Another drug-marketing settlement, another argument over whether multimillion-dollar payouts really deter bad pharma behavior. This time, the settlement is Allergan's $600 million promise to the Department of Justice, made to settle probes of alleged off-label marketing of wrinkle-relaxer Botox.
As more than one commentator has noted, $600 million isn't as much as it sounds: Botox is expected to bring in $1.4 billion in net sales this year. What's more, if Allergan wins FDA approval to tout the drug as a migraine remedy--which it's already been doing, albeit illegally, the DoJ says--it stands to boost revenue for the drug by $1 billion.
If pharma's consumer-ad spending brings a 2-for-1 yield, as we read recently, then Allergan's off-label marketing settlement delivers almost as much bang for the buck. As Fortune asks, "Allergan's Botox fine: good marketing?"
Regulators have been making noises about going after individual executives for their companies' misconduct. But as Forbes points out, prosecuting individuals is tougher than going after companies. Businesses tend to settle faster. Agencies need announcements--like DoJ's Allergan-settlement announcement--to show they're doing their jobs. So they don't go after executives, who, because they don't want to pay fines or go to jail, defend themselves vigorously. After all, they might lose.
- see the Forbes column
- check out the Fortune coverage
- get more from BNet Pharma
- read the New York Times story