The company paid $750 million to settle the criminal conviction and a whistleblower suit that exposed Glaxo’s sale out of a plant in Puerto Rico contaminated Paxil CR, Avandamet (a diabetes drug), Kytril (a drug given to cancer patients) and Bactroban, all manufactured without the most basic of quality controls.
According to the whistleblower, when she inspected the plant and saw what was happening, she contacted the vice president of quality for North America and told him that “he needed to shut down the factory and call the FDA.” She “… urged him to stop the trucks that were leaving the dock that day.”
GSK, however, did not shut down the factory, did not call the FDA and did not stop the trucks from taking out the drugs and putting them into the stream of commerce. Finally, after eight months of going through channels and warning GSK of what was happening, the whistleblower quit and, thank goodness, blew the whistle on the company’s criminally dangerous behavior.
This is obviously a disturbing story. We all buy medications from time-to-time and, when we take them, we expect them to be pristine in quality, free from bacteria and other contamination, in the prescribed dosages and otherwise what they are supposed to be. It would just never occur to me that it would be any other way.
Yet there is something more to this story than the outrageous behavior of GSK that is detailed. The recent Dodd-Frank financial reform legislation created a new whistleblower program through the Securities and Exchange Commission. The idea is to incentivize employees to report government financial fraud, to hopefully deter such conduct and prevent the type of financial abuse that continues to be exposed by the ongoing economic meltdown.
Who could possibly be opposed to ensuring that our financial markets are run honestly? It seems to me like a no-brainer. Yet, critics of the program have argued that employees should not be “encouraged” to bypass internal corporate procedures. These “critics” are, of course, the very corporations whose frauds are targeted for exposure by the legislation. Apparently, they would rather handle these issues themselves, internally and without the “threat” of government intervention and public accountability.
Well, GSK had so-called “internal controls.” The person who warned of abuses in the Puerto Rico manufacturing plant used those controls, reported through channels and what good did that do? None. Zero. Zip. Nothing. The only avenue that stopped the problem was the federal False Claims Act, a whistleblower statute that exists independently of the Dodd-Frank financial reforms.
So I have no sympathy for the Dodd-Frank whistleblower critics. If they do not want to be bothered by the provisions, they should simply act honestly in the first place.