Corporate Violence Essay

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Corporate violence is a term that describes serious or life-threatening harm resulting from the actions of corporations. Corporate violence includes the side effects of pharmaceuticals, environmental damage to critical ecosystems or residential neighborhoods, and explosions, fires, and cave-ins in which lives are lost because of safety violations. Corporate violence may also include unsafe product design and manufacture and the distribution of contaminated consumables. Corporate violence describes profit-driven actions in which known dangers are suppressed or ignored and the public knowingly put at risk. Accidents and sabotage that happen to companies acting in good faith do not fall under this rubric, though unintentional harm resulting from negligence or a failure to do due diligence does. Criminal prosecution of corporations is rare, even when deaths have occurred.

Corporate Culprits

Pharmaceuticals and medical device manufacturing is a lucrative industry dominated by multinational corporations. The industry grew rapidly in the late 20th and early 21st centuries to become among the most lucrative and profitable in the world. Global pharmaceutical sales topped $800 billion in 2011, according to Reuters. The United States is the largest market, with almost half of Americans taking at least one prescription drop daily. In 2010, generic drug sales alone were over $78 billion. In 2012, the U.S. Department of Commerce estimated that the medical technology domestic and export markets were worth more than $110 billion and $44 billion, respectively. Leading-revenue corporations are well established among the Fortune 500 multinationals. In 2013, Johnson & Johnson, Pfizer, and Merck were the largest of 13 pharmaceutical companies — collectively known as Big Pharma — on the list. Critics and consumer watchdogs are concerned that corporations may engage in deviant manufacturing and marketing practices that negligently or knowingly jeopardize public health in their pursuit of profit. This raises concern that harms associated with drugs and devices are really the unnecessary results of corporate criminal deviance.

There are an estimated 6.5 million adverse drug reactions annually, and the Centers for Disease Control and Prevention (CDC) estimates that 22,134 Americans died from pharmaceutical drug overdoses in 2010. Researchers and regulators commonly assert that over 100,000 Americans die annually from negative prescription drug effects even when used as directed by their physicians. In 2004 regulators pulled Merck’s painkiller Vioxx, which was found to double a user’s risk of heart attack or stroke, but only after an estimated 20 million people had used it.

The petroleum industry—Big Oil—is also commonly cited by critics as having a history of violence. The 1989 Exxon Valdez supertanker in Prince William Sound was conservatively reported to have spilled 11 million U.S. gallons into the bay, killing hundreds of thousands of animals and destroying critical habitat upon which the local fishing industry depended. Though Exxon blamed Captain Joseph Hazelwood, who was sleeping heavily after getting drunk, investigation revealed that the third mate, who was in charge at the time, was attempting to avoid icebergs and hit Bligh Reef instead, a situation that would have been unnecessary if the ship had been properly equipped; Exxon had refused to repair the radar, which had been broken for a year. BP’s record includes the wreck of the tanker Torrey Canyon off Cornwall, England, in 1967 (the largest shipwreck up to that time), the 2006 Prudhoe Bay spill, and the Deepwater Horizon blowout in 2010, which spread a slick in the Gulf of Mexico that could be seen from space and killed 11 oil platform workers, the company’s worst death toll since its 2005 refinery explosion in Texas that killed 15 workers. According to Peter Maas, the damage caused by the Deepwater Horizon spill is dwarfed by the accumulated damage to the people and wetlands of the Niger River Delta, where Royal Dutch Shell has long controlled the region’s oil.

Other well-known examples of corporate violence include the 1984 catastrophic leak of methyl isocyanate gas from a Union Carbide plant in Bhopal, India, which resulted from lax procedures, poor training, and critical equipment that had been inoperable for months; the mercury poisoning of Minimata Bay residents by Japanese petrochemical company Chisso in the 1950s; the heavy marketing of Nestle’s powdered infant formula in the 1970s and 1980s to poor women in developing countries, where sanitation and unsafe water supplies make formula a dangerous alternative to breast milk; and the Upper Big Branch Mine disaster in 2010, in which 29 miners were killed in an explosion following a pattern of safety violations by Massey Energy.

Deviance and Harm in the Pharmaceutical Industry

In the 1960s, A. H. Robins Company sold millions of Dalkon shields, intrauterine birth control devices, that it knew increased risk for serious infections. Not until 1974 did regulators pull it from the market. Thousands sued the company. In 2010, Bayer was accused of hiding early reports indicating that its best-selling birth control pill Yaz caused blood clots. Likewise, GlaxoSmithKline (GSK) hid evidence that its diabetes drug Avandia was dangerous. Between 1999 and 2007 Avandia was implicated in an estimated 83,000 heart attacks, for which GSK paid $3 billion in 2011. In 2008 court documents revealed that Johnson & Johnson knew that the ASR hip joint replacement that its subsidiary DePuy Orthopaedics marketed had a higher-than-usual failure rate that caused serious joint pain and dislocations, infections, and bone fractures. It had sold 93,000 units worldwide. In 2009, when American regulators requested clinical safety data and refused to allow sales in the United States, the corporation blamed surgeons for the risks, pulled ASR from the market, and sold off stock a year later. By 2013, there were 14,000 lawsuits filed against DePuy.

There has been a good deal of concern about “off-label marketing,” or “misbranding,” which involves marketing drugs for uses for which they are not approved by the U.S. Food and Drug Administration (FDA). This is illegal, but because physicians are allowed to prescribe medications for off-label uses, critics contend that pharmaceutical representatives may market their drugs to physicians unofficially for unapproved uses. The opportunity is significant. Corporations spend an estimated $1 billion annually on continuing medical education programs (CMEs) in which they tell doctors about their new products.

There have been some notable cases of dangerous off-label marketing, including Chemie Grunenthal’s marketing in the 1960s of its over-the-counter tranquilizer Thalidomide to pregnant women, mainly in Europe, despite knowing that the drug was extremely dangerous. Some 8,000 children were born with birth defects such as having malformed, flipper-like arms and legs or simply no limbs at all. The company paid $31 million to settle lawsuits by affected families. In the early 2000s, regulators prohibited Pfizer from marketing Bextra as an acute pain reliever because it was implicated in causing heart attacks. Yet one of its regional sales managers admitted in court that the corporation systematically did so. UCB and Elan Pharmaceuticals also pled guilty to misdemeanor charges of dangerous off-label marketing programs and paid $35 million and $203 million, respectively.

Regulatory Agencies

There are numerous regulatory agencies at the federal level charged with providing rules for corporate behavior and investigating malfeasance. The U.S. Department of Labor oversees the Mine Safety and Health Administration (MSHA) and the Occupational Safety and Health Administration. The National Highway Traffic Safety Administration is responsible for regulating automobile safety, and the Consumer Products Safety Administration has jurisdiction over nearly all manufactured consumer goods in the United States. Other agencies include the Federal Aviation Administration, the Environmental Protection Agency, and the Nuclear Regulatory Commission. These agencies were created by acts of Congress usually in response to public concerns generated by problems associated with irresponsible company practices, such as contaminating drinking water supplies, improperly disposing of toxic materials, or requiring workers to endure unhealthful or dangerous working conditions.

When Elixir Sulfanilamide, the chemical equivalent of antifreeze, killed 107 people including a 6-year-old girl, the child’s mother wrote a letter to U.S. President Franklin Roosevelt. As a result Congress enacted the 1938 Food, Drug, and Cosmetics Act (FDCA). The act required drug sellers to show that their drugs were safe before selling them, and the FDA became the primary regulatory agency. Congress amended the law to broaden its regulatory scope. In 1951, the Durham Humphrey Amendment directed companies to label certain drugs for prescription only. In response to the Thalidomide case, Congress passed the 1962 Kefauver-Harris Amendment. The 1976 Medical Device Amendment vested the FDA with authority to regulate surgical equipment and medical devices.

There are a couple of ways that the FDA can monitor postmarket-release drugs for adverse effects and devices for safety hazards. Medical professionals can use the FDA’s MedWatch voluntary reporting system, and drug and device manufacturers are supposed to report any safety hazards. Public health advocates worry that only a very small percentage of adverse drug events actually are reported, and that due to their conflict of interest between revenues and public safety many corporate offenders may not alert regulators to product hazards.

The FDA can recall dangerous drugs and devices from market. Before withdrawing potentially dangerous drugs from market, the FDA can require additional clinical tests or issue reports, warn doctors, or require warning labels. Every year the FDA recalls dangerous medical products. In 2012 alone it recalled 49.

Regulation and Penalties

There are debates about the extent to which corporate behavior and harm should be viewed as corporate violence. Not everyone agrees about how authorities, particularly the U.S. Food and Drug Administration (FDA) and Department of Justice (DOJ) should regulate corporations and their executives. Authorities and private parties may respond with various civil, regulatory, and criminal responses. Still, many fear that these may be insufficiently punitive to deter corporate officials who may see the human harms and regulatory sanctions simply as the cost of doing business.

When consumers are harmed or killed by companies’ products, they or surviving family members can file lawsuits against the corporations. Lawsuits dealing with the same product and manufacturer may be combined into class-action suits. The common law doctrine of “strict liability” applies, in which companies may be deemed legally liable and therefore ordered to compensate victims financially for the harm even when they did not intentionally cause it. This can result in large settlements that advocates hope will be sufficiently compensatory and deterrent. Because of the discovery process, civil lawsuits can often force corporations to publicly reveal incriminating evidence in court alerting the public to danger.

However, this can be controversial. Industry representatives and tort reform advocates fear that unwarranted lawsuits and court awards can unfairly punish manufacturers and impede product innovation. They have pushed, and often won, legislative measures and judicial rulings that have made it more difficult to bring successful lawsuits, collect big awards after lengthy appeals processes, and cap maximum punitive award amounts.

In 2011 pharmaceutical industry whistle-blowers initiated 638 cases, the highest annual total to date. The FDA can coordinate law enforcement with the Department of Health and Human Services’ Office of Inspector General (OIC) and the DOJ as well as state attorneys general. The FDA’s Office of Criminal Investigations (OCI) can initiate criminal law enforcement. In 2010 the Government Accountability Office (GAO) reported that the OCI had only 223 staffers, 180 of whom were criminal investigators often hired from other federal law enforcement agencies.

The FDA can invoke its authority to “exclude” pharmaceutical corporations from doing business with federal health care agencies unless they fire specific executives when regulators catch the companies engaging in off-label marketing or misbranding. Because pharmaceutical companies depend heavily upon doing their business with the government, regulators believe that they will take the threats seriously and fire top executives. In turn, this is meant to pressure executives into ensuring that their companies have reliable internal policies preventing illegal marketing in the first place.

U.S. v. Park (1975) involved a national retail food chain president whom the U.S. Supreme Court held criminally liable for unsanitary company facilities. The Park Doctrine was established whereby executives of companies manufacturing FDA-regulated products have an affirmative duty to ensure product safety or else face criminal prosecution under the FDCA. Executives are strictly liable regardless of their lack of involvement or even knowledge of dangerous corporate practices. Executives risk up to $100,000 fines and/ or one-year incarceration and can be barred from working in the industry while the company can be excluded from contracting with the government.

In 2003, the U.S. Sentencing Commission adopted new guidelines that increased the probability that executives found guilty of a misdemeanor would go to prison. This strategy is controversial, with some arguing that it is overregulation and unfairly punishes executives who did not commit crimes. Between 1996 and 2011 exclusionary authority was used in 30 cases, but typically pharmacy employees rather than pharmaceutical or medical device executives were targeted. Still, in 2010, 3,300 individuals and organizations were excluded.

Civil lawsuits have been successful against numerous pharmaceutical and medical device manufacturers, culminating in significant monetary awards. For instance, in the 1990s American Home Products sold the popular diet drug Fen-Phen, which caused heart and lung problems. Eventually, the costs of litigation and settlements amounted to $21 billion. Leading pharmaceutical companies paid an estimated $7 billion to settle lawsuits, fines, and penalties between 2004 and 2010. Eli Lilly faced 18,000 lawsuits over its antipsychotic drug Zyprexa, for which it paid $500 million. Serious criminal penalties for corporate officials are rare considering the serious and repetitive nature of the corporate violence allegations. This is an old pattern seen even in the infamous cases involving the Dalkon shield, the synthetic estrogen diethylstilbestrol (DES), and Thalidomide. Only two executives were criminally indicted for the Dalkon shield but only for contempt. None were criminally indicted in the DES or Thalidomide cases.

Richardson-Merrell executives received only a six-month probation for falsifying lab reports that showed their cholesterol drug MER/29 caused blindness. In 2010 KV Pharmaceutical Company’s chief executive officer/chairman of the board pled guilty to two misdemeanors, was fined $1 million, forfeited $900,000, and was sentenced to 30 days in jail for the sale of oversized morphine sulfate tablets. However, four Synthes/Norian executives were found guilty and imprisoned for “human experimentation” with unapproved bone cements that killed three people.

In Kiobel v. Shell (2002), suit was brought against Shell for its role in the executions of Ogoni leaders who had opposed Shell’s environmentally devastating drilling operations in Nigeria. The 1792 Alien Tort Statute was used to bring the suit against Shell, but in 2013 Shell argued in its appeal before the U.S. Supreme Court that corporations were not bound by the same laws that held individuals accountable for human rights abuses. The plaintiffs had hoped that in view of the Citizens United ruling declaring that corporations were entitled to the same constitutional guarantees as people, they would be held to the same standards for criminal responsibility. The court ruled that the statute, which was written to accommodate the prosecution of foreign pirates in U.S. jurisdictions, could not be used to bring cases where the crime was committed by a foreign company in a foreign nation. Sidestepping the main issue, the court left open the possibility that the statute might still be used in cases where the corporation’s connection to the United States is less tenuous.

The Exxon Valdez disaster happened in the context of international maritime law, and the effect was to strengthen safety regulations regarding oil tankers through the International Maritime Organization. Additionally, the U.S. Congress passed the Oil Pollution Act (1990), which restricts vessels with previous spills of more than

1 million U.S. gallons from transporting oil in Prince William Sound. The act also phased in a requirement that oil tankers have double hulls to prevent devastating spills.

Cost of Doing Business

Some argue that rather than deter the big recidivists, settlements and fines have actually reassured companies that the profits of harmful wrongdoing are well worth the costs. For example, between 2000 and 2008, Eli Lilly was said to have earned $36 billion from illegally selling Zyprexa alone, dwarfing decades of criminal fines. Likewise, Pfizer’s $2.75 billion in settlements between 2004 and 2008 is an estimated 1 percent of its revenues during that period. In 2009 the DOJ considered the corporation to be a dangerous recidivist and forced it to pay a record $2.3 billion fine for illegally marketing 13 different drugs, including popular Lipitor and Viagra, for off-label use.

In 2007 three executives of Purdue Pharma were prosecuted for off-label marketing of Oxycontin as less likely to cause addiction than other painkillers and as safe for patients with minor pain, though the drug was approved only for those with severe pain. The company was fined just $600 million, though Purdue made over $1 billion annually from Oxycontin sales.

Despite allegations of repeat violations and increasingly large settlements, pharmaceutical and other industry leaders continue to increase their economic and political power. Investigation into the causes of the Upper Big Branch Mine explosion found that officials throughout the region and the MSHA itself were fearful of challenging Massey Energy on its appalling safety record because of the company’s influence. In 2012, the pharmaceutical/health products sector spent $245 million in registered lobbying alone. Industry watchdogs fear that authorities view even violent corporations as too big and important to punish meaningfully.

ExxonMobil spent most of the 20 years following the Exxon Valdez oil spill fighting punitive damages and ultimately succeeded in having the original award of $5 billion reduced to just above $500 million. Exxon argued that there had been no criminal intent on the part of the corporation and that fines above $25 million were disproportionately punitive regardless of the extent of the actual damage resulting from the accident. The combined costs of legal penalties, settlements, and clean-up amounted to less than a single year’s profit in 1989, the year of the spill. Though the sum was considerable, critics note that the world’s third-largest corporation could well afford to pay it without being sufficiently motivated to incur the costs of ensuring the safety of ongoing and future operations.

Bibliography:

  1. Angell, Marcia. The Truth About the Drug Companies: How They Deceive Us and What to Do About It. New York: Random House, 2005.
  2. Hills, Stuart L. Corporate Violence: Injury and Death for Profit. Lanham, MD: Rowman and Littlefield,
  3. Maas, Peter. The Violent Twilight of Big Oil. New York: Vintage, 2010.
  4. Mokhiber, Russell. Corporate Crime and Violence: Big Business Power and the Abuse of the Public Trust. New York: Random House, 1988.
  5. Mokhiber, Russell and Robert Weissman. Corporate Predators: The Hunt for Mega-Profits and the Attack on Democracy. Monroe, ME: Common Courage Press, 2002.
  6. S. Department of Justice. “GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud Allegations and Failure to Report Safety Data.” http://www.justice.gov/opa/pr/2012/July/12-civ-842.html (Accessed September 2013).

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