What was cable television’s most watched drama in 2016?
The FX blockbuster — The People v. OJ Simpson.
Now being streamed by millions on Netflix.
America is consumed by high profile crime.
Which raises the question.
Why not high profile corporate crime?
That proposition will be put to the test next year.
Steven Brill – founder of the American Lawyer magazine and Court TV – has written a gripping account of a corporate crime – titled America’s Most Admired Lawbreaker.
That would be Johnson & Johnson.
When asked why America’s Most Admired Lawbreaker can’t be as riveting as the People v. OJ Simpson, Brill doesn’t miss a beat.
“It can be,” Brill told Corporate Crime Reporter in an interview last week.
“I did sell the movie rights to it,” he says matter of factly. “It is going to be made into a serial on one of the television outlets. That’s all I can tell you. Probably in six months to a year you will see it. It is harder to get eyeballs to it than OJ, but I think we are going to succeed.”
In America’s Most Admired Lawbreaker, Brill tells the story of the biggest and the most admired corporation in the world’s most prosperous industry – healthcare – a company known for “consumer products from Band-Aids to baby powder, Neutrogena to Rogaine, Listerine to Visine, Aveeno to Tylenol and Sudafed to Splenda.”
“But the real money — about 80 percent of its revenue and 91 percent of its profit,” Brill writes, “comes not from those consumer favorites, but from Johnson & Johnson’s high-margin medical devices: artificial hips and knees, heart stents, surgical tools and monitoring devices – and from still higher margin prescription drugs targeting Crohn’s disease (Remicade), cancer (Zytiga, Velcade), schizophrenia (Risperdal), diabetes (Invokana), psoriasis (Stelara), migraines (Topamax), heart disease (Xarelto) and attention deficit disorder (Concerta).”
Brill focuses Johnson & Johnson’s corporate crime of selling Risperdal off label.
In November 2013, a Johnson & Johnson unit, Janssen Pharmaceuticals, pled guilty to marketing Risperdal for unapproved uses – namely to the elderly. Risperdal was approved only to treat schizophrenia. but sales representatives promoted Risperdal to physicians and other prescribers who treated elderly dementia patients by urging the prescribers to use Risperdal to treat symptoms such as anxiety, agitation, depression, hostility and confusion.
In a plea agreement, Janssen admitted that it promoted Risperdal to health care providers for treatment of psychotic symptoms and associated behavioral disturbances exhibited by elderly, non-schizophrenic dementia patients.
In addition to promoting Risperdal for elderly dementia patients, from 1999 through 2005, Janssen allegedly promoted the antipsychotic drug for use in children and individuals with mental disabilities.
The complaint alleges that Johnson & Johnson and Janssen knew that Risperdal posed certain health risks to children, including the risk of elevated levels of prolactin, a hormone that can stimulate breast development and milk production.
One of Janssen’s Key Base Business Goals was to grow and protect the drug’s market share with child/adolescent patients.
Janssen instructed its sales representatives to call on child psychiatrists, as well as mental health facilities that primarily treated children, and to market Risperdal as safe and effective for symptoms of various childhood disorders, such as attention deficit hyperactivity disorder, oppositional defiant disorder, obsessive-compulsive disorder and autism.
Until late 2006, Risperdal was not approved for use in children for any purpose, and the FDA repeatedly warned the company against promoting it for use in children.
The company paid $2.2 billion to resolve criminal and civil cases.
At the end of his article, Brill lays out a profit and loss statement for the criminal activity.
“As for the bottom line, Risperdal sales from 1994 through 2008 (when it went off-patent) have totaled approximately $30 billion, including approximately $20 billion in the U.S.,” Brill writes. “Expenses in the U.S., including all manufacturing and sales and promotion costs, probably amounted to $2 billion based on the business plans and budgets I have seen. That would yield a profit of $18 billion.”
“Assume half of those profits, or $9 billion, were derived from off-label sales to children and the elderly.”
“Suppose that even $3 billion ends up being spent on all of the remaining litigation (which is my highest-end estimate).”
“With about $3 billion already paid out in verdicts, settlements and legal fees, that would mean J&J will have spent $6 billion to clean up after all of the alleged illegal conduct.”
“The company will still have cleared $3 billion from its off-label sales—despite getting caught.”
“In other words, the worst possible outcome for J&J—getting caught red-handed and being buried in lawsuits that end up with terrible verdicts or settlements—will still have been highly profitable. (J&J may also have had as much as $300 to $400 million in Risperdal research and development costs, but that money was spent before the first pill was sold and would have been more than recouped from permitted, on-label sales.)”
“All in all, in terms of the company’s fortunes and the career trajectories of the people responsible for its conduct, it is hard to argue that the system produced much of a deterrent when it comes to illegally promoting its powerful products.”
“It is equally hard not to wonder, considering the totality of the Johnson & Johnson Risperdal story, how much we can count on the integrity of a dominant industry whose most admired company admitted so little, promoted so many of those responsible and continues to thrive so mightily.”
And the man at the heart of the boom in Risperdal sales – Alex Gorsky – who was promoted to be CEO of Johnson & Johnson.
“What interested me about this case was that the sales manager of the drug – Risperdal – did such a good job of this that he was promoted to be the CEO of the company – Johnson & Johnson,” Brill said.
“The typical story we know about corporate crime is when the CEO says — this company is so big, how could I have possibly have known this was going on? Here, he was all over this .”
The company actually pled guilty. This case is like most major corporate crime cases in a nutshell. You have the criminal settlement. You have the key individuals getting off. And it raises the question — should the individuals be held accountable and why weren’t they?
“Of course they should have been held accountable. The government says — it would have been hard to prove. I don’t think so here.”
Why a misdemeanor settlement?
“It’s part of the bargain. The negotiators would say — you had to be there. One looming issue is now a very big issue. You are starting to see the drug companies claim a First Amendment right, a corporate, free speech right. You are going to first see the FDA reverse its previously strong rigid stance on drug marketing. The courts are moving in the direction of this kind of corporate First Amendment right. They all sort of spring from Citizens United.”
At the end of the article, you lay out how the company and the CEO still made off, despite the guilty plea by the company and the millions paid in fines.
“That was the work that I was proud of in this case. I did a profit and loss statement. If you do your calculation — should I commit this corporate crime? And if your profit and loss statement says — even if I get caught, I’m okay. And who says I’m going to get caught?”
Is this in book form or just online?
“Just online. The idea is to create a new form for where you would do a serial that you can read all of the documents, the depositions, see interviews with people. I decided that it wasn’t worth a book.”
“I’m working on another book. It’s in part about some of what we talked about. It’s an account of how the country got where it is today — income inequality, corporate responsibility, journalism. It’s — how did we get into the state we are in today? That will be out about a year from now.”
[For the complete q/a format Interview with Steven Brill, see page 31 Corporate Crime Reporter 14(13), April 3, 2017, print edition only.]