The Pharma Barons: Corporate Law’s Dangerous New ‘Race to the Bottom’ in the Pharmaceutical Industry
Michigan Business and Entrepreneurial Law Review, Forthcoming
53 Pages Posted: 9 Aug 2018
Date Written: Fall 2018
Abstract
Martin Skhreli, the “Pharma Bro” and former CEO of Turing Pharmaceuticals, outraged the American public when he raised the price of the Daraprim — an HIV drug with no alternative treatment — from $13 to $750 per pill. Lost in the outrage over Skhreli’s conduct is the fact that he was a small-time operator in an industry that exhibits far more egregious examples of dangerous and socially irresponsible behavior. The pharmaceutical industry is the most profitable industry in the world in large part because it persuades Americans to consume massive quantities of prescription drugs that they often do not need or that prove dangerous to their health. This article posits that American corporate law is in the midst of its second “race to the bottom,” whereby congress and the FDA are facilitating a dangerous deregulatory descent in the pharmaceutical industry. Corporate law’s first race to the bottom produced the infamous “robber barons,” like Jay Gould, Andrew Carnegie, and J.P. Morgan. These men exploited government officials and corporate law loopholes to amass fortune and avoid criminal liability for their antisocial and illegal behavior. Today, drug company executives are orchestrating a new pattern of legal deregulation. Through sophisticated lobbying efforts and a revolving door between government and industry, pharmaceutical executives have secured legal deregulations that allow them to conduct corrupted clinical trials and to win approval for prescription drugs that lack efficacy and often prove dangerous. This deregulatory push permits drug companies to engage in direct-to-consumer prescription drug advertising — a marketing practice so unsafe that it is banned in every other nation in the world. The actions of these pharmaceutical executives, or “pharma barons,” are endangering the nation’s public health. U.S. life expectancies are falling behind other industrialized nations, yet we consume far more prescription drugs than any other country. Prescription drug overdoses are the leading cause of accidental death in the U.S., while prescription opioid painkillers alone kill 50 Americans every day. Like the robber barons who preceded them, drug company executives face little, if any, criminal liability for their illegal behavior. Instead, they routinely settle criminal charges by paying corporate fines and entering non-prosecution agreements through corporate subsidiaries. This article serves the urgent purpose of exposing the risk that this new race to the bottom poses to our nation’s health and prosperity.
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