GSK to pay ‘unprecedented’ $3 billion fraud charge
pharmafile | July 3, 2012 | News story | Business Services, Sales and Marketing | Avandia, Bextra, GSK, Paxil, Wellbutrin, Witty
GlaxoSmithKline will pay $3 billion in fraud charges, the largest of its kind in US history.
The charges relate to the off-label promotion of its antidepressants Paxil and Wellbutrin for unapproved uses, such as for the treatment of children and adolescents and for sexual dysfunction.
It also comes after GSK was found to be withholding important safety information about its diabetes drug Avandia. The drug was later pulled from the European market and limited in the US when it emerged it can cause serious heart problems.
The company has admitted legal liability for its off-label promotion and withholding Avandia data, which are recognised as criminal misdemeanors in US law.
The settlement, the largest ever in a healthcare fraud case in the US, includes a criminal fine of $956.8 million, the Justice Department said in statement.
The agreement also includes a $300 million civil settlement for failing to provide best prices and underpaying rebates owed under the Medicaid drug programme – something GSK doesn’t admit liability to.
The firm will also pay just over $1 billion to resolve civil allegations relating to the off-label marketing of Wellbutrin and Paxil, and a further $700 million for similar civil matters.
The total $3 billion settlement surpasses the previous record, a $2.3 billion settlement involving Pfizer in 2009 over the marketing of its painkiller Bextra and other drugs.
This is a final settlement and covers the existing legal provisions announced by the firm in November last year, in which the firm held back over $3 billion to pay for the expected fines.
Deputy US Attorney General James Cole told a news conference in Washington DC that the settlement was “unprecedented in both size and scope,” adding that it was ‘historic’ and “a clear warning to any company that chooses to break the law”.
US attorney Carmin Ortiz said that GSK had used bribes to get doctors to prescribe its medicines: “The sales force bribed physicians to prescribe GSK products using every imaginable form of high-priced entertainment, from Hawaiian vacations [and] paying doctors millions of dollars to go on speaking tours, to tickets to Madonna concerts.”
Continued scrutiny
As part of the agreement, GSK has been told to enter into a corporate integrity agreement (CIA) with the Office of Inspector General, which will oversee the company’s conduct for the next five years.
The CIA also covers a portion of GSK’s manufacturing operations – this relates to the company’s settlement in 2010, in which GSK’s was found guilty of distributing adulterated drugs from its former manufacturing facility in Cidra, Puerto Rico.
Bad behaviour from a ‘different era’
GlaxoSmithKline’s chief executive Sir Andrew Witty, said: “Today brings to resolution difficult, long-standing matters for GSK. Whilst 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.
“In the US, we have taken action at all levels in the company. We have fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct.”
Witty added that in the last two years, his company has reformed the basis on which it pays its sales representatives and improved the firm’s ability to ‘claw back’ remuneration of senior management.
Ben Adams
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