MIAMI, FL - FILE: A bottle of anti-depressant pills named Paxil are shown March 23, 2004 photographed in Miami, Florida. It was reported on July 2, 2012 that pharmaceutical company GlaxoSmithKline will plead guilty with Justice Department and pay $3 billion in the largest settlement of health care fraud in U.S. history. The company is to plead guilty to a three-count criminal information, including two counts of introducing misbranded antidepressant drugs Paxil and Wellbutrin to interstate commerce and one count of failing to report safety data about the diabetes drug Avandia to the FDA. (Photo Illustration by Joe Raedle/Getty Images) Photo: Joe Raedle, Getty Images / SF
The U.S. Department of Justice has reached a settlement in the largest health care fraud case in U.S. history. The ruling, which included accusations of false advertising, forced the once widely respected British drugmaker, GlaxoSmithKline (maker of Avandia, Zofran, Paxil and Wellbutrin, among other pharmaceuticals) to pay a record-shattering $3 billion to various plaintiffs and the Department of Justice. At first glance, this case constitutes a win for both the Department of Justice and the American people. Initial glances, however, are very misleading.
Despite this $3 billion settlement, advertising fraud is on the rise in the United States. Expert public relations teams are called in to spin stories and confuse consumers - demeaning the efforts of our federal government, putting our judicial system at risk. It is clear there is not enough being done to prevent, stop or resolve matters of false advertising in this country.
While the effect of the GlaxoSmithKline case has yet to be fully seen, the outcomes of previous false advertisement lawsuits are particularly telling. Less than two months ago, a federal judge ruled on the Federal Trade Commission's case against the infamous pomegranate juice manufacturer POM Wonderful.
POM was sued for misleading advertising. Its medical claims on the ability of its pomegranate juice product to cure prostate cancer were, as FTC Chief Administrative Law Judge Michael Chappell ruled, medically unfounded.
This should have been disastrous for POM's advertising campaign and bottom line. POM did not suffer after the judge's ruling - it thrived. Only one week after Judge Chappell's ruling, POM began a new advertising campaign. The centerpiece of the ad campaign selectively quotes directly from Judge Chappell's ruling:
"What you as a consumer of POM need to know is that the FTC judge agreed that POM Wonderful 100% Pomegranate Juice and POMx do provide significant health benefits. Here is what the judge said in his own words: 'Competent and reliable scientific evidence supports the conclusion that the consumption of pomegranate juice and pomegranate extract supports prostate health.' "
Chappell did not rule in POM's favor. While Judge Chappell states that POM researchers (who were paid a sum of $35 million to conduct the research) came up with evidence that POM believed to be "competent and reliable," he notes, in the very next line of his ruling, that "the greater weight of the persuasive expert testimony shows that the evidence relied upon by (POM Wonderful) is not adequate to substantiate claims that the POM products treat, prevent or reduce the risk of prostate cancer." The fact that POM, after being sued for its false advertising, continues to present misleading advertisements that misrepresent a judge's ruling sets a dangerous example.
If GlaxoSmithKline is as creative, and deceptive, as POM at working around the lawsuit, then we might see it roll out ads that skew the $3 billion loss in its favor - blatantly distorting the ruling as an endorsement of its products.
Record settlements mean little if the deception continues. While winning lawsuits is a first step, what really matters is changing corporate behavior.
At this point, even as regulators secure record-breaking settlements, the American people are losing, and the corporate spin teams are winning, the fight.
Asha M. Fereydouni of Danville will graduate from UC Davis in June 2013