Inside Story America

GlaxoSmithKline fraud case: Does crime pay?

As the pharmaceutical giant is fined a record sum of $3bn, we ask if the move will be a deterrent for others.

In the biggest health care fraud settlement in US history, a federal judge approved a fine totalling $3bn for criminal and civil violations by the British pharmaceutical giant, GlaxoSmithKline, last week.

“Most of the examples … are of a drug that is approved for disease A and it is thought to be safe and effective for disease A but they’re not selling enough. It’s still on patent … as long as it’s on patent, as long as they can charge more, they will start pushing it for disease B and C and D for which there is no evidence that the benefits outweigh the risks so this is a strategy widely used by companies to increase their sales.

– Dr Sidney Wolfe, co-founder and director of the Health Research Group

The company admitted illegally marketing the popular antidepressants Paxil and Wellbutrin and also withholding the data on the health risks of its best-selling diabetes drug, Avandia.

For seven years Glaxo failed to report data showing drug Avandia increased the risk of heart attack by as much as 40 per cent.

And the company claimed Wellbutrin was beneficial for weightloss and treating sexual dysfunction.

In the case of Paxil, GlaxoSmithKline promoted the drug for use by children and teenagers, despite the US Food and Drug Administration not approving it for patients under 18.

In fact, a clinical trial had found that the drug made adolecents more likely to attempt suicide.

Whistleblowers said that the company gave doctors lavish trips and spa treatments in order to pursuade them to prescribe the drug for uses not approved of through testing – what are known as off-label prescriptions.

Glaxo also hired a company to write a medical journal article downplaying the risks.

The US deputy attorney general called the settlement historic, saying it sent a clear warning to any company that chooses to break the law.

“They are doing the calculation … and it comes out in their favour that you might as well take the risk here. The basic economics are fairly straight forward, we know that these drugs could be produced, with few exceptions, very cheaply …. There is an enormous incentive for them to lie, cheat, steal, whatever, try and push these drugs.

– Dean Baker, co-director of the Center for Economic and Policy Research

But there have been some other big drug companies that have been caught acting illegally.

In January 2009, the American pharmaceutical giant Eli Lilly agreed to pay more than $1.4bn for illegally promoting the drug Zyprexa.

Prior to Glaxo, the previous record-setting case involved Pfizer Inc., which in September 2009 paid $2.3bn for improperly marketing 13 different drugs, including Viagra.

In April 2012, Johnson & Johnson and a subsidiary were ordered to pay more than $1.2bn for minimising or concealing dangers associated with the antipsychotic drug Risperdal.

And in May, Abbott Laboratories settled for $1.6bn in regard to false marketing of the antiepileptic and mood-stabilising drug Depakote.

So, with the profits over more than a decade of illegal selling far larger than the amount Glaxo agreed to pay, will pharmaceutical companies really be put off? And do drug companies put profits before patients in the US?

Inside Story Americas, with presenter Shihab Rattansi, discusses with guests: Dr Sidney Wolfe, the co-founder and director of the Health Research Group; Dean Baker, the co-director of the Center for Economic and Policy Research; and Wendell Potter, an author and corporate health analyst.

Inside Story Americas also invited GlaxoSmithKline to take part in this discussion, but the company declined.

“Many observers, including myself believe that as long as it is just money that’s involved, it’s not a sufficient deterrent. The drugs that were involved in this settlement earned tens of billions of dollars over a long period of time. So the settlement was less than a single year’s sales of just one of those drugs, Avandia, the drug that I was involved in exposing the risks of. And so it’s just money, and it’s just part of doing business. Many people, particularly on Capitol Hill, believe that it’s time to begin holding these executives accountable for actual jail time when they commit this kind of criminal fraud.”

Dr. Steven Nissen, a cardiologist at the Cleveland Clinic who in 2007 published findings that showed the health risks of the drug Avandia



  • GlaxoSmithKline promoted antidepressants for unapproved uses
  • Glaxo failed to disclose diabetes drug increased heart attack risk
  • The company pleaded guilty and agreed to pay $3bn fines – the largest settlement ever by a drug company
  • The fine includes $1bn criminal fine and $2bn for the civil settlement
  • The $2bn civil settlement involved asthma drug Advair and claims that Glaxo overcharged the US government
  • The criminal charges involved Paxil Wellbutrin and Avandia
  • The antidepressant, Paxil, brought in $11.6bn in sales for Glaxo
  • Sales of the diabetes drug, Avandia, brought in $10.4bn
  • Sales of Wellbutrin, another antidepressant, brought in $5.9bn for Glaxo