Glaxo’s $3 Billion Deceit

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    Dishonest promotion leads to massive fine

    Drug giant GlaxoSmithKline will plead guilty and pay $3 billion to resolve federal criminal and civil inquiries arising from the company’s illegal promotion of some of its products, its failure to report safety data and alleged false price reporting, the Justice Department announced Monday.

    The company agreed to plead guilty to three criminal counts, including two counts of introducing misbranded drugs — Paxil and Wellbutrin — and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration.

    With reports like this one, quoted from a USA Today article, still making headlines weeks after the story first broke, you’d think GlaxoSmithKline would be running in crisis management mode. Not so, however.

    Why, you may ask? Because, as BCM President Jonathan Bernstein put it in last week’s episode of The Crisis Show, the phrase “unethical pharmaceutical company” has become redundant. Glaxo and its peers act as if they factor billions of dollars in fines and legal settlements into the cost of doing business, and the majority of consumers live with the knowledge that these pharmaceutical giants don’t exactly share their sense of ethics.

    The good news for those harmed by Glaxo’s dishonesty is that by agreeing to pay the government fines, Glaxo has made an admission of guilt, which should open the organization up to legal attacks, including batteries of class action lawsuits assembled by lawyers seeking an easy payday. And if they consider down that path, they should remember that Arthur Andersen was destroyed by the court of public opinion, not by a court of law.

    For more resources, see the Free Management Library topic: Crisis Management

    [Jonathan Bernstein is president of Bernstein Crisis Management, Inc., an international crisis management consultancy, author of Manager’s Guide to Crisis Management and Keeping the Wolves at Bay – Media Training, and co-host of The Crisis Show. Erik Bernstein is Social Media Manager for the firm, and also editor of its newsletter, Crisis Manager]