GlaxoSmithKline to pay $3 billion healthcare fraud settlement

GlaxoSmithKline to pay $3 billion healthcare fraud settlement, U.S. says
By Tiffany Hsu

Los Angeles Times July 2, 2012

Pharmaceutical drug maker GlaxoSmithKline will pay $3 billion and plead guilty to federal charges to resolve a slew of criminal and civil issues stemming from its use of kickbacks, mis-branding and other misconduct to market drugs such as Paxil, Wellbutrin and Advair, the U.S. government announced.

The agreement is the largest healthcare fraud settlement in history, spanning nearly every state, according to the Justice Department. It's also the largest payment ever by a drug company.

The settlement is "unprecedented in both size and scope," said James M. Cole, deputy attorney general, in a statement.

"Today brings to resolution difficult, long-standing matters for GSK," said Chief Executive Sir Andrew Witty in a statement. "Whilst these originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made."

The British company illegally marketed depression drug Paxil to children and teens, even sponsoring dinners and spa programs in the drug's name, prosecutors said.

Glaxo also used sham advisory boards and speakers at lavish resorts to promote depression drug Wellbutrin as an option for weight loss and a remedy for sexual dysfunction and substance addiction, according to the government. Customers were urged to use higher-than-approved dosages, the government said.

The healthcare giant was also accused by prosecutors of advertising off-label uses for asthma drug Advair, seizure medication Lamictal and nausea treatment Zofran while also making false claims about the safety and usefulness of such drugs.

The government also accused Glaxo of offering kickbacks to medical professionals, dangling cash, trips to Florida and tickets to basketball games as an incentive to promote and prescribe its drugs.

Glaxo was also submitting incorrect prices for its products to the government, allowing it to underpay rebates owed to programs such as Medicaid, prosecutors said.

The company will plead guilty to three federal criminal charges, two of them for introducing mis-branded Paxil and Wellbutrin drugs and one for not reporting safety data about the cardiovascular effects of diabetes drug Avandia to the Food and Drug Administration.

To deal with damages and civil penalties, Glaxo will shell out $2 billion while paying a $1 billion criminal fine.