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Drugmaker GlaxoSmithKline 'guilty of fraud'
British drugmaker pleads guilty and agrees to pay $3bn fine in largest case of healthcare fraud in US history.
Last Modified: 03 Jul 2012 04:30

GlaxoSmithKline Plc, the British drugmaker, has agreed to plead guilty to misdemeanor criminal charges, and pay $3bn to settle what government officials described as the largest case of healthcare fraud in US history.

Monday's agreement , which still needs court approval, would resolve allegations that the British drugmaker broke US laws in marketing two popular drugs for unapproved uses and to failing to disclose important safety information on a third.

The three billion dollar combined criminal-civil fine will be the largest penalty ever paid by a drug company, James M Cole, deputy attorney general said.

"Let me be clear, we will not tolerate health care fraud," Cole told a news conference at the Justice Department.

He would not say whether any company executives were under investigation.

GSK agreed to plead guilty to three misdemeanor criminal counts, one each related to the three drugs.

Guilty pleas in cases of alleged corporate misconduct are exceedingly rare, making GSK's agreement especially unusual.

The company's guilty plea and sentence have to be approved by a federal court in Massachusetts.

Past settlements

Here are some of the largest prosecutions of the last 10 years:
-Pfizer Inc in 2009 agreed to pay a record $2.3bn to settle
allegations it improperly marketed 13 drugs
-Eli Lilly and Co in 2009 said it would pay $1.42bn to settle probes into selling its Zyprexa schizophrenia drug for unapproved uses
-Merck & Co in 2008 reached an agreement to pay
more than $650m to resolve allegations that it failed to
pay Medicaid and other government healthcare programmes
-
Bristol-Myers Squibb agreed in 2007 to pay more
than $510m to settle charges of illegal marketing and
pricing for its products
-Cephalon agreed in 2008 to pay $425m to
settle allegations that it marketed three drugs for uses that were not approved.

"For far too long, we have heard that the pharmaceutical industry views these settlements merely as the cost of doing business," Stuart F Delery, head of Justice's civil division, said at the news conference.

"That is why this administration is committed to using every available tool to defeat health care fraud."

Patrick Burns, director of communications at Taxpayers against Fraud Education Fund, in Washington, said to Al Jazeera that GlaxoSmithKline is not the only drugmaker guilty of using corruption in their marketing.

"These are companies that are marketing kick-backs ... they're not actually marketing drugs anymore" Burns said.

The corporation also agreed to be monitored by government officials for five years to attempt to ensure the company's compliance, Cole said.

Misleading journal article

GSK targeted the antidepressant Paxil to patients under age 18 when it was approved for adults only, and it pushed the drug Wellbutrin for uses it was not approved for, including weight loss and treatment of sexual dysfunction, according to an investigation led by the US Department of Justice.

The company went to extreme lengths to promote the drugs, including distributing a misleading medical journal article, providing doctors with expensive resort vacations, European hunting trips, high-paid speaking tours and even tickets to a Madonna concert.

In a third instance, GSK failed to give the US Food and Drug Administration (FDA) safety data about its diabetes drug Avandia, in violation of US law, prosecutors said.

The misconduct continued for years beginning in the late 1990s and continued, in the case of Avandia's safety data,
through 2007.

The agreement to settle the charges "is unprecedented in both size and scope," said Cole, the number two official at the US Justice Department.

He called the action "historic" and "a clear warning to any company that chooses to break the law."

The settlement includes one billion dollars in criminal fines and two billion dollars civil fines.

GSK said in a statement it would pay the fines through existing cash resources.

The company announced a three billion dollar charge in November related to legal claims.

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Source:
Al Jazeera and agencies
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