GlaxoSmithKline to Pay Record Sum for Sales and Safety Violations

GlaxoSmithKline (GSK; London, United Kingdom) has agreed to plead guilty and pay USD 3 billion in penalty over its marketing of Paxil and Wellburtrin, and for failing to report safety problems with Avandia.

The initial terms of the agreement were announced in 2011, when GSK first agreed to plead guilty and pay civil and criminal penalties in a deal with US federal prosecutors over its marketing of paroxetine HCl (Paxil), bupropion (Wellbutrin), and other drugs, and for failing to report safety problems with rosiglitazone (Avandia). To settle all the criminal charges involving the three drugs, GSK agreed to pay USD 1 billion. In addition, the settlement also requires GSK to pay USD 300 million to resolve allegations that the company reported false drug prices under Medicaid, making it appear that its drugs were cheaper than what they actually were. As a result, GSK underpaid rebates due to Medicaid and overcharged the government, according to the Justice Department.

In the civil settlement portion of the resolution, GSK agreed to pay USD 2 billion to settle civil claims that the company promoted Paxil, Wellbutrin, asthma drug combination fluticasone/salmeterol (Advair), antiepileptic medication lamotrigine (Lamictal), and antinausea medicine ondansetron (Zofran) for off-label uses, and that it paid kickbacks to doctors to prescribe those drugs along with migraine drug sumatriptan (Imitrex), irritable bowel syndrome medication alosetron (Lotronex), asthma drug fluticasone (Flovent), and herpes medication valacyclovir (Valtrex). The US federal government said this was the largest health fraud settlement in the history of the United States.

“Today's historic settlement is a major milestone in our efforts to stamp out health care fraud,” said Bill Corr, deputy secretary of the Department of Health and Human Services (HHS; Washington DC, USA). “For a long time, our healthcare system had been a target for cheaters who thought they could make an easy profit at the expense of public safety, taxpayers, and the millions of Americans who depend on programs like Medicare and Medicaid. But thanks to strong enforcement actions like those we have announced today, that equation is rapidly changing.”

“On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made,” said GSK CEO Andrew Witty. “While charges originated in a different era for the company, they cannot and will not be ignored. The company has fundamentally changed its marketing and selling procedures, including firing employees and changing how sales representatives are paid.”

In addition to the criminal and civil resolutions, GSK will participate in a five-year corporate integrity agreement with the HHS Office of Inspector General that will require the company to make major changes to the way it does business, including changing the way its sales force is compensated to remove compensation based on sales goals for territories, one of the driving forces behind much of the conduct at issue in this matter, according to the press release.

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