GlaxoSmithKline has agreed to pay $3 billion to the federal government and plead guilty to charges of illegally promoting two antidepressants and withholding key safety information about the diabetes drug Avandia.
As part of the settlement announced on July 2, the pharmaceutical company is admitting to promoting the drugs Paxil (paroxetine) and Wellbutrin (bupropion) for off-label uses and failing to report safety data about Avandia (rosiglitazone) to the Food and Drug Administration.
In the case of Paxil, the government charges that from 1998 to 2003, GSK sponsored dinner and spa programs to encourage physicians to prescribe the drug for children and adolescents, even though it was not approved for pediatric use. The government also alleges that the company prepared and published a misleading medical journal article providing false information about the efficacy of Paxil in patients under age 18. The government also charged that GSK paid physicians to promote off-label uses of Wellbutrin ranging from weight loss to the treatment of sexual dysfunction.
GSK also withheld safety data about the diabetes drug Avandia, including data from post-marketing studies and two other studies conducted in response to concerns about the cardiovascular side effects of the drug, according to the U.S. Department of Justice.
GSK will pay about $1 billion in penalties to the federal government for the illegal promotion of Avandia, Wellbutrin, and Paxil. GSK has agreed to pay another $2 billion in civil penalties to resolve allegations of fraud, including failure to give proper rebates to the Medicaid program.
The settlement is the largest health care fraud settlement in U.S. history and the $3 billion penalty will be the largest ever paid by a drug company, according to the U.S. Department of Justice.
Government officials said they want the settlement to serve as a warning to other drug manufacturers and companies that might seek to defraud the government.
"For a long time, our health care system has 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," Bill Corr, deputy secretary of the Department of Health and Human Services, said in a statement. "But thanks to strong enforcement actions like those we have announced today, that equation is rapidly changing."
In addition to the monetary penalties, GSK has entered into a 5-year Corporate Integrity Agreement with HHS. Among the provisions, GSK is required to change its pay structure to remove compensation based on sales goals for territories, which was considered a factor in driving the illegal promotion of the drugs. The company will also require company executives to forfeit their bonuses if they or their employees engage in significant misconduct.
Sir Andrew Witty, GSK’s CEO, issued a statement saying that company officials have learned from their mistakes. "In the U.S., we have taken action at all levels in the company," he said. "We have fundamentally changed our procedures for compliance, marketing, and selling. When necessary, we have removed employees who have engaged in misconduct."
The settlement must be accepted by the U.S. District Court before it is finalized.