Pfizer Smacked by Feds: Today's Outrage
NEW YORK (
) --
Pfizer
(PFE) - Get Report
is paying a record $2.3 billion penalty to settle charges about illegal drug promotions. This is a public whipping by the Justice Department that is intended to send a signal to the entire industry.
The Obama administration is making it clear that one way or another it is going to change our health care system. Business as usual is over.
No more schmoozing, boozing and carousing with doctors to get them to prescribe specific brands of drugs or to go off label for alternative treatments. No more all-expense-paid trips to the Riviera.
It's a sad day for doctors everywhere.
And what about those doctors who willingly and knowingly played along? Are they not complicit? Didn't they break the law too? No matter, Pfizer was the ringleader. Take out the dealer and the junkies will suffer too.
The real travesty is that once again our justice system punishes the innocent shareholders.
The $2.3 billion is going to come out of the pockets of investors. Where are the consequences for management or the board of directors that at best turned a blind eye to all this? Shareholders should remember this when it comes time to vote on new terms for these folks.
It will be interesting to see how investors react today. If we don't see a drop in Pfizer stock and swings in major rivals such as
Johnson & Johnson
(JNJ) - Get Report
,
Merck
(MRK) - Get Report
,
Amgen
(AMGN) - Get Report
and
Gilead
(GILD) - Get Report
, then one interpretation would be that investors aren't too worried about any chilling effect from this fine.
After all, even a record $2.3 billion penalty is a drop in the bucket compared with $48 billion in sales. This fine is enough to get noticed, but is it enough to matter?
For its part, Pfizer said it regrets actions taken in the past and has since improved internal controls. We've heard that before.
--Written by Glenn Hall in New York.
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Glenn Hall is the New York-based Editor in Chief of
TheStreet.com
. Previously, he served as deputy editor and chief innovation officer at
The Orange County Register
and as a news manager at
Bloomberg News
in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at
The Journal-Gazette
in Fort Wayne, Ind. His work also has been published in a variety of newspapers including
The Wall Street Journal
,
The New York Times
and
International Herald Tribune
. Hall received a bachelor's degree in journalism and political science from The Ohio State University and a certificate in project and program management from Boston University.
