Drug giant pleads guilty, fined $3B for drug marketing
By Staff and wire reports
July 2, 2012
Prescription drug giant GlaxoSmithKline will plead guilty and pay $3 billion to resolve federal criminal and civil inquiries arising from the company's illegal promotion of some of its products, its failure to report safety data and alleged false price reporting as part of the largest health care fraud settlement in U.S. history, the Justice Department announced Monday.
The company agreed to plead guilty to three criminal counts, including two counts of introducing misbranded drugs — Paxil and Wellbutrin — and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration.
Under the terms of the plea agreement, GSK(GSK) will pay a total of $1 billion, including a criminal fine of $956,814,400. The company also will pay $2 billion to resolve civil claims under the federal government's False Claims Act.
"Today's multibillion-dollar settlement is unprecedented in both size and scope,'' Deputy Attorney General James Cole said. "At every level, we are determined to stop practices that jeopardize patients' 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."
Prosecutors say GSK encouraged use of Paxil for children although it was not approved for anyone under 18. The company also promoted Wellbutrin for uses besides major depressive disorder, its only approved use. They say that between 2001 and 2007 GSK failed to report on two studies of the cardiovascular safety of Avandia, a diabetes drug.
Glaxo is pleading guilty to these violations of FDA regulations, which are misdemeanors. It has set aside $3.5 billion to cover the cost of the fines and other penalties related to the government's seven-year probe of the company's marketing practices for Paxil, Wellbutrin and Avandia, three of its blockbuster drugs.
The company earlier set aisde $3 billion for legal costs tied to health problems that people taking Avandia and the other medicines are at risk of suffering.
Glaxo has already paid more than $700 million to resolve patient lawsuits, alleging Avandia caused heart attacks and strokes. Many of the Avandia cases have been consolidated before a federal judge in Philadelphia.