Big Pharma Hit With Record Fraud Fine

Big Pharma Hit With Record Fraud Fine

Written by Alex Reid
Posted July 18, 2012

GlaxoSmithKline, one of the world's largest pharmaceutical companies, plead guilty to unlawfully promoting some of its drugs, costing the company $3 billion, and making the books as the largest settlement to date against a pharmaceutical company.

The company is faulted for promoting antidepressants for unapproved uses (Paxil and Wellbutrin), as well as failure to report safety information about one of their diabetes drugs (Avandia).

Paxil was reportedly promoted by GlaxoSmithKline as a drug for the treatment of depression in patients who are under eighteen, but the FDA never approved the drug for such use. GlaxoSmithKline has also been accused of publishing and distributing medical journal articles which back the use of the drug for minors, in addition to funding events such as dinners and spa programs which encouraged the use of the antidepressant in adolescents.

Similarly, GSK was said by the Justice Department to have paid off doctors to promote off-label uses of another of the company’s antidepressants, Wellbutrin. The company funded meetings for such business at expensive and lavish resorts.

Meanwhile, GlaxoSmithKline deceived Avandia users by failing to report relevant safety data; the drug’s ability to increase heart failure or heart attack was never reported. The FDA, FBI, and Department of Health and Human Services were all involved in investigations into the companies practices.

CEO Sir Andrew Wittey attempted to shield blame and turn the page, saying:

"Today brings to resolution difficult, long-standing matters for GSK. 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."

He also says in that statement: “In the U.S., we have taken action at all levels in the company. We have fundamentally changed our procedures for compliance, marketing and selling.”

Deputy attorney general James M. Cole said about the British companies actions: "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. 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."

The issues with Paxil, Wellbutrin, and Avandia will make up $1 billion of the claims, while the other $2 billion are in connection with a civil settlement that focuses on sales and marketing practices, particularly of the asthma drug Advair.

While the settlement against GSK seems to be promising news for the regulation of such large drug companies, it is also discouraging to some that no individuals are being charged in this case, nor in similar ones. Eliot Spitzer, who sued GSK in 2004 (“over similar accusations involving Paxil,” writes the New York Times) says that CEOs and other high-ranking individuals should be held accountable in order to truly put a stop to such actions. “What we’re learning is that money doesn’t deter corporate malfeasance,” he said.

In fact, $3 billion is small change for large companies such as GlaxoSmithKline. The company made $10.4 billion in sales for Avandia, $11.6 billion for Paxil, and $5.9 billion on Wellbutrin during the years in question, according to IMS Health.

Abbott Laboratories paid $1.6 billion for a settlement in May, and Johnson & Johnson has an impending settlement of up to $ 2 billion on the way--but if companies such as these and GSK are truly making three times that on the sales of one drug, such settlements seem to be no more than a light tap on the wrist for wrongdoers. While CEO Witty gives the impression that such fraudulent actions are a thing of the past, with so much money at stake in the pharmaceutical industry, trustworthiness may still be an unknown.


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