Corporations Behaving Badly

The 10 Worst Corporations of 2001

1. ABBOT: Ripping Off the Government

Earlier this year, TAP Pharmaceutical Products Inc., a major U.S. pharmaceutical manufacturer, was forced to pay $875-million to resolve criminal charges and civil liabilities in connection with its fraudulent drug pricing and marketing conduct with regard to Lupron, a drug sold by TAP primarily for treatment of advanced prostate cancer in men. TAP is a joint venture started by Abbott Laboratories and Takeda Pharmaceuticals of Japan to market two particular drugs, one of which is Lupron.

The wrongdoing was brought to the attention of federal prosecutors by Douglas Durand, the former vice president of sales of TAP Pharmaceutical. Durand provided the government with information about free samples and the implicit encouragement to bill Medicare for free samples, about the company marketing the spread between Medicare reimbursement and the amount the doctors had to pay TAP for the product, about unrestricted educational grants and about extraordinarily lavish entertainment and trips that were given to doctors who were willing to prescribe Lupron in significant quantities.

For a company compelled to enter into such a massive settlement, TAP was surprisingly belligerent. "We fundamentally disagree with many of the government's allegations, but we resolved this matter to make clear our commitment to proper and ethical business practices, and to avoid protracted legal battles and ensure uninterrupted availability of Lupron for many thousands of patients who rely on it," said TAP President Thomas Watkins in announcing the company's plea. Watkins did admit that TAP provided free samples of Lupron to doctors with the knowledge that those physicians would seek and receive reimbursement for sales of the product. But he said, "We fundamentally disagree with government claims regarding TAP's pricing and reimbursement policies. We believe we consistently complied with pricing laws and regulations."

As the TAP case was being resolved in Boston, the Chicago Tribune reported that federal prosecutors were investigating whether a division of Abbott Laboratories and at least three other companies worked with medical-care providers to bilk government health insurance programs for the poor and elderly. According to the report, at issue is whether the medical product manufacturers engaged in a kickback scheme to encourage hospitals, nursing homes or home-care providers to buy pumps and related supplies used to feed seriously ill people by giving the products away or selling them at a discount. Some providers then allegedly billed the products at a higher price to either Medicare, the federal health insurance program for the elderly, or Medicaid, the federal-state health insurer for the poor.

Earlier this year, in an effort to stop the overly aggressive and deceptive marketing of the painkiller OxyContin, West Virginia Attorney General Darrell V. McGraw, sued Abbott and Purdue Pharma, the manufacturers and chief promoters of the drug. With oxycodone — a member of the same family of drugs as opium and heroin — as one of its main ingredients, OxyContin is also one of the most commonly abused prescription medications in the Appalachian region. McGraw alleged that, though they knew the dangers posed by misuse of OxyContin, the defendants willingly marketed the product in a coercive and deceptive manner in hopes of achieving a greater margin of profit and eventually an illegal monopoly on the narcotic pain medication market.

2. ARGENBRIGHT: Sometimes Crime Doesn't Pay

Ask Argenbright, a leader in the privatized airport security business in the United States. Argenbright controls roughly 40 percent of the market. Its employees screen passengers and carry-on bags for the airlines, which have been delegated these responsibilities by the federal government.

Owned by the British firm Securicor, Argenbright in May 2000 pled guilty to two counts of making false statements to federal regulators and paid $1.55-million in fines in connection with charges that it failed on a massive scale to do background checks on security screeners employed at Philadelphia International Airport, failed to provide them with required training and then lied to federal authorities about it.

The government's sentencing memorandum in the case summarizes the charges. "During the period January 1, 1995 through December 31, 1998 the Philadelphia district office of Argenbright Security, Inc. (ASI) hired more than 1,300 untrained pre-departure screeners to work at the security checkpoints at Philadelphia International Airport over a period of more than four years. Through its employees in Philadelphia, ASI caused dozens of criminals to be hired by not checking their backgrounds, but falsely certifying that the checks had been done. ASI's district manager Steven Saffer encouraged and permitted test scores to be falsified and phony GEDs to be created."

3. BAYER: Putting Profit Before Health

According to the Prescription Access Litigation (PAL) project, a coalition of more than 60 organizations in 29 states, an agreement between Bayer, Barr Laboratories and two other generic drug companies is blocking access to adequate supplies and cheaper, generic versions of Cipro, one of the leading antibiotics used to treat anthrax. PAL has sued to undo the agreement. PAL charges that Bayer has unlawfully paid three of its competitors — Barr Laboratories, Rugby and Hoechst-Marion Roussel — a total of $200-million to date to abandon efforts to bring cheaper generic versions of Cipro to the market.

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