GlaxoSmithKline to pay record $3bn healthcare fraud settlement

Global healthcare giant GlaxoSmithKline (GSK) reached an agreement with the US Government, multiple states and the District of Columbia to pay a record US$3bn (€2.4bn) to resolve its criminal and civil liability arising from the unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices.

The final settlement is a result of negotiations that reached agreement in principle in November 2011 and covers criminal fines as well as civil settlements.

GSK agreed to plead guilty to two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration (FDA). For this it received a criminal fine of $956,814,400 and forfeiture in the amount of $43,185,600. The criminal plea agreement also includes certain non-monetary compliance commitments and certifications by GSK’s US president and board of directors.

The company will also pay $2 billion to resolve its civil liabilities with the federal government and multiple states under the False Claims Act. The civil settlement resolves claims relating to Paxil, Wellbutrin and Avandia, as well as additional drugs, and also resolves pricing fraud allegations.

GSK has made fundamental changes to its procedures for compliance, marketing and selling in the US over the last few years. The company has adopted new policies, enhanced others, and implemented measures to strengthen training and compliance programmes, including adding compliance staff and changing the basis of the incentive compensation system for GSK sales representatives who work directly with healthcare professionals. The company’s US Commercial Practices Policies now meet or exceed the US PhRMA Code governing interactions with healthcare professionals.

‘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,’ said ceo Sir Andrew Witty. ‘On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made.

‘In the US, we have fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct. In the last two years, we have reformed the basis on which we pay our sales representatives and we have enhanced our ability to “claw back” remuneration of our senior management.

‘We have a vital role to play in bringing innovative medicines to patients and we understand how important it is that our medicines are appropriately promoted to healthcare professionals and that we adhere to the standards rightly expected by the US Government.’

According to James M. Cole, US Deputy Attorney General, the settlement ‘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 jeopardise 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.’