Sanofi-Aventis Settles

Here is another addition to the parade of multi-million dollar legal settlements by health care corporations. As reported by the AP:

Drugmaker Sanofi-Aventis has agreed to pay nearly $100 million to settle allegations it cheated Medicaid on the cost of nasal sprays.

The Justice Department said Aventis Pharmaceutical Inc., a wholly owned subsidiary of Sanofi-Aventis U.S. LLC, has agreed to pay the government $95.5 million to settle the charges.

The government charged that between 1995 and 2000, Aventis and its corporate predecessors did not offer Medicaid the best prices for the sprays Azmacort, Nasacort and Nasacort AQ.

In reaching the settlement, Sanofi-Aventis U.S. did not admit any wrongdoing. The company, based in Bridgewater, N.J., issued a statement saying it believed the old pricing system was legal.

Under the law, the company was required to tell Medicaid the lowest price that it charged companies for those products, and offer state Medicaid programs rebates based on those prices.

Prosecutors contend that in order to dodge that obligation, Aventis entered into a private deal with the HMO Kaiser Permanente that repackaged Aventis drugs under a new label, allowing them to overcharge Medicaid programs for the same product.

It seems that scarcely a week goes by without a settlement of charges of unethical behavior by some major health care organization. The ongoing parade of such cases ought to inspire some worry about the ethics of the leaders of such organization. Given the current very public discussion of how expensive health care has become, one would think that there would be some discussion of how much of this expense is due to various kinds of deceptive and unethical behavior by some of the biggest, richest, and most powerful health care organizations. But perhaps that would be too upsetting for those who make so much money running these organizations.

As we have said before, most recently here, while human beings authorized or committed the acts that got the organization in trouble, rarely do these people seem to suffer any negative consequences. At most, the organization may pay a fine. In this case, the fine was, in corporate terms, of modest size. However, even a large fine, may come out of dividends or the stock price, dispersing the cost to stock-holders, or out of salaries across the board, dispersing the cost to all employees. Thus, those who got the organization into trouble are unlikely to feel pain from it. Perhaps because of reverence for all organizations related to health care, and fear that the bankruptcy of any health care organization will leave patients in the lurch, prosecutors do not seem inclined to actually prosecute such organizations. The net effect, though, seems to be that dishonest executives of health care organizations can continue to act with impunity.Until bad leadership of health care organizations leads to negative consequences for those practicing it, health care leadership can be expected to continuously degrade.

ADDENDUM (2 June, 2009) - See these comments on the Effect Measure blog.