GlaxoSmithKline pays $3bn after illegal drugs marketing in the US

Posted on 2 Jul 2012

UK-based pharmaceutical firm GlaxoSmithKline has been hit with a $3bn fine in the USA today, the largest health care fraud settlement in the country’s history and the largest payment ever by a drug company.

The company has announced that it has reached an agreement with the US Government, multiple states and the District of Columbia to conclude the Company’s most significant ongoing Federal government investigations.

Deputy attorney general James M. Cole stated that the multibillion-dollar settlement is “unprecedented in both size and scope.”

GlaxoSmithKline admitted its guilt to promoting the anti-depressants Paxil and Wellbutrin when they were not approved for use.

Although Paxil is available for sale, the US government claimed that GlaxoSmithKline illegally promoted the drug to patients under the age of 18 between April 1998 to August 2003, despite the FDA not having given it their approval for pediatric use.

The US government alleges that GlaxoSmithKline participated in preparing, publishing and distributing a misleading medical journal article that misreported that a clinical trial of Paxil demonstrated efficacy in the treatment of depression in patients under age 18, when the study failed to demonstrate efficacy.

It also argued that GSK did not make available data from two other studies in which Paxil also failed to demonstrate efficacy in treating depression in patients under 18.

The United States further alleges that GSK sponsored dinner programs, lunch programs, spa programs and similar activities to promote the use of Paxil in children and adolescents.

It claims that GlaxoSmithKline paid a speaker to talk to an audience of doctors and paid for the meal or spa treatment for the doctors who attended.

GlaxSmithKline also pleaded guilty to not handing over information from certain studies on diabetes drug Avandia to the Food and Drug Administration (FDA).

GlaxoSmithKline had already set aside cash for the settlement after the initial terms were agreed in November 2011.

The settlement will cover criminal fines as well as civil settlements with the federal and state governments but its guilty plea and sentence is not final until accepted by the U.S. District Court.

Commenting on the agreement, GlaxoSmithKline CEO Sir Andrew Witty said: “Today brings to resolution difficult, long-standing matters for GSK. While these originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made.”

The company released a statement today saying that it has since changed its sales and marketing practices and Sir Andrew Witty added that the firm “has  taken action at all levels in the company in the US.”

He explained: “We have fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct. In the last two years, we have reformed the basis on which we pay our sales representatives and we have enhanced our ability to ‘claw back’ remuneration of our senior management.”

As part of the agreement, GSK has entered into a corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services.

The corporate integrity agreement will also cover a portion of GSK’s manufacturing operations, related to the company’s settlement in 2010 on events in the early 2000s at GSK’s former manufacturing facility in Cidra, Puerto Rico.