More twilight zone material: progress from the Pinto case stalled at the mercy of the "Too Big To Fail" doctrine. Undoubtedly backed by the misguided "rational human economic model." In the Pinto case, punitive damages were awarded to prevent future corporate decisions to measure cost/benefits by putting a price tag on tag on human life…. Ilene
Before the Ford experts left Washington to return to drafting tables in Dearborn they did one other thing. They managed to informally reach an agreement with the major public servants who would be making auto safety decisions. This agreement was that "cost-benefit" would be an acceptable mode of analysis by Detroit and its new regulators. And, as we shall see, cost-benefit analysis quickly became the basis of Ford’s argument against safer car design.
Cost-benefit analysis was used only occasionally in government until President Kennedy appointed Ford Motor Company president Robert McNamara to be Secretary of Defense. McNamara, originally an accountant, preached cost-benefit with all the force of a Biblical zealot. Stated in its simplest terms, cost-benefit analysis says that if the cost is greater than the benefit, the project is not worth it—no matter what the benefit. Examine the cost of every action, decision, contract part or change, the doctrine says, then carefully evaluate the benefits (in dollars) to be certain that they exceed the cost before you begin a program or—and this is the crucial part for our story—pass a regulation.
As a management tool in a business in which profits matter over everything else, cost-benefit analysis makes a certain amount of sense. Serious problems come, however, when public officials who ought to have more than corporate profits at heart apply cost-benefit analysis to every conceivable decision. The inevitable result is that they must place a dollar value on human life.
Ever wonder what your life is worth in dollars? Perhaps $10 million? Ford has a better idea: $200,000. [Pinto Madness, Mother Jones, Oct. 1977]
Pfizer Caught Illegally Marketing Bextra, Feds Won’t Prosecute Because "Pfizer Too Big To Nail"
Courtesy of Mish
CNN Health has an interesting article detailing illegal marketing practices at Pfizer. However, government officials looked the other way because Pfizer too big to nail.
Imagine being charged with a crime, but an imaginary friend takes the rap for you.
That is essentially what happened when Pfizer, the world’s largest pharmaceutical company, was caught illegally marketing Bextra, a painkiller that was taken off the market in 2005 because of safety concerns.
Internal company documents show that Pfizer and Pharmacia (which Pfizer later bought) used a multimillion-dollar medical education budget to pay hundreds of doctors as speakers and consultants to tout Bextra.
Pfizer said in court that "the company’s intent was pure": to foster a legal exchange of scientific information among doctors.
But an internal marketing plan called for training physicians "to serve as public relations spokespeople."
According to Lewis Morris, chief counsel to the inspector general at the U.S. Department of Health and Human Services, "They pushed the envelope so far past any reasonable interpretation of the law that it’s simply outrageous."
By April 2005, when Bextra was taken off the market, more than half of its $1.7 billion in profits had come from prescriptions written for uses the FDA had rejected.
But when it came to prosecuting Pfizer for its fraudulent marketing, the pharmaceutical giant had a trump card: Just as the giant banks on Wall Street were deemed too big to fail, Pfizer was considered too big to nail.
Why? Because any company convicted of a major health care fraud is automatically excluded from Medicare and Medicaid. Convicting Pfizer on Bextra would prevent the company from billing federal health programs for any of its products. It would be a corporate death sentence.
Prosecutors said that excluding Pfizer would most likely lead to Pfizer’s collapse, with collateral consequences: disrupting the flow of Pfizer products to Medicare and Medicaid recipients, causing the loss of jobs including those of Pfizer employees who were not involved in the fraud, and causing significant losses for Pfizer shareholders.
"If we prosecute Pfizer, they get excluded," said Mike Loucks, the federal prosecutor who oversaw the investigation. "A lot of the people who work for the company who haven’t engaged in criminal activity would get hurt."
Pfizer says the company has learned its lesson.
But after years of overseeing similar cases against other major drug companies, even Loucks, isn’t sure $2 billion in penalties is a deterrent when the profits from illegal promotion can be so large.
"I worry that the money is so great," he said, that dealing with the Department of Justice may be "just of a cost of doing business."
Photo credit: The Truth About Cars
