GlaxoSmithKline Agrees to $3 Billion Settlement to Resolve Fraud Allegations

Jul 09, 2012   

On July 2, 2012, the U.S. Department of Justice (“DOJ”) announced that British drug maker GlaxoSmithKline (“GSK”) agreed to plead guilty and to pay $3 billion in criminal and civil penalties for liabilities arising from the companys unlawful activities involving the promotion and sale of several pharmaceutical products. The settlement is the largest health care fraud related settlement in U.S. history. A copy of the DOJs press release can be read here.

According to the terms of the settlement agreement, GSK has agreed to plead guilty to a three-count criminal information which includes two counts of introducing misbranded drugs into interstate commerce in violation of 21 U.S.C. § 331 (a) and one count of failing to report safety data about a drug to the FDA in violation of 21 U.S.C. § 331(e) and 21 U.S.C. § 355(k)(1). A copy of the Information can be read here.

The information alleges that for two drugs, Paxil and Wellbutrin, GSK unlawfully promoted both for unapproved “off-label” uses. Generally speaking, while doctors are free to use their medical judgment to prescribe FDA approved medicines for any use, pharmaceutical manufacturers cannot promote medicines for any use that is not approved by the FDA. The promotion of a drug for “off-label” uses by a pharmaceutical manufacturer results in the drug being considered “misbranded” under the FDCA. See generally 21U.S.C.§352(f)(1); 21 C.F.R. § 201.100. According to the Information, between 1998 and 2003, GSK promoted Paxil for treating depression in patients under age 18, despite the FDA never approving the drug for pediatric use. The Information alleges that GSK promoted this “off-label” use through publishing a medical journal article which misrepresented the drugs efficacy in treating depression in patients under age 18 as well as through a series of promotional events such as dinners and spa programs. The Information further alleges that GSK promoted Wellbutrin, an anti-depressant, for various off-label uses including weight-loss, sexual dysfunction, and attention deficit hyperactivity disorder.

GSK also pled guilty to one count of failure to report safety data to the FDA regarding its drug Avandia. The information alleges that between 2001 and 2007, GSK failed to report safety data regarding two studies conducted in response to concerns of European regulators about the cardiovascular safety of Avandia. As a result of these violations, GSK has agreed to pay a total of $1 billion in criminal fines and forfeitures.

GSK also reached a civil settlement with the DOJ regarding allegations of  violating the False Claims Act for: 1) the “off-label” promotion of Paxil, Wellbutrin, Advair, Lamictal, and Zofan (including using paid spokespersons such as Dr. Drew Pinsky from MTVs Loveline to tout the various off-label uses of such products in settings where it would appear he was not acting on behalf of GSK); 2) paying kickbacks to doctors to prescribe those drugs; 3) making false and misleading statements regarding the safety of Avandia; and 4) reporting false best prices and underpaying rebates owed under the Medicaid Drug Rebate Program. A copy of the Civil Complaint can be read here. As a result of these numerous violations, GSK agreed to pay a civil penalty of $2 billion. Additionally, GSK has entered into a 5-year Corporate Integrity Agreement with the Department of Health and Human Services which has required GSK to restructure its executive compensation program to permit the company to recoup annual bonuses and incentives from executives if they, or their subordinates, engage in misconduct.

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