Could Avandia scandal lead to jail time?

An FDA panel is expected to meet tomorrow and Wednesday to discuss whether the diabetes drug Avandia should be recalled.

Lawyers are licking their chops, How hungry are they? This press release inserts an ad from a law firm whose video seeking business automatically starts playing when the page is accessed.

It's a gold rush, no doubt. But should the people whose drug may have caused heart attacks, strokes, congestive heart failure, bone fractures, vision loss and other injuries pay a higher price?

A criminal price.

The government is authorized to prosecute people under the Food, Drug and Cosmetic Act through the office of consumer litigation for fraud against the agency. If false data is deliberately submitted, a felony may be charged.

To get a misdemeanor conviction, the government doesn't even have to prove intent, just that the defendant "held a position of responsibility or authority in a firm such that the person could have prevented the violation."

The targets in this case would be executives of Glaxo SmithKline, the London-based company that owns Avandia, which has been available since 1999. The drug was once a blockbuster, bringing in $2.2 billion in 2006 alone.

UPDATE: The original development of Avandia was done by SmithKline Beechum, before its acquisition by Glaxo. The company has been accused of covering up risks for Avandia since 1999, according to The New York Times, which dated Glaxo's knowledge of this to 2005.

Sales began falling in 2007, when an analysis of dozens of studies published in the New England Journal of Medicine linked the drug to heart attacks. Some 5,000 civil cases, consolidated in Philadelphia, were settled just last month, after 700 cases drew a settlement of $60 million.

Maybe you're starting to see a pattern. BP. Glaxo SmithKline. AIG. In all these cases well-established regulatory processes failed, people have died and others had their lives ruined, and somehow Bernie Madoff still lacks a cell mate.

It would be very difficult to prove a criminal fraud in the case of Avandia, but there is a paper trail.

The FDA sent the company a warning letter back in 2001, and warnings on the drug were upgraded in 2006. In all these cases, as after the NEJM study and again now, Glaxo has pushed back, insisting Avandia does not increase the overall risk of heart attack, stroke or death.

It's supposed to be part of the game that a company will, in its statements to the government, consistently seek to limit its financial liability for any alleged harms.

But all that's at stake right now is money, admittedly a lot of money, but not the personal fortunes of Glaxo's top executives, certainly not their liberty.

All of which means, even if Glaxo lied in its original safety study, lied after the 2007 study, and is lying right now. we the people may have little recourse against the lying liars for the lies they tell us.

Somehow, if you stand behind the corporate veil, especially if that veil is in another country, like the UK, you are beyond the reach of American law.

The hopelessness felt by Americans in the summer of 2010 may come down to just that sentence. If regulation fails, or if it's manipulated, how do the people get justice?

This post was originally published on Smartplanet.com