Another Example, As If One Was Needed, of the Need for Government Regulation
Conservatives have long argued that regulation is severely damaging the economy. They conveniently leave out the part about how it helps consumers. Case in point, GlaxoSmithKline which just agreed to pay a $3 billion fine to the government to settle a case against its marketing of a diabetes drug and other practices.
The cases against GlaxoSmithKline include illegal marketing of Avandia, a diabetes drug that was severely restricted last year after it was linked to heart risks. Company whistle-blowers and federal prosecutors said the company had paid doctors and manipulated medical research to promote the drug.
But don’t worry, GSK has changed, they have learned their lesson.
“This is a significant step toward resolving difficult, long-standing matters which do not reflect the company that we are today,” Andrew Witty, chief executive of GlaxoSmithKline, said in a statement. “In recent years, we have fundamentally changed our procedures for compliance, marketing and selling in the
to ensure that we operate with high standards of integrity and that we conduct our business openly and transparently.” U.S.
Of course they have, why would anyone doubt their word? Well there is also this.
In a separate case last year, GlaxoSmithKline agreed to pay $750 million, including a $150 million criminal penalty, to resolve federal complaints about manufacturing quality at a plant in Cidra, P.R., since closed.
And there are other things out there, but not to worry.
Brian Bourdot, an analyst at the investment bank Barclays Capital, called the settlement an important step but also noted that GlaxoSmithKline “remains involved in other legal disputes, including alleged violations of the Foreign Corrupt Practices Act.”
“We regard such disputes as an innate risk for large multinational pharmaceutical companies,” he wrote in a note to investors.
Translation, settlements like this are just part of the cost of doing business. In fact a settlement like this is a positive for the company, just ask the shareholders.
GlaxoSmithKline had already set aside cash for the settlement, which analysts said would remove legal uncertainty. The company’s stock rose 2.96 percent Thursday to $44.55 a share, near its 52-week high, amid a broader market advance of about 2 percent.
See $3 billion may sound like a lot of money, but for companies like GSK, just another expense item on the way to prosperity.
GlaxoSmithKline, with a market value of more than $110 billion, had net profit of about $5 billion on $43 billion sales in the year ending Sept. 30.