July 2, 2012 – The U.K.’s largest drugmaker announced today that it has reached an agreement with the U.S. Government and a number of states to conclude several massive federal investigations. The final settlement is a result of negotiation agreements which were reached last November. In total, GlaxoSmithKline (GSK) will make payments totaling $3 billion, which will reportedly be covered by existing provisions and funded through existing cash resources.
What’s the problem?
GSK pleaded guilty to a three-count criminal indictment, which included two counts of introducing the misbranded antidepressants Paxil and Wellbutrin into interstate commerce, as well as one count of failing to report safety data about the blockbuster diabetes drug Avandia to the U.S. Food & Drug Administration (FDA). The criminal counts will total approximately $1 billion. GSK will also pay an additional $2 billion to resolve civil liabilities relating to the three drugs, as well other medications manufactured by the company, with the intention of resolving allegations of pricing fraud.
According to the Justice Department, GSK unlawfully marketed Paxil for treating depression in children without FDA approval for pediatric use. The company also reportedly published and distributed a misleading medical journal article that exaggerated Paxil’s ability to treat depression in adolescents, in addition to sponsoring dinners, spa programs, and other activities designed to promote the drug. The Justice Department also contends that in 2003, GSK paid millions in an effort to market Wellbutrin – which was approved at the time only to treat depression – for off-label purposes for which it was neither tested nor approved by the FDA. In the case of Avandia, GSK was accused of failing to report vital safety data between 2001 and 2007 that subsequently led to ‘black box’ warnings about the drug’s ability to cause potentially life-threatening heart problems.
“Today’s multi-billion dollar settlement is unprecedented in both size and scope. It underscores the Administration’s firm commitment to protecting the American people and holding accountable those who commit health care fraud,” James M. Cole, Deputy Attorney General, said in a statement. “At every level, we are determined to stop practices that jeopardize patients’ health, harm taxpayers, and violate the public trust – and this historic action is a clear warning to any company that chooses to break the law.”
The landmark settlement marks the end of a sweeping investigation that involved the FDA, FBI, and Department of Health and Human Services.