation of one corporation by another. C o s t e r . rather than t h e v i c t i m i s a t i o n o f c o n s u m e r s o r w o r k e r s . D o n a l d C o s t e r t o o k c o n t r o l o f M c K e s s o n and R o b b i n s .

D u t c h S c h u l t z ) w h o w e r e t h r e a t e n ing t o r e v e a l ' D r C o s t e r ' s ' past t o t h e b o a r d . H o w e v e r . ' D r C o s t e r ' s i p h o n e d off a b o u t $20 million in c o m p a n y funds by having t h e c o m p a n y pay to build up an i n c r e a s i n g i n v e n t o r y of bulk d r u g s in its C a n a d i a n w a r e h o u s e . C o s t e r ' s real g e n i u s w a s i n c o n v i n c i n g b a n k s t h a t M c K e s s o n and R o b b i n s had assets w h i c h i t did not i n fact h a v e . t h e l o a n m o n e y s had b e e n d i v e r t e d t o M u s i c a family c o m p a n i e s . and t h e r e p u t a t i o n o f t h e c o m p a n y ' s a u d i t o r s . B u t M c K e s s o n a n d R o b b i n s could h a r d l y c o m p l a i n a b o u t the d e p r e d a t i o n s o f t h e i r p r e s i d e n t . A d v i s e d l y . Dr C o s t e r a c h i e v e d such a r e p u t a t i o n for m a n a g e r i a l brilliance a n d social r e s p e c t a b i l i t y t h a t in 1937 he w a s a p p r o a c h e d by influential s e c t i o n s of t h e R e p u b l i c a n Party to run a g a i n s t R o o s e v e l t for p r e s i d e n t . As P h i l l i p M u s i c a he had b a n k r u p t e d a n u m b e r of c o m p a n i e s after f r a u d u l e n t l y p r o c u r i n g l o a n s o n t h e s t r e n g t h o f nonexistent assets. D u r i n g his p e r i o d a t t h e h e l m o f M c K e s s o n and R o b b i n s . b a n k s c o n t i n u e d t o p o u r c a p i t a l into M c K e s s o n and Robbins. It is b e l i e v e d t h a t s o m e of this m o n e y w a s used to pay off b l a c k m a i l e r s ( a m o n g t h e m . ' C o s t e r ' built u p t h e e m p i r e . S i n g l e h a n d e d l y . 'Coster' committed suicide after t h e persistent company t r e a s u r e r d i s c o v e r e d t h a t t h e C a n a d i a n s t o c k p i l e o f bulk d r u g s w a s 280 . W h i l e o t h e r c o m p a n i e s c r u m b l e d d u r i n g the d e p r e s s i o n . T h e c o m p a n y had b e e n a g r e a t e r beneficiary o f ' C o s t e r ' s ' a c u m e n at materialising non-existent assets t h a n ' C o s t e r ' himself. Before the c o m p a n i e s were b a n k r u p t e d . however. I f t h e r e w e r e any real v i c t i m s . virtually none x i s t e n t . I n 1938 C o s t e r ' s m a s q u e r a d e w a s d i s c o v e r e d . D r C o s t e r built u p t h e e m p i r e b y selling c o m p a n y p r o d u c t s w h i c h h a d high a l c o h o l c o n t e n t ( m a i n l y hair t o n i c ) t o u n d e r w o r l d b o o t l e g g e r s d u r i n g p r o h i b i t i o n . i n fact. h e d e c l i n e d . O n e s e n t e n c e for b r i b i n g c u s t o m s officials had b e e n p r e m a t u r e l y t e r m i n a t e d w h e n M u s i c a s w u n g a p a r d o n from no less t h a n P r e s i d e n t Taft. T h e p r e s i d e n t o f M c K e s s o n and R o b b i n s w a s i n fact P h i l l i p M u s i c a . T h e i n v e n t o r y w a s . o n e of t h e g r e a t e s t con men in A m e r i c a n h i s t o r y . I n p a r t .Fiddling t h r e e l a r g e s t p h a r m a c e u t i c a l c o m p a n i e s i n the U n i t e d S t a t e s . M o n e y t o pay for t h e i m a g i n a r y b u l k d r u g s w a s being d i r e c t e d t h r o u g h a d u m m y c o m p a n y to the president of M c K e s s o n a n d his family. ' D r C o s t e r ' s ' m u c h v a u n t e d M D a n d Phd d e g r e e s from the U n i v e r s i t y o f H e i d e l b e r g were fake. Price W a t e r h o u s e . M u s i c a had s e r v e d t w o prison s e n t e n c e s . t h e y w e r e t h e b a n k s and t h e c o m p e t i t o r s ' C o s t e r ' had c r u s h e d .

M u s i c a . it r e m a i n s t o d a y p e r h a p s t h e l a r g e s t g e n e r i c m a n u f a c t u r e r and d i s t r i b u t o r i n the world. a n d J a y e s E x p o r t ) c o m p l a i n i n g t h a t t h e y had illegally c o n s p i r e d to o b t a i n d r u g s at d i s c o u n t r a t e s r e s e r v e d for d e v e l o p i n g c o u n t r i e s . B u t this i s not b e c a u s e o f t h e 1938 s e t b a c k . f r e q u e n t l y w i t h a s s i s t a n c e from i n s i d e r s . He i n t e n d e d to r e c o u p t h e cost of t h e g i v e a w a y by a d d i n g an e x t r a e l e v e n t h on to the n o r m a l price of e a c h 281 . J o h n s o n and J o h n s o n c o m p l a i n e d that the fraudulently obtained discount cost t h e m S2. F o r e m o s t .764 cases o f O r t h o . W i t h i n six m o n t h s the c o m p a n y h a d t u r n e d t h e c o r n e r o n t h e loss o f confidence and a d v e r s e p u b l i c i t y it suffered ( B a l d w i n and B e a c h . K i c k b a c k s to insiders from s u p p l i e r s often m e a n t h a t d r u g c o m p a n i e s d o not m a k e t h e best p u r c h a s e s t h a t t h e m a r k e t can offer.3 m i l l i o n . T h e f i n a n c e d i r e c t o r o f o n e p h a r m a c e u t i c a l c o m p a n y told of a car d e a l e r w h o .b a s e d p h a r m a c e u t i c a l c o m p a n y and t h e r e f o r e missed t h e b e n e f i t s o f m o n o p o l y profits from p r o d u c t s u n d e r p a t e n t . ' C o s t e r ' had left M c K e s s o n and R o b b i n s w i t h e n o u g h s t r e n g t h t o r e c o v e r from t h e o v e r n i g h t e v a p o r a t i o n o f a large slice of its p r e s u m e d a s s e t s . with a n n u a l c o r p o r a t e sales of o v e r $3 billion. N e v e r t h e l e s s . I n 1979 J o h n s o n and J o h n s o n successfully sued t h r e e firms ( W a s h i n g t o n W h o l e s a l e D r u g E x c h a n g e . Sixty-six cities w e r e b o m b a r d e d with a n e w s p a p e r campaign of 'Facts A b o u t M c K e s s o n & R o b b i n s ' to r e s t o r e c o n f i d e n c e in t h e i m a g e of t h e c o m p a n y . as it is t o d a y . offered to p r o v i d e an e x t r a car for t h e f i n a n c e d i r e c t o r . h a s not evolved as a r e s e a r c h .Fiddling n o t a real c o m p a n y asset. M c K e s s o n . C o m p a n y rips off c o m p a n y C o r p o r a t e c r i m e s i n w h i c h o n e c o m p a n y f i n a n c i a l l y victimises a n o t h e r are c o m m o n p l a c e in the international pharmaceutical i n d u s t r y . J a y e s H o l d i n g I n t e r n a t i o n a l p u r c h a s e d 5. S e v e r a l o f t h e o t h e r largest p h a r m a c e u t i c a l c o m p a n i e s j o i n e d with M c K e s s o n ' s p u b l i c r e l a t i o n s firm t o apply p r e s s u r e to dissuade two motion picture producers who wished to m a k e a film a b o u t C o s t e r . D r u g c o m p a n i e s are also victimised b y n o n .d r u g c o m p a n i e s . M c K e s s o n and R o b b i n s is t o d a y n o w h e r e n e a r its z e n i t h a s o n e o f t h e t h r e e t o p p h a r m a c e u t i c a l c o m p a n i e s i n t h e U S . 1940). in b i d d i n g for t h e l e a s e of e l e v e n n e w c a r s to t h e firm. J a y e s H o l d i n g Intern a t i o n a l .N o v u m b i r t h c o n t r o l pills and Sultrin t a b l e t s a t t h e d i s c o u n t rate by p r e t e n d i n g to represent the N i g e r i a n g o v e r n m e n t .

The paper performance looks g o o d a n d t h e n e w m a n a g e m e n t t e a m i s c r e d i t e d with setting t h e c o m p a n y b a c k o n a n u p w a r d p a t h . U l t i m a t e l y . t h e r e a r e t h o s e w h e r e g o v e r n m e n t s are v i c t i m s . But t h e s h a r e h o l d e r s a r e willing to sell c h e a p l y b e c a u s e they k n o w that this o n e p r o d u c t is a b o u t to go off p a t e n t . the corporate criminals then i n t e n t i o n a l l y d e p r e s s t h e s h a r e p r i c e s further. for e x a m p l e . b y p a y i n g out v a r i o u s a c c r u e d d e b t s m o r e quickly t h a n t h e y a r e d u e . t h e g r o u p sells out w i t h a h e a l t h y capital gain on the o r i g i n a l cost o f t h e s h a r e s . the company concerned was called Fair Deal M o t o r s . by a v a r i e t y o f m e a n s t h e y gain effective c o n t r o l o f t h e c o m p a n y . or to be s u p e r s e d e d by a c o m p e t i t o r ' s n e w d i s c o v e r y . 2 The Revco Medicaid fraud I n a d d i t i o n t o c o r p o r a t e c r i m e s w h i c h involve victimising o t h e r c o m p a n i e s .Fiddling of the eleven cars. C e r t a i n F D A officials b e l i e v e t h a t t h e r e i s o p e r a t i n g within t h e U n i t e d S t a t e s a g a n g of c o r p o r a t e c r i m i n a l s w h o specialise in t a k i n g o v e r pharmaceutical companies. This can be d o n e . Having taken control. but w h o s e s h a r e h o l d e r s are willing to sell c h e a p l y . A p p r o p r i a t e l y . t h e h e a l t h y e a r n i n g s o f t h e n e w acquisit i o n p u s h u p t h e e a r n i n g s p e r f o r m a n c e o f the c o m p a n y i n t h e control of the c o r p o r a t e criminals. R e v c o is not a p h a r m a c e u t i c a l m a n u f a c t u r e r . T h e n e x t s t a g e o f t h e s t r a t e g y is to t a k e o v e r a c o m p a n y w h i c h is s i t t i n g on a lot of c a s h . B e f o r e t h e c r a s h c o m e s . to be t a k e n off t h e m a r k e t by F D A . O n e such c a s e w a s t h e R e v c o M e d i c a i d fraud. In p h a r m a c e u t i c a l s it is often e a s i e r t h a n in o t h e r i n d u s t r i e s to find a c o m p a n y w i t h fat e a r n i n g s and s h a r e h o l d e r s w h o are n e v e r t h e l e s s willing t o sell. subject of an i m p r e s s i v e s t u d y by V a u g h a n ( 1 9 8 0 ) . They have managerial experience in p h a r m a c e u t i c a l s a n d o p e r a t e by p u r c h a s i n g s h a r e s in a c o m p a n y w h i c h is on a d o w n w a r d p a t h in t h e s t o c k m a r k e t . R e v c o a n d t w o of its e x e c u t i v e s p l e a d e d no c o n t e s t to a n u m b e r of 282 . P e r h a p s t h e t a r g e t c o m p a n y has o n e m o d e r a t e l y successful p r e s c r i p t i o n d r u g p r o d u c i n g solid e a r n i n g s o n w h i c h t h e c o m p a n y i s t o t a l l y d e p e n d e n t . a very large o n e listed in the F o r t u n e 500. W h e n t h e share prices a p p r o a c h t h e i r z e n i t h . W h e n t h e s h a r e s d r o p e n o u g h the g r o u p b u y s u p e v e n m o r e a t rock b o t t o m v a l u e . b u t a r e t a i l e r . I t i s b e l i e v e d t h a t i n o n e c a s e t h e g r o u p w a s actually invited b y d e s p e r a t e m a n a g e m e n t t o t a k e c o n t r o l o f t h e d e c l i n i n g p e r f o r m a n c e o f their c o m p a n y .

The government's computerised s c r e e n i n g s y s t e m for d e t e c t i n g e r r o r s had sent b a c k t h e c l a i m s for r e s u b m i s s i o n . in a d d i t i o n to b e i n g r e q u i r e d to m a k e restitut i o n of $ 5 2 1 . a n d t h e last t h r e e digits o f t h e six digit p r e s c r i p t i o n n u m b e r s w e r e t r a n s p o s e d . 1980). T h e g o v e r n m e n t ' s d i s c o v e r y o f t h e fraud was accidental. 5 2 1 to t h e O h i o D e p a r t m e n t of P u b l i c W e l f a r e for the illegally paid M e d i c a i d p a y m e n t s . V a u g h a n ( 1 9 8 0 ) p o i n t s o u t t h a t R e v c o ' s i n t e r p r e t a t i o n o f the c r i m e w a s t h a t i t w a s v i c t i m . F o r s o m e r e a s o n ( d e f e c t i v e S O P s ? ) t h e rejects had n o t b e e n d e a l t w i t h as t h e y c a m e in and had piled u p . 1979: 2 0 0 ) . Risk o f d e t e c t i o n o f t h e fraud w a s low s i n c e t h e illicit c l a i m s w e r e w r i t t e n explicitly to satisfy t h e r e q u i r e m e n t s o f t h e c o m p u t e r . 0 0 0 c l a i m s a n d l e g i t i m a t e l y c o r r e c t i n g t h e e r r o r s w o u l d cost more time than it was worth. H o w e v e r . T h e y used m o d e l c l a i m s . t h e y w e r e s u b s t i t u t i n g the legitim a t e m e a n s for a c h i e v i n g t h a t goal with a c h e a p e r and m o r e conv e n i e n t i l l e g i t i m a t e m e a n s . the a m o u n t s would average o u t ( V a u g h a n .Fiddling falsification c o u n t s .(XK). T h e R e v c o e x e c u t i v e s w e r e not a t t e m p t i n g t o e a r n illegitimate p r o f i t s . t h e y w e r e t r y i n g t o r e c o v e r m o n e y s t o which they w e r e . T h e e x e c u t i v e s w e r e fined $2. e v e n in the a r e a of financial c r i m e s . the two convicted executives h a d i n s t i g a t e d a p l a n to bring t h e c o m p a n y ' s a c c o u n t s r e c e i v a b l e b a c k i n t o b a l a n c e . R e v c o stock suffered a limited d o w n t u r n for a short p e r i o d of t i m e ( V a u g h a n . m o r e o r l e s s . D a t e s w e r e c h a n g e d . R a t h e r t h a n c o r r e c t t h e rejected c l a i m s for r e s u b m i s s i o n t o t h e s t a t e .claims w h i c h a l r e a d y had b e e n a c c e p t e d b y t h e state and paid. e n t i t l e d .000 e a c h and the c o r p o r a t i o n $5(). W i t h o u t t h e welfare 283 . clerical w o r k e r s a t R e v c o h e a d q u a r t e r s w e r e i n s t r u c t e d t o m a n u a l l y r e w r i t e c l a i m forms i n n u m b e r s e q u i v a l e n t t o the r e j e c t e d c l a i m s . T h e y m a d e t h e j u d g m e n t t h a t e x a m i n i n g each o f t h e 5 0 . The two executives believed that because of the large n u m b e r of claims involved. W h e n R e v c o m o v e d its c o r p o r a t e h e a d q u a r t e r s in 1975 b o x e s of c l a i m s for p r e s c r i p t i o n s given to M e d i c a i d r e c i p i e n t s b y R e v c o p h a r m a c i e s w e r e found.p r e c i p i t a t e d . N o a t t e m p t w a s m a d e t o alter a m o u n t s o f t h e individual claims. an a v a r i c i o u s d e s i r e for i l l e g i t i m a t e profits c a n n o t e x p l a i n s o m e m a j o r offences. T h e case is i n t e r e s t i n g in t h a t it i l l u s t r a t e s h o w . T h e s e w e r e c l a i m s w h i c h had b e e n rejected b y t h e O h i o D e p a r t m e n t o f PublicWelfare for r e i m b u r s e m e n t . O n c e the boxes were discovered.

s u b s i d i a r y t o p a r e n t o r o n e s u b s i d i a r y t o a n o t h e r .M a r t y and T i e d e m a n n .t r a n s f e r pricing cases have b e e n h e a r d i n F r e n c h c o u r t s ( D e l m a s . T a x laws o f t h e h i g h . T h i s n e e d not n e c e s s a r i l y b e t r u e . I t s o m e t i m e s h a p p e n s with such cases that s h u n t i n g a r o u n d t h e circuit h a p p e n s only o n p a p e r w i t h o u t the c o r r e s p o n d i n g physical m o v e m e n t of materials. a n d e v e n t u a l l y r e i m p o r t e d to F r a n c e at Fr 250 per kilo u n d e r a different t r a d e n a m e . a n d c o m p u t e r p r o c e s s i n g lacking i n d i s c r e t i o n o r c o m m o n sense the c r i m e w o u l d not h a v e o c c u r r e d . A b o u t forty p h a r m a c e u t i c a l c o m p a n i e s a r e said t o b e u n d e r investig a t i o n . t h e y a r e e v a d e d . Essentially the c o m p a n i e s attempt to evade company taxes i n F r a n c e b y high i m p o r t p r i c e s w h i c h v i o l a t e F r e n c h tax laws. t h e n c e M o n a c o . Intracompany transfer pricing A l a r g e p r o p o r t i o n of t h e t r a n s a c t i o n s on t h e b o o k s of an intern a t i o n a l c o m p a n y a r e sales from p a r e n t t o s u b s i d i a r y . T a x h a v e n s a r e used t o g r e a t a d v a n t a g e b y t h e i n t e r n a t i o n a l p h a r m a c e u t i c a l i n d u s t r y .t a x c o u n t r y may h a v e e n a c t e d laws r e q u i r i n g that t r a n s f e r p r i c e s be set on an "arms l e n g t h ' basis ( t h a t is.t a x c o u n t r y are not v i o l a t e d . T h e N e t h e r l a n d s A n t i l l e s i s one o f t h e w o r l d ' s m o r e n o t o r i o u s tax h a v e n s .Fiddling d e p a r t m e n t ' s unnecessarily bureaucratic rules. e x p o r t e d to W e s t G e r m a n y . as if the c o m p a n y w e r e selling t o a n o t h e r r a t h e r t h a n t o itself).t a x c o u n t r y at b e l o w m a r k e t p r i c e s in o r d e r to shift profits to w h e r e t h e y will a t t r a c t least tax. I n o n e c e l e b r a t e d case v i t a m i n s w e r e m a n u f a c t u r e d in F r a n c e at a cost of Fr 50 p e r k i l o . d r u g s m i g h t be s h i p p e d from a h i g h . 1979). that t h e c r i m e can be e x p l a i n e d by d e f e c t i v e S O P s on t h e part of b o t h t h e o r g a n i s a t i o n a l victim and t h e o r g a n i s a t i o n a l offender. F o r e x a m p l e .t a x c o u n t r y to a l o w . h o w e v e r . I t may b e . t h e c o m p a n y a g r e e d t o pay t h e F r e n c h g o v e r n m e n t $10 million i n ' r e d r e s s m e n t ' . T r a n s f e r pricing is t h e r e f o r e a c l a s s i c law e v a s i o n s t r a t e g y . intolerable delays. the significant A m e r i c a n t r a n s n a t i o n a l b a s e d in S a n F r a n c i s c o . C u t t e r L a b o r a t o r i e s . I n t r a c o m p a n y transfer prices can effectively shift profits from o n e part of the w o r l d to a n o t h e r . from t h e r e sent t o S w i t z e r l a n d . F o r e x a m p l e . is o w n e d by a N e t h e r l a n d s Antilles holding company which in turn is owned by 284 . a s t h e h i g h . in 1973 following an i n v e s t i g a t i o n of M e r c k ' s transfer p r i c e s for I n d o c i d 2 5 . In r e c e n t y e a r s a n u m b e r of d r u g . t h e n . S o m e c o m p a n i e s s h u n t t h e i r p r o d u c t a r o u n d a E u r o p e a n circuit i n c r e a s i n g t h e p r i c e a t e a c h p o i n t .

In 1977. F o r A b b o t t t h e figure w a s 101 p e r c e n t . W h e n T h i r d W o r l d c o u n t r i e s a r e t h e v i c t i m s o f transfer pricing the c o n s e q u e n c e s are most serious. large profits w e r e r e c o r d e d for Searle's Puerto Rican subsidiary. B u t t h e m o s t i m p o r t a n t tax h a v e n i n t h e p h a r m a ceutical industry is P u e r t o Rico. a t t h a t t i m e . very m u c h h i g h e r t h a n t h e o v e r p r i c i n g o f o t h e r i m p o r t s (specifically r u b b e r . 22 M a y 1978: 154-6). H e f o u n d t h a t p h a r m a c e u t i c a l i m p o r t s into C o l o m b i a b y foreigno w n e d c o m p a n i e s w e r e o v e r p r i c e d b y 155 per c e n t . 7 per cent. Vaitsos (1974) conducted the classic s t u d y o f high t r a n s f e r prices into Third W o r l d c o u n t r i e s . M a n y A m e r i c a n t r a n s n a t i o n a l s h a v e sizeable m a n u f a c t u r i n g p l a n t s in P u e r t o R i c o . . T h i s e x p l a i n s the e x t r a o r d i n a r y return on pharmaceutical investment in P u e r t o R i c o c a l c u l a t e d b y Wall S t r e e t a n a l y s t J o h n S . t h e c o u n t r y w o u l d h a v e s a v e d a c h a r g e of $20 million to t h e C o l o m b i a n b a l a n c e o f p a y m e n t s i n 1968. l e a v i n g s o m e e x t r a cash i n P u e r t o R i c o each t i m e . 1 p e r c e n t to a high of 962.2 p e r cent of its w o r l d w i d e profits in P u e r t o R i c o . V a i t s o s a l s o found t h a t several o f t h e largest t r a n s n a t i o n a l p h a r m a c e u t i c a l c o m p a n i e s r e t u r n e d t h e i r profits via a h o l d i n g c o m p a n y i n P a n a m a w h i c h . A b b o t t . I n r e c e n t y e a r s I r e l a n d has a t t r a c t e d m a n y n e w p h a r m a c e u t i c a l m a n u f a c t u r i n g p l a n t s partly b e c a u s e o f its t a x a d v a n t a g e s . B a y e r . c h e m i c a l s a n d e l e c t r o n i c s ) . F o r S q u i b b t h e f i g u r e w a s 53. S c h e r i n g r e c o r d e d 59. S m i t h K l i n e .7 per c e n t . Y e t t h a t y e a r t h e a v e r a g e d e c l a r e d profits s u b m i t t e d 285 . a c c o r d i n g t o d a t a s u p p l i e d t o B u s i n e s s W e e k b y O p p e n h e i m e r and C o . T h e s t u d y c o n c l u d e d t h a t t h e effective r a t e o f r e t u r n o n C o l o m b i a n o p e r a t i o n s for fifteen global d r u g c o r p o r a t i o n s ranged from a low of 3 8 .1 per cent with an a v e r a g e of 7 9 . A p p r o x i m a t e l y half o f t h e e s t i m a t e d $20 m i l l i o n in e x c e s s profits r e p a t r i a t e d by t h e transfer pricing would have gone to the C o l o m b i a n g o v e r n m e n t i n t a x e s . B u t t l e s I I . 4 p e r c e n t . 1 p e r c e n t . B u t t l e s c a l c u l a t e s t h a t W a r n e r . .L a m b e r t had a 110 per cent r e t u r n on its i n v e s t m e n t in P u e r t o R i c a n p l a n t and e q u i p m e n t in 1976.' V a i t s o s e s t i m a t e d that i f C o l o m b i a h a d b e e n p a y i n g a v e r a g e w o r l d p r i c e s for its p h a r m a c e u t i c a l i m p o r t s . w h i l e for S c h e r i n g it w a s a m e a g r e 90 p e r cent (Business Week. w a s a tax h a v e n . W h i l e the rest of t h e w o r l d ran at a l o s s . All t h e s e c o m p a n i e s w e r e o u t d o n e by S e a r l e w h i c h in b o t h 1976 and 1977 m a n a g e d to r e c o r d o v e r 100 p e r cent of its w o r l d w i d e profits in P u e r t o R i c o . 4 8 .Fiddling t h e G e r m a n g i a n t . 4 5 . and a large p r o p o r t i o n of t r a n s a c t i o n s b e t w e e n t h e U n i t e d S t a t e s and o t h e r p a r t s o f t h e w o r l d g o t h r o u g h P u e r t o R i c o .

u p p e r i o d and t h e r e b y i m p r o v e its ability to g e t local c r e d i t . o r simply t o a l l o c a t e m a r k e t s b y m a k i n g t h e e x p o r t s o f a s u b s i d i a r y n o n c o m p e t i t i v e . R e p a t r i a t i o n of profits from the T h i r d W o r l d can be a c h i e v e d by fiddling t h e p a c k a g e s as well as fiddling t h e b o o k s . i n g e n i o u s s o l u t i o n s can e v e n b e found t o a c c o m m o d a t e t h e conflicting f i n a n c i a l g o a l s .e x p o r t p r i c e s . T h e r e a r e m a n y r e a s o n s a p a r t from e v a d i n g tax for a p a r e n t to c h a r g e high p r i c e s for i n t r a c o m p a n y sales to an affiliate. W h e n t h e r e a r e conflicting r e a s o n s for b o t h high and low i m p o r t p r i c e s . A t r a n s n a t i o n a l might d e s i r e t h r o u g h t r a n s f e r p r i c i n g t o i n c r e a s e t h e profitability o f a new s u b s i d i a r y d u r i n g a s t a r t .Fiddling by t h e s e s u b s i d i a r i e s to t h e C o l o m b i a n tax a u t h o r i t i e s was 6. t h e r e can b e r e v e r s e i n c e n t i v e s w h i c h e n c o u r a g e l o w . N o w t h e A u s t r a l i a n s u b s i d i a r y is after a price i n c r e a s e from t h e H e a l t h D e p a r t m e n t for t h e P h a r m a c e u t i c a l B e n e f i t s S c h e m e .7 p e r cent.i m p o r t and h i g h . B y p a y i n g 100 p e r cent o f t h e d e c l a r e d cost t o the p a r e n t c o m p a n y ( t h r o u g h a tax h a v e n ) t h e subsidiary w a s able t o t r a n s f e r 300 p e r cent i n c r e a s e d profits to t h e p a r e n t ( H e l l e r . l o w e r a p p a r e n t profits w h e n e x c e s s i v e profits m i g h t e n c o u r a g e l a b o u r u n i o n s t o e s c a l a t e w a g e d e m a n d s o r local c u s t o m e r s (and g o v e r n m e n t s ) t o d e m a n d p r i c e r e d u c t i o n s . It might be d o n e to circumvent dividend repatriation restrictions. C o u n t r i e s w h i c h h a v e high c u s t o m s a n d excise d u t i e s o b v i o u s l y h a v e incent i v e s in t h e d i r e c t i o n of low i m p o r t p r i c e s . and low p r i c e s for sales from affiliate to p a r e n t . So it a s k s t h e p a r e n t c o m p a n y to invoice it for 4 286 . H e r e is a trick used by t h e A u s t r a l i a n subsidiary of o n e t r a n s n a t i o n a l . S u p p o s e t h e p a r e n t c o m p a n y for its a c c o u n t i n g r e a s o n s insists t h a t t h e A u s t r a l i a n s u b s i d i a r y pay it exactly $5 a g r a m for a c e r t a i n p r o d u c t . r e d u c e t h e affiliate's e x p o s u r e t o c u r r e n c y d e v a l u a t i o n and e x p r o p r i a t i o n r i s k s .p u r c h a s i n g a n d price-fixing a u t h o r i t i e s t a k e a c c o u n t o f t h e c o s t s of i m p o r t e d m a t e r i a l s in d e c i d i n g a fair price for t h e p r o d u c t . P e r h a p s t h e m o s t c o m m o n r a t i o n a l e for high i n t r a c o m p a n y i m p o r t p r i c e s with p h a r m a c e u t i c a l s i s t o conv i n c e g o v e r n m e n t t h a t a p r i c e i n c r e a s e s h o u l d be g r a n t e d b e c a u s e of t h e high cost o f t h e m a t e r i a l s i m p o r t e d t o m a k e t h e d r u g s . W h i l e incent i v e s t h a t run in this d i r e c t i o n a r e the m o s t i m p o r t a n t in t h e intern a t i o n a l p h a r m a c e u t i c a l i n d u s t r y . G o v e r n m e n t d r u g . A E u r o p e a n t r a n s n a t i o n a l w a s found t o b e i m p o r t i n g i n t o S o u t h A m e r i c a sealed p a c k i n g c a s e s o f d r u g s w h i c h c o n t a i n e d less t h a n 3 0 p e r c e n t o f t h e d e c l a r e d c o n t e n t s . 1977: 55).

s o p h i s t i c a t e d and c o m p r e h e n s i v e m o n i t o r ing o f t r a n s f e r p r i c e s . W h e n the B r a z i l i a n s find t h a t a s u p p l i e r is a v a i l a b l e with p r i c e s m u c h c h e a p e r t h a n the i n t r a c o m p a n y t r a n s f e r p r i c e . B r a z i l is a l e a d e r in fostering e x c h a n g e of i n f o r m a t i o n b e t w e e n c o u n t r i e s o n p h a r m a c e u t i c a l transfer p r i c e s . d e v e l o p e d e c o n o m i e s are p r o g r e s s i n g t o w a r d s e x c h a n g e o f i n f o r m a t i o n b e t w e e n tax a u t h o r i t i e s a n d e v e n i n t e r n a t i o n a l tax a u d i t s ( e . of its to to T r a n s f e r p r i c i n g is often s u p p o r t e d by r e s t r i c t i v e b u s i n e s s p r a c t i c e s i n t h e T h i r d W o r l d . E f f e c t i v e l y .Fiddling half t h e s h i p m e n t at $10 p e r g r a m and to send t h e o t h e r half free c h a r g e 'for use in c o n d u c t i n g t r i a l s ' . H e a d q u a r t e r s t h e n gets r e q u i r e d p r i c e for total s h i p m e n t . To e n s u r e against d e m a n d s for p u r c h a s e from t h e c h e a p e s t a v a i l a b l e s u p p l i e r the p a r e n t c o m p a n y m i g h t w r i t e into its a g r e e m e n t w i t h a s u b s i d i a r y a tied p u r c h a s e c l a u s e . t h e y insist t h a t t h e t r a n s n a t i o n a l s o u r c e from t h e c h e a p e r s u p p l i e r . n o t a b l y A r g e n t i n a . W i t h tax e v a s i o n t h r o u g h transfer p r i c i n g . h o w e v e r . M o s t T h i r d W o r l d c o u n t r i e s . w h i l e t h e s u b s i d i a r y is a b l e w a v e an i n v o i c e u n d e r t h e n o s e of a H e a l t h D e p a r t m e n t official p r o v e t h a t this e x p e n s i v e p r o d u c t c o s t s $10 a g r a m . P e r u . G o v e r n m e n t s can d e m a n d l o w e r t r a n s f e r p r i c e s only w h e n t h e y k n o w w h a t transfer p r i c e s are being p a i d b y o t h e r c o u n t r i e s o n t h e s a m e p r o d u c t s . C a n a d a with t h e U n i t e d S t a t e s ) . has rules against c l a i m i n g e x c e s s i v e l y high transfer p r i c e s for i m p o r t e d m a t e r i a l s w h e n s e e k i n g p r i c e i n c r e a s e s from t h e g o v e r n m e n t . G u a t e m a l a . t h e c o m p a n i e s can get away with a n y t h i n g . for e x a m p l e . poor countries a r e ' i n danger of being excluded 287 . B r a z i l . T h e d a n g e r for t h e t r a n s n a t i o n a l i s t h a t t h e T h i r d W o r l d g o v e r n m e n t will p o i n t o u t t h a t i m p o r t e d raw m a t e r i a l s can be p u r c h a s e d more cheaply than the intracompany t r a n s f e r p r i c e from o t h e r s u p p l i e r s . B o l i v i a and M e x i c o . T h e m a i n p r o b l e m for d e v e l o p i n g c o u n t r i e s is a lack of r e s o u r c e s t o m o u n t a c o n t i n u o u s . have b e g u n t o s c r e e n a g r e e m e n t s with t r a n s n a t i o n a l s t o r e m o v e r e s t r i c t i v e b u s i n e s s c l a u s e s . In contrast. Tying certain types of purchases to one supplier would be a v i o l a t i o n of a n t i t r u s t laws in m o s t d e v e l o p e d c o u n t r i e s . d o not have a n t i t r u s t laws. S o m e c o u n t r i e s . C h i l e . K n o w l e d g e i s p o w e r i n n e g o t i a t i o n w i t h t r a n s n a t i o n a l s . H o w e v e r . C o l o m b i a and I n d i a also n o w specifically p r o h i b i t c e r t a i n t y p e s o f tied p u r c h a s e schemes. E c u a d o r . I n t h e i n t e r n a t i o n a l transfer p r i c i n g g a m e t h e i r o n y is t h a t t h e r h e t o r i c o f t h e free m a r k e t is often empty without government intervention. g . i t s e e m s t h a t n o o n e c h e c k s t h e cost f i g u r e s supplied b y t h e c o m p a n i e s .

T h e differe n c e i s t h a t i n t h e T h i r d W o r l d t h e y a r e typically m o u n t e d with i m p u n i t y .U S c i t i z e n s . we a r e left with a m u d d l e of d i s p a r a t e c r i m i n a l f o r m s . A m e r i c a n t r a n s n a t i o n a l s split their i n c o m e a m o n g a s m a n y a s six h o l d i n g c o m p a n i e s t o s p r e a d t h e i r m a r g i n a l tax liability. W h e n t h e l a t t e r i s o w n e d b y the original s e l l e r t h e c o r r e c t b a s e for c a l c u l a t i n g tax liability is t h e value of sales from t h e m a r k e t i n g s u b s i d i a r y . The investigation by the Audit C o m m i t t e e o f t h e Board o f t h e A m e r i c a n H o s p i t a l S u p p l y C o r p o r a t i o n . d e p o s i t e d b y A H S into U S b a n k a c c o u n t s . C o n t r o l s t r a t e g i e s for b o t h t y p e s o f c r i m e m u s t focus 288 . Officials w h o s h o w signs of p u t t i n g o b s t a c l e s in the c o m p a n y ' s w a y can be n e u t r a l i s e d w i t h a b r i b e . i l l u s t r a t e s s o m e o f the activities w h i c h c a n b e g o i n g o n q u i t e u n b e k n o w n t o T h i r d W o r l d tax a u t h o r i t i e s . A H S e m p l o y e e s i n s o m e c o u n t r i e s w e r e r e c e i v i n g part o f their s a l a r y in local c u r r e n c y in t h e i r c o u n t r y of r e s i d e n c e . I n one c o u n t r y A H S a l s o had a n illegal s c h e m e for u n d e r s t a t i n g sales tax. I n t h e c a s e o f n o n . Y e t in the final c h a p t e r it will b e c o m e clear that t h e s e v a r i o u s forms o f c o r p o r a t e c r i m e d o have i m p o r t a n t c h a r a c teristics in c o m m o n . Conclusion T h e financial m a n i p u l a t i o n s d i s c u s s e d i n this c h a p t e r s e e m t o r e p r e s e n t t y p e s o f c o r p o r a t e c r i m e which a r e q u a l i t a t i v e l y different from t h o s e d i s c u s s e d e a r l i e r . D o n a l d C o s t e r g a m e with i m a g i n a r y assets and a M E R / 2 9 g a m e with i m a g i n a r y r a t s and m o n k e y s h a v e i n c o m m o n ? A t t h e i r r o o t . 1979b: 245). or a division within an o r g a n i s a t i o n . R e a d e r s may feel t h a t i n a t t e m p t i n g t o c o v e r c o m p r e h e n s i v e l y t h e s p e c t r u m o f c o r p o r a t e c r i m e s which o c c u r in o n e i n d u s t r y . G o o d s w e r e sold t o a m a r k e t i n g s u b s i d i a r y o w n e d b y A H S . t h e p r o b l e m s h a v e similar s o l u t i o n s . B o t h c r i m e s w e r e r e n d e r e d p o s s i b l e by t h e fact t h a t key i n d i v i d u a l s had a u t o c r a t i c c o n t r o l of e i t h e r a w h o l e o r g a n i s a t i o n . All t h e familiar t r i c k s of large c o m p a n i e s for e v a d i n g tax in the d e v e l o p e d w o r l d c a n also b e seen i n t h e T h i r d W o r l d . W h a t do a Dr F. T h e b a s e for c a l c u l a t i n g sales tax liability w a s t h e value of sales to t h e m a r k e t i n g s u b s i d i a r y . p u r s u a n t t o their b r i b e r y c o n s e n t d e c r e e (see C h a p t e r 2 ) . n e i t h e r t h e U S n o r foreign tax a u t h o r i t e s w e r e notified o f this U S b a n k c o m p e n s a t i o n . and the r e m a i n d e r i n U S d o l l a r s . In G u a t e m a l a .Fiddling from a p r i v i l e g e d c l u b of efficient tax a d m i n i s t r a t i o n s ' ( L a l l .

A n e n c o u r a g i n g t h i n g a b o u t t h e study o f c o r p o r a t e c r i m e is. Fiddling the books c a n b e m a d e m o r e difficult b y h a v i n g t h e b o o k s g o t h r o u g h m o r e h a n d s a n d b y d i s c l o s u r e r e q u i r e m e n t s w h i c h m a k e their c o n t e n t s m o r e a c c e s s i b l e t o s h a r e h o l d e r s and o t h e r i n t e r e s t e d p a r t i e s . t h e r e f o r e . m o r e simply. disclosures. O f c o u r s e . Both types of c r i m e d e m a n d a r e t h i n k i n g of p r o c e d u r a l s a f e g u a r d s in c r i m i n a l c o u r t s w h i c h w e a l t h y d e f e n d a n t s e x p l o i t t o p r e v e n t c o u r t s from untangling the web of complexity. or by a r u l e w h i c h insists t h a t a variety of p e o p l e p a r t i c i p a t e in a p p r o v i n g a drug p r o m o t i o n a l claim. w h e r e m a n y p e o p l e are i n v o l v e d in a d e c i s i o n . t h e full b o a r d m e e t i n g . C o m p a r a b l e p r o t e c t i o n s against illegality a r e p r o v i d e d by a rule which requires that loans to company directors must be approved b y . I n s i d e r t r a d i n g hides b e h i n d t h e c o m p l e x i t y o f t h e c o m m e r c i a l w o r l d j u s t a s f r a u d u l e n t safety-testing p r o g r a m m e s hide behind the complexity of science. exposing the exercise of that power to s c r u t i n y b y o t h e r s . it is h a r d e r to k e e p t h e lid on illegality. Multiple a p p r o v a l s . Y e t we will see in t h e final c h a p t e r t h a t g e n e r a l i s a t i o n s are p o s s i b l e a b o u t t h e c i r c u m s t a n c e s i n w h i c h s e l f . 289 . t h e s e g e n e r a l p r i n c i p l e s m u s t b e given q u i t e specific c o n t e n t for different t y p e s of c r i m e .r e g u l a t i o n can and c a n n o t c o m p l e m e n t e x t e r n a l l y i m p o s e d r e g u l a t i o n . E v e n i f t h e o t h e r s w h o o b s e r v e t h e exercise o f p o w e r h a v e no formal right of c h a l l e n g e (as in t h e case o f t h e lowly t r e a s u r e r a t M c K e s s o n and R o b b i n s ) t h e m e r e fact that o n e ' s actions are o b s e r v e d by others constitutes a situational deterrent.Fiddling on rendering unaccountable organisational power more accounta b l e . Intern a t i o n a l fiddles m u s t be dealt with by j o i n t a u d i t s and e x c h a n g e of information between national regulatory agencies. A n d w e will see t h a t t r a n s f e r pricing and using T h i r d W o r l d c i t i z e n s as g u i n e a pigs in t h e safety t e s t i n g of d r u g s are m e r e l y specific m a n i f e s t a t i o n s o f t h e u n d e r l y i n g reality o f t h e way t r a n s n a t i o n a l c o r p o r a t i o n s deal wit