GSK to settle healthcare fraud charges for $3 bn

Last Updated: Tuesday, July 3, 2012 - 00:07

New York: In the largest healthcare fraud settlement in US history, pharma giant GlaxoSmithKline has agreed to plead guilty to criminal charges that it unlawfully promoted certain prescription drugs and will pay USD 3 billion to resolve the allegations.

The US Justice Department Monday said GSK failed to report certain safety data and undertook alleged false price reporting practices.

The USD 3 billion dollar resolution is the largest payment ever by a drug company. GSK will plead guilty to three criminal counts, including two counts of introducing misbranded drugs, Paxil and Wellbutrin for trading and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration (FDA).

Under the terms of the plea agreement, GSK will pay a total of USD 1 billion, including a criminal fine of USD 956.81 million and forfeiture in the amount of USD 43.18 million.

It will also pay USD 2 billion to resolve its civil liabilities with the federal government under the False Claims Act, as well as the states.

"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," Deputy Attorney General James Cole said.

"At every level, we are determined to stop practices that jeopardise patients's 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," he added.

In the criminal information, the government alleges that from 1998 to 2003, GSK unlawfully promoted Paxil for treating depression in patients under age 18, even though the FDA had never approved it for pediatric use.

GSK participated in preparing, publishing and distributing a misleading medical journal article that misreported that a clinical trial of Paxil demonstrated efficacy in the treatment of depression in patients under age 18, when the study failed to demonstrate efficacy.

The US further alleges that GSK sponsored dinner and lunch programmes and spa getaways to promote the use of Paxil in children and adolescents.

In the case of drug Wellbutrin, the US government said GSK paid millions of dollars to doctors to speak at and attend meetings, sometimes at lavish resorts. At these events, the off-label uses of Wellbutrin were routinely promoted and also used sales representatives, sham advisory boards, and supposedly independent Continuing Medical Education (CME) programs to promote Wellbutrin for unapproved uses between January 1999 to December 2003.

Further, between 2001 and 2007, GSK failed to include certain safety data about the diabetes drug Avandia in reports to the FDA that are meant to allow the FDA to determine if a drug continues to be safe for its approved indications and to spot drug safety trends.

The missing information included data regarding certain post-marketing studies, as well as data regarding two studies undertaken in response to European regulators? concerns about the cardiovascular safety of Avandia.

As part of this global resolution, GSK has agreed to resolve its civil liability for promoting Paxil, Wellbutrin, Advair, Lamictal and Zofran for off-label, non-covered uses and paying kickbacks to physicians to prescribe those drugs as well as the drugs Imitrex, Lotronex, Flovent and Valtrex.

It also made false and misleading statements concerning the safety of Avandia.

In addition to the criminal and civil resolutions, GSK has executed a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG).

The plea agreement and CIA include novel provisions that require that GSK to implement and maintain major changes to the way it does business.

The US Department of Health and Human Services Inspector General Daniel Levinson said under the five-year integrity agreement, GlaxoSmithKline would be required to provide individual accountability of its board and executives.

GSK executives would have to forfeit annual bonuses if they or their subordinates engage in significant misconduct, and sales agents would be paid based on quality of service rather than sales targets.


First Published: Tuesday, July 3, 2012 - 00:07

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