AstraZeneca: Corporate Rap Sheet

AstraZeneca

By Philip Mattera

London-based pharmaceutical giant AstraZeneca is the result of the 1999 merger of Britain’s Zeneca, a spinoff of the old Imperial Chemical Industries specializing in cancer medications, and Sweden’s Astra AB, which was best known for the ulcer and heartburn medication Prilosec. Since that deal, the combined company has been embroiled in numerous controversies over illegal marketing, product safety, anticompetitive behavior and tax avoidance.

 

Advertising and Marketing Controversies

In 2003 federal officials announced that AstraZeneca had pleaded guilty to criminal and civil charges relating to the illegal marketing of the prostate cancer drug Zoladex. The company agreed to pay $355 million, consisting of $64 million in criminal fines, a $266 million settlement of civil False Claims Act charges, and a $25 million settlement of fraud charges relating to state Medicaid programs. AstraZeneca, which agreed to enter into a corporate integrity agreement with the Inspector General of the U.S. Department of Health and Human Services, had been accused of giving illegal financial inducements such as grants and honoraria to physicians.

In 2004 a coalition of consumer groups filed suit against AstraZeneca in a California state court, arguing that advertising for the company’s acid reflux drug Nexium misled consumers into thinking that it was superior to AstraZeneca’s Prilosec. The company had introduced Nexium to replace Prilosec as the latter drug was losing its patent protection. The case, along with a related one filed in Massachusetts, is pending.

Also in 2004, the U.S. Food and Drug Administration (FDA) found that AstraZeneca’s full-page newspaper advertisements defending the safety of its Crestor cholesterol medication were “false and misleading.” The warning letter sent by the agency to AstraZeneca took issue not only with what the company said about the drug but also the way it represented the FDA’s position on Crestor.

In 2010 the U.S. Justice Department announced that AstraZeneca would pay $520 million to resolve allegations that it illegally marketed its anti-psychotic drug Seroquel for uses not approved as safe and effective by the FDA. Under the terms of the settlement, $302 million of the total was to go to the federal government and $218 million to state Medicaid programs. Among other things, the company was accused of having paid doctors to give speeches and publish articles (ghostwritten by the company) promoting those unapproved uses. AstraZeneca agreed to sign a corporate integrity agreement regarding its future behavior. In 2011 AstraZeneca settled a related Seroquel case brought by state governments by agreeing to pay another $69 million.

 

Product Safety

In 2002 AstraZeneca said it would put a more conspicuous warning label on its lung cancer drug Iressa after several patients in Japan suffered pneumonia and some died.

In 2003 researchers at the University of Illinois-Chicago released the results of research concluding that AstraZeneca’s Seroquel and two other schizophrenia drugs made by other companies created an elevated risk for diabetes. Subsequently, more than 25,000 lawsuits were filed against the company. In 2010 the company said it would pay a total of $198 million to settle those cases. That same year, the UK’s Prescription Medicines Code of Practice Authority found that AstraZeneca had failed to adequately describe the risks of Seroquel in an advertisement for the drug in a medical journal.

In 2004 the watchdog group Public Citizen urged the federal government to ban AstraZeneca’s new cholesterol drug Crestor because of evidence linking it to the life-threatening muscle condition rhabdomyolysis. Noting that the company had not submitted timely reports to the FDA on some two dozen serious adverse reactions to Crestor, Public Citizen also called for a criminal investigation of the company. A 2005 study performed at Tufts University found that Crestor users had more serious side effects than those taking other cholesterol drugs.

Also in 2004, an FDA review of AstraZeneca’s new blood thinner Exanta questioned the safety and effectiveness of the drug.

 

Pricing and Anticompetitive Behavior

In 2001 a coalition of 17 consumer groups filed lawsuits against AstraZeneca and Barr Laboratories accusing them of illegally keeping a generic version of the cancer drug tamoxifen off the market. The two companies entered into an agreement under which AstraZeneca paid Barr $21 million to sell its drug rather than produce a low-cost generic. The cases were later dismissed.

In 2003 the European Commission accused AstraZeneca of misusing patent rules to shield its ulcer drug Losec (Prilosec in the United States) from generic competitors. The company was charged with having misstated the year the drug was introduced in order to make it eligible for an extension of its exclusivity rights. In 2005 the commission fined AstraZeneca 60 million euros, a penalty which was upheld by the European Court of Justice in 2012.

In 2007 a federal judge ruled in a national class action case that AstraZeneca and two other companies had to pay damages in connection with overcharging Medicare and private insurance companies. The judge singled out AstraZeneca for acting “unfairly and deceptively” in its pricing of prostate cancer drug Zoladex. AstraZeneca was later hit with a $12.9 million judgment. In 2010 AstraZeneca agreed to pay $103 million to settle a national lawsuit accusing the company of overcharging for Zoladex and Pulmicort Respules asthma medication.

In 2009 AstraZeneca was one of four drug companies that entered into a settlement agreement under which they agreed to pay a total of $124 million to settle charges that they violated the federal False Claims Act by failing to provide required rebates to state Medicaid programs. AstraZeneca’s share of the total settlement amount was $2.6 million.

 

Employment Discrimination

In 1998 the U.S. Equal Employment Opportunity Commission announced that Astra U.S.A. would pay $9.85 million to settle sexual harassment allegations. The U.S. subsidiary’s president and chief executive had been charged with replacing mothers and older female employees with attractive young single women who were pressured into having sex with company executives.

In 2011 the U.S. Labor Department’s Office of Federal Contract Compliance Programs announced that AstraZeneca would pay $250,000 to settle allegations of pay discrimination in its treatment of 124 women at a company facility in Wayne, Pennsylvania.

 

Taxes

In 2010 AstraZeneca agreed to pay £505 million to British revenue authorities to resolve a dispute related to the company’s use of transfer pricing techniques to reduce its tax liability.

 

Watchdog Groups and Campaign

AIDS Healthcare Foundation

Center for Science in the Public Interest

Community Catalyst

Consumers International

Doctors Without Borders

Families USA

Interfaith Center on Corporate Responsibility

Oxfam International

Prescription Access Litigation (PAL) Project

Public Citizen Health Research Group

Treatment Action Campaign

 

Key Books and Reports

A Healthy Business? World Health and the Pharmaceutical Industry by Andrew Chetley (1990).

Bad Pharma: How Drug Companies Mislead Doctors and Harm Patients by Ben Goldacre (2012).

Benchmarking AIDS: Evaluating Pharmaceutical Company Responses to the Public Health Crisis in Emerging Markets (Interfaith Center on Corporate Responsibility, 2006).

Branding the Cure: A Consumer Perspective on Corporate Social Responsibility, Drug Promotion and the Pharmaceutical Industry in Europe (Consumers International, 2006).

Investing for Life: Meeting Poor People’s Needs for Access to Medicines through Responsible Business Practices (Oxfam International, 2007).

Last updated December 19, 2012