FDA slams EpiPen maker

https://arstechnica.com/science/2017/09/fda-slams-epipen-maker-for-doing-nothing-while-hundreds-failed-people-died/

by Tomte • 9 years ago

178 115 9 years ago

If this is not criminal negligence then I don't know what is. I bet nobody goes to prison for it though. It's funny how individuals can go to prison for rather trivial offences that do not harm others. Yet corporations can get away with what basically equates to manslaughter.

burnte2• 9 years ago

Indeed. Corporations are called fictitious entities for a reason, they don't really exist. Send all the people home, and ask a corporation to turn on a lamp, or sell a widget; it can't. We allow their creation because it creates a great deal of convenience to the humans in the business. However, they're still fictitious and the state has the right to dissolve a corporation in some circumstances. Despite this, we seem to have a culture where corporations are given MORE rights than people. We've literally created imaginary monsters that threaten the life and freedom of real human beings.

aaronblohowiak• 9 years ago

"Rip open the diseased heart of a corporation and what spills out?”

“People.”

(From the second book in the altered carbon series)

mtgx• 9 years ago

And we haven't even put AI in charge of them yet. Wait until those completely soulless statistics-only driven entities start running them while having more than human rights.

cypherpundit• 9 years ago

I like your lamp test, too bad it wasn't part of the Citizens United ruling that made corporations legally people - people with more money than most individuals who can influence legislation more than most individuals.

d--b• 9 years ago

With the price hike story though, the public will push for some heads to fall, and prosecution should have the jury on their side for this. I'm willing to take the bet that someone's going to jail for this.

mhandley• 9 years ago

Seems like a reasonable punishment for such criminal negligence for a corporation would be revocation of the patents protecting their monopoly. A corporation does not deserve a government-sanctioned monopoly if it is negligent in how it uses that monopoly power.

seanp2k2• 9 years ago

I would love it if that ever happened to any company. Sadly,

speedplane4• 9 years ago

What I don't understand about this situation, is that the EpiPen is not covered by patents. It's been off patent for a long time. Why aren't other companies stepping in and making a competing product? If it's off patent and they can make the same product for cheaper, then the branded EpiPen sales will decline which will force them to lower their price.

There is definitely a market failure here, but it's not clear why.

Aaargh203184• 9 years ago

Seems like a reasonable punishment for such criminal negligence for a corporation would be ...

But corporations don't make decisions, those are made by the actual human beings that work for those corporations. Those human beings belong in prison.

deelowe• 9 years ago

And their approach was to send a letter. That'll teach them.

aaronbrethorst• 9 years ago

Want to see a stronger response? Then elect someone to the Presidency in 2020 who promises to strengthen regulations.

srean• 9 years ago

Well, that presumes that the promises would be kept

jeroen94704• 9 years ago

This is part of the standard FDA procedure. It starts with a formal warning letter (they send out many of those each year, for varying degrees of severity), and give the company a chance to address the non-conformities and violations. If a company fails to address the issues found, further action is taken, as evidenced by this bit from the end of the letter:

"Correct the violations cited in this letter promptly. Failure to promptly correct these violations may result in legal action without further notice including, without limitation, seizure and injunction. Unresolved violations in this warning letter may also prevent other Federal agencies from awarding contracts."

I've recently browsed through these warning letters for educational purposes (they're all publicly published on the FDA website), and this is by far the sternest letter I've seen.

chiph• 9 years ago

A warning letter from the FDA is quite serious. The executives would ignore it at their peril.

https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/u...

peterwwillis• 9 years ago

You ever notice how the government likes to treat corporations like people, but corporations never go to prison? They get fined a marginal fraction of their yearly profits, or maybe in an extreme case an employee goes to jail, but the corporation continues to do what it was doing before. Basically, if you're incorporated, and you can find a fall guy, nothing can stop you - except maybe a drop in sales.

TeMPOraL2• 9 years ago

Corporate death penalty - dissolution of the corporation - is an easy concept (even if used far too infrequently). But I wonder what would be corporate equivalent of prison time? For individuals, incarceration is about limiting their usual freedoms. So how could it work for a corporate entity? A temporary suspension of the legal person status?

grecy• 9 years ago

CEO and all board members get real jail time.

Charge them all with manslaughter, send a message.

pluma2• 9 years ago

Corporate "jail time" would be indistinguishable from "death penalty" in practice: suspending a corporation's ability to engage in contracts and do business basically means the corporation rapidly falls apart, existing contracts run out or get cancelled, employees don't receive pay checks, etc.

Corporations are basically a sizable chunk of the privileges people lose when going to prison but without the physical reality that guarantees a continued existence. In practice that physical reality manifests itself in the form of the actual human beings running the company and making its decisions, obviously.

So considering a corporation is more like a person without direct agency that relies on the care and supervision of trusted persons, it seems obvious misbehaviour of corporations should be treated as criminal negligence on the part of its caretakers, the people running it.

Alternatively the people running it are the corporation's physical manifestation and therefore the ones who should go to prison if the corporation is jailed (like how when a natural person is sent to prison, they are physically imprisoned rather than merely having their bank accounts frozen).

But all this navelgazing aside, the US is a country where civil assets can be arrested as suspected accomplices to crimes without bringing up any charges against their owners (civil forfeiture). It's clear the "corporations are people" narrative only exists to let certain people have their cake and eat it too, not to make any sense if taken literally.

pdkl95• 9 years ago

A temporary suspension of the legal person status?

That's a start. A stronger limitation of their usual freedoms could also be modeled on the Voting Rights Act's preclearance[1] requirements. The corporation has the burden of proving to an independent regulatory panel that a proposed change will not have the effect of recreating the problem.

[1] https://en.wikipedia.org/wiki/Voting_Rights_Act_of_1965#Prec...

phonon2• 9 years ago

Indicting a corporation (which is rare) is considered a "death sentence". Most other companies will not sign contracts with another company that has been Indicted (even if not convicted).

http://blogs.findlaw.com/blotter/2014/04/what-happens-when-a...

https://www.justice.gov/sites/default/files/criminal-fraud/l...

Civil or SEC prosecutions are totally different, of course.

ceejayoz• 9 years ago

But I wonder what would be corporate equivalent of prison time?

https://en.wikipedia.org/wiki/Consent_decree

Aaargh203184• 9 years ago

But I wonder what would be corporate equivalent of prison time?

How about just prison time ? Corporations on their own can't do anything, they are just a legal fiction. The actual decisions are made and implemented by real human beings; they can be held responsible and put in jail.

mnm1• 9 years ago

The executives should be held personally responsible for what the corporation does. In this case, people died so the CEO, CFO, etc. should all be sent to jail as if they had killed these people personally, their assets seized and distributed to the victims. I guarantee you that once you have real consequences for executives' actions, they will fix the problem immediately. That will never happen in our corporation first culture, however, but the culture might eventually change and demand justice. Stranger things have happened.

matthewmacleod3• 9 years ago

Putting a corporation 'in jail' is essentially a death sentence, since no corporation is realistically going to survive that process. That would have lasting, negative repercussions for people who have committed not crime beyond being employed by someone who did.

I completely agree that more robust methods for punishing criminal corporate acts are required, but those can take many other forms – and I'd personally side with individual responsibility for illegal actions.

speedplane4• 9 years ago

I'm not against personally prosecuting those in charge, but it's often extremely difficult to prove that specific individuals are responsible.

There is a simpler solution. Impose bigger fines. Much much bigger fines. Make the cost/benefit calculus for breaking rules so unattractive that the prudent business decision is to not break them.

Right now, when these companies are caught, they have to pay back what they stole, and sometimes get hit with a not so bad punitive damage. They should instead be hit with damages so hard that it kills their stock price, and does serious damage to the company itself. It will make the people in charge more careful.

maxxxxx2• 9 years ago

The threat of corporations going to jail would be a great disincentive for them growing too large. I think we would be much better off if we had more smaller companies.

naturalgradient• 9 years ago

The CEO is daughter of senator https://en.wikipedia.org/wiki/Joe_Manchin

'Manchin was the only Democrat to vote in confirmation of controversial Trump cabinet appointees Jeff Sessions[87] and Steven Mnuchin,[88] one of two Democrats who voted to confirm Scott Pruitt as EPA Administrator, and one of three who voted to confirm Rex Tillerson.'

and politically well connected. Would be surprised if anything would happen, at all. Just like the last pricing scandal, which was barely a year ago:

http://fortune.com/2016/09/27/mylan-epipen-heather-bresch/

thriftwy2• 9 years ago

Scandals should work in that way so they make the senator unreelectable, instead of making the company invulnerable.

It's as if nobody else wants to sit in that chair!

KGIII2• 9 years ago

It is the senator's child. Assuming no other malfeasance, I see no reason to take it out on anyone who isn't actually responsible.

To be fair, assuming no other malfeasance requires a pretty big leap of faith...

equalunique• 9 years ago

Drain the swamp.

curiousgeorgio7• 9 years ago

To the commenters suggesting that the FDA should do more to punish this company, consider another alternative: if the FDA actually did less to begin with (while still investigating and providing information transparency), we'd probably be better off.

Instead of relying on the government to fix the situation with slow legislation (which usually ends up with enough loopholes to be circumvented anyway), we should allow the industry to function as an actual free(ish) market. If that were the case, we would already have dozens of better EpiPen alternatives as a result of the previous shenanigans from these companies. In other industries, when a company's product is clearly defective, inferior or overpriced, they lose market share and are forced to either improve the product or go out of business. But when the government plays the role of (slow, expensive, often corrupt) "gatekeeper", that is what creates these abusive monopolies.

carlmr• 9 years ago

Yes and no, industry also has it's fair share of monopolies that gatekeep themselves. If a company becomes big and powerful enough it can write tailored legislation and corrupt the right people so that other competitors have no chance.

In this case I'd say you're probably right because the EpiPen is a very simple product, so you'd find a lot of potential competitors, even some with good enough funding to contend with the current market players. However with more complicated medical devices it's harder and harder to compete, because you need so much upfront research money, that you in fact always get a anti-competitive monopoly or oligopoly.

curiousgeorgio7• 9 years ago

you need so much upfront research money, that you in fact always get a anti-competitive monopoly or oligopoly

Industries with high R&D costs may be more prone to the formation of natural monopolies, but in most cases that's a better scenario than the coercive monopolies created as a byproduct of government regulation.

It could be argued that the tech industry, as one example, has similarly high R&D costs (at least in certain fields), and Apple, Google, Microsoft, etc. have all been blamed for monopolistic practices, but even then, the tech world operates in a much healthier market environment than the healthcare or pharmaceutical industries.

Personally, I'd feel more confident being treated in a theoretical Apple hospital (heck, I'd even go for the cheaper Android version) than any of our real-world hospitals with shiny government seals of approval (and more inefficiencies than one can imagine) - as long as I can rely on a decent level of transparency in safety/quality/pricing of those options.

steeve4• 9 years ago

What exactly is preventing another company for creating an EpiPen clone?

mjevans• 9 years ago

Probably payouts from the current manufacturer to stay out of the market. Those payoffs are probably greater than the profit they could make as an off-brand generic.

Requiring financial transparency among all possible parties to regulators and banning collusion like the above would actually be the correct way to ensure the market functions properly.

curiousgeorgio7• 9 years ago

The FDA. Or at least, the FDA has made it extremely expensive and time-consuming for any competitor who wishes to enter the market.

The argument is that a high bar of safety requirements protects consumers (and I'll admit it does to some degree, however inefficiently), but a free market system is more efficient at producing the results that people actually care about (quality, safety, affordability, etc).

Also, patents - another government-run monopoly-maker that should be eliminated.

fabian2k• 9 years ago

It takes quite a long time and a significant amount of money to perform the necessary studies and get the FDA approval. The time factor alone makes it difficult for a competitor to react efficiently if the main or sole provider for a drug or device increases prices drastically.

Mylan reportedly also used a few more anti-competitive tactics like contracts with schools that lower the price for them, but prohibit the school from buying any competing products (see e.g. http://www.reuters.com/article/us-mylan-new-york/new-york-to... )

Houshalter• 9 years ago

The FDA won't approve any of them†. There are a number of alternatives in Europe, but they can't legally sell them in the US (except for one and it's under some silly restrictions that keep it from being used more widely.)

†Or sets the cost of approval to be vastly higher than any potential profits, which is effectively the same thing.

Cozumel2• 9 years ago

What exactly is preventing another company for creating an EpiPen clone?

Nothing. It's already done, it's just vanished from the news.

When the senators daughter was put in charge of epi-pen, first it was made mandatory in schools (so they had to buy it) then price was raised to $500 ( https://www.theguardian.com/commentisfree/2016/sep/22/epipen... )

So a 3D printed alternative was created. It costs $50 and can be made at home ( http://fortune.com/2016/09/15/epipen-alernative-cheap/ )

DanBC• 9 years ago

What everyone else said, but also there's something around pharmacists have to fill the prescription as it's written, and cannot substitute generics.

So, if a dr writes "epipen" it needs to be an actual Epipn(TM) that gets handed over.

There's a UI aspect here too. Doctors use software, and if that software presents expensive non-generics first in the drop-down list that's the med that gets selected.

https://twitter.com/drmarkporter/status/765569736423927813

https://twitter.com/drmarkporter/status/765570038048911360

Q for SystmOne GPs: is there a simple way to ensure default drugs offered when prescribing are cheapest versions most commonly prescribed?
For context: our default omeprazole version (20mg) is currently 5 times price of one 4 down. Easily repeated costly error when busy.

anigbrowl• 9 years ago

Thalidomide.

Clubber4• 9 years ago

I remember reading about EpiPen when they did their price hike. The main reason they were able to do it is the FDA had given them (intentionally or not) a de-facto monopoly in the US.

https://mises.org/blog/lack-epipen-competitors-fdas-fault

Of course, we don't want just anyone to be able to package up anything and sell it (unless it's the nutrition industry, for some reason) but at the same time, the EpiPen business isn't good for the country either.

What's funny, is this company did the same thing as Shkreli, but does their CEO get the same treatment?

artursapek3• 9 years ago

What treatment? Nothing happened Shkreli in response to what he did with Daraprim. His criminal trial had nothing to do with it. That's a common misconception thanks to our bottom-feeding media.

AlexandrB2• 9 years ago

In other industries, when a company's product is clearly defective, inferior or overpriced, they lose market share and are forced to either improve the product or go out of business.

No, they really aren't. [1][2][3]

[1] https://en.m.wikipedia.org/wiki/United_States_v._Microsoft_C....

[2] https://m.phys.org/news/2005-06-amd-sues-intel-monopoly-abus...

[3] http://money.cnn.com/2015/03/19/technology/google-monopoly-f...

curiousgeorgio7• 9 years ago

In none of those cases did the government actually step in and do anything to break up those "monopolies" (other than perhaps an insignificant "slap on the wrist" in Microsoft's case).

So if the government didn't solve those problems, what did? Answer: innovation and competition from other market players.

scott_s• 9 years ago

There are plenty of clearly defective products in a barely regulated health-adjacent industry that don't lose marketshare: the entire supplement industry, including homeopathic and "herbal" remedies. Relying on free markets to regulate themselves depends on rational consumers. But we are not rational.

lowbloodsugar2• 9 years ago

Its not really a problem for me if people buy homeopathic remedies. It is a problem for me that I can't buy cheap, effective epipen alternatives.

jcranberry• 9 years ago

What, exactly, are you suggesting the FDA do less of? Are you suggesting that pharmaceutical companies should be allowed to bring their products straight to the market? Or just that their clinical trials process should be relaxed?

beedogs• 9 years ago

We'll be seeing more and more of this as capitalism goes through its death throes. The next 20 years aren't going to be pretty.

andybak• 9 years ago

The rumours of it's death are greatly exaggerated.

Environmental catastrophe is the only likely trigger I can see. Without that, capitalism will adapt and survive - of course with the inevitable pendulum shifts between it's more authoritarian and more benign forms.

A final thought - are people using the term in a clearly defined way or is it just a label for "that bad stuff" from the left and "freeeedom" from the right?

bmmayer1• 9 years ago

There are a couple 19th century Hegelian philosophers who would love to have a conversation with you.

_jal• 9 years ago

Capitalism won't die. Representative government, civil rights, and the ability of the average person to control their own labor will, but greed is eternal.

readhn• 9 years ago

we have not really had a major corporate prosecution with Executives going to jail since probably Enron scandal.

I'd be surprised to see big pharma CEO in jail these days. especially politically connected.

electriclove• 9 years ago

This comment by Cozumel needs more discussion:

"Maybe the fact her mommy is President of the National Association of State Boards of Education and drafted a law making them mandatory for schools to buy, then her husband lobbied for the law, once it became mandatory for schools to stock them they hiked the price to $500."

Edit to add links:

https://en.wikipedia.org/wiki/Joe_Manchin

https://en.wikipedia.org/wiki/Heather_Bresch

https://en.wikipedia.org/wiki/Gayle_Conelly_Manchin

lowbloodsugar2• 9 years ago

Results:

* no punitive action taken by regulators

* sales increase as parents buy more epipens just to make sure

Good work FDA. Serving your real constituents as usual.

FDA slams EpiPen maker

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