Bob Diamond’s air of injured innocence when his bank was found with, not just both hands in the till but feet, nose and a giant hoover as well, has been greeted with a mix of incredulity and fury. But it seems to me that he certainly has the right to be feeling “it’s not fair”.
After all where are the calls for judge-led enquiries, Parliamentary hearings and a full scale culture change at GlaxoSmithKline following the $3 billion settlement where they fessed up to putting profits above ethics, encouraging the prescribing of unsuitable drugs to children and paying for favourable articles to appear in supposedly objective medical journals?
What exactly would they have to do to be put through the regulatory wringer – hide data, mount personal attacks on critics? On no, there’s evidence they’ve done that as well.
Not a lone offender
They also do very well in the fat cat salary bonus stakes. In 2008 the highest paid pharma CEO at Abbott was getting 35 million, at Scheering Plough 30 million and 25 million at Johnson and Johnson. And yet there is no suggestion that they should take a pay cut or donate bonuses to a homeless charity. Because of course GlaxoSmithKline is far from a lone offender. So why one rule for Finance and another for Pharma?
What’s remarkable is the difference between the American and the UK approach to drug companies. While here in the home of socialist medicine we barely lay a regulatory finger on them, in tooth ‘n claw capitalism USA they are subjected permanently on-going federal investigations and hundreds of thousands of aggrieved patients bring court cases against them saying the drugs harmed them.
Last year, for instance, Merck paid 950 million dollars for its miss-selling of the anti-inflammatory drug Vioxx and that came on top of an earlier payment of 4.85 billion dollars to settle 27,000 lawsuits by individuals claiming they were damaged.
Time for criminal prosecutions
This time last year a new Bribery Act became law in the UK and the head of the Serious Fraud Office (SFO) hinted that they could be targeting the industry soon, announcing that the pharmaceutical industry was on the “high risk register” in the USA and that the SFO was in regular communication with its American equivalent the Department of Justice. Since then – nothing. Meanwhile in the States the feeling is growing that fines are just a regular part of doing business and senior executives should face criminal prosecution.
Given that the NHS is a state-run business it is heavily ironic that most of the cases against GlaxoSmithKline that lead to their 3-billion-dollar mea culpa were brought under an Act specifically designed to catch hucksters selling rancid meat to the Union forces during the Civil War by paying bounties to tipsters.
Hard-nosed NHS negotiators
The legal guns are now turned on the drug companies because the government is a major customer via Medicare and Medicaid. In 2009 the Justice Department collected 3.1 billion dollars under the false claims act, 80 per cent of which came from drug companies.
Can it really be the case that even though Medicare and Medicaid were gulled into paying far too much for their drugs and promised results they couldn’t deliver, the hard-nosed negotiators of the NHS were able to face down the wily pharma salesmen and get a fair price for the British taxpayer? And if not then isn’t it about time we were clawing back some unjustified profits?
Giving the public a better deal
But it’s not just that big Finance and big Pharma share a can-do, whatever-it-takes culture, that results in a cavalier attitude to collateral damage, whether from faulty insurance or heart attacks. Something else binds them. They should both be thought of as utility companies, suggested a report from the think-tank Compass. We rely on their services for the health of the economy and for the health of the nation. So they should be regulated in a way that means the public as well as the shareholders get a better deal.
When electricity water and transport companies fail customers, they are fined and subject to a range of other penalties. GlaxoSmithKline’s protestations of new brooms and leaf turning would be more convincing if they involved the same kind of demands for cultural changes and investigation now being visited on the banks. I’m sure it would make Bob feel better anyway.