Pharma Giant Agrees To Pay $3 Billion In Fines For Improper Practices
July 2, 2012

Pharma Giant Agrees To Pay $3 Billion In Fines For Improper Practices

Lawrence LeBlond for - Your Universe Online

Pharmaceutical giant GlaxoSmithKline (GSK) pleaded guilty and has agreed to pay the largest fine in US history over charges that it marketed drugs for unauthorized uses, held back safety data, and cheated the government´s Medicaid program, the US Justice Department (DOJ) announced Monday.

GSK was also accused of paying kickbacks to doctors, funding expensive trips and other benefits, to gain their support for their drugs.

The DOJ added that the company misbranded two of its most popular drugs -- Paxil and Wellbutrin -- and made unbacked claims for its diabetes drug Avandia to the Food and Drug Administration (FDA).

The fine, a staggering $3 billion, will be the largest penalty ever paid by a drug company, said Deputy Attorney General James M. Cole. It tops the $2.3 billion fine paid by Pfizer in 2009 for improperly marketing 13 drugs. Cole added that GSK agreed to be monitored by government officials for five years to ensure the company complies.

Under the terms of the plea agreement, GSK will pay a $1 billion and an additional $2 billion to resolve civil claims under the government´s False Claims Act.

“Today's resolution is significant not just because GSK's conduct was egregious or because it is the largest health care fraud settlement in the Department's history” said acting assistant attorney general Stuart Delery. “For far too long, we have heard that the pharmaceutical industry views these settlements merely as the cost of doing business. That is why this administration is committed to using every available tool to defeat health care fraud”

The misconduct continued for years, beginning in the late 1990s. For Paxil, the charges stated that from 1998 to 2003 GSK promoted Paxil for use in treating depression in patients under 18 without approval from the FDA. The charges also said the company illegally promoted Wellbutrin for things like weight loss and sexual dysfunction between 1998 and 2003.

GSK said in a statement that it would pay the fines with existing cash resources. The case involved several industry informants who first reported the wrongdoings a decade ago. These whistleblowers will also share in the financial settlement in the case, according to attorneys.

Sir Andrew Witty, CEO for GlaxoSmithKline told AFP that the problems originated in a “different era” and that the company has now moved toward compliance, marketing and selling its products in a legal manner, and has removed employees involved in the misconduct.

“On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made,” said Witty. “We have a vital role to play in bringing innovative medicines to patients and we understand how important it is that our medicines are appropriately promoted to healthcare professionals and that we adhere to the standards rightly expected by the US government.”

Crimes and civil violations like those in the GSK case have been widespread in the Pharma industry for years and have produced series of cases with carrying heavy fines and stiff penalties. In the past few years, the DOJ has become much more aggressive in pursuing such fraud, most often in whistleblower cases taken on by a handful of attorneys focused on such fraud.

Cole told a news conference at the Justice Department that “we will not tolerate health care fraud.” While making that point clear, he did not say whether any other big drug executives were currently under investigation.

GSK´s plea and sentence will have to be approved by a federal court in Massachusetts before it is set in stone.

DOJ officials also said that between 2001 and 2007 GSK failed to report to the FDA on safety data from certain post-marketing studies and from two studies of the cardiovascular safety of the diabetes drug Avandia. Since 2007, the FDA has added warnings to the Avandia label to alert doctors about potential increased risk of congestive heart failure and heart attack.

GSK is pleading guilty to these violations of FDA regulations, which are misdemeanors. It said it has set aside $3.5 billion to cover the cost of the fines and other penalties related to the government´s longstanding investigation of the company´s marketing practices for Paxil, Wellbutrin and Avandia.

The company also set aside $3 billion for legal costs tied to health problems that people on Avandia and other medicines are at risk of suffering. GSK has also paid more than $700 million to resolve patient lawsuits, alleging Avandia caused heart attacks and strokes.

Despite agreeing to the record-breaking fine, GSK said the settlement does “not constitute an admission of any liability or wrongdoing in the selling and marketing of Lamictal, Zofran, Imitrex, Lotronex, Flovent, Valtrex, Avandia or Advair products. [Furthermore] the civil settlement agreement contains many allegations that are either inaccurate or incomplete, that selectively tell only parts of the story, and that draw unwarranted conclusions from disputed facts.”