The Justice Department and several states are going to haul in $3 billion from GlaxoSmithKline in what is being billed as the largest healthcare fraud settlement in U.S. history and the largest payment ever by a drug maker.
The pharmaceuticals manufacturer has not only agreed to fork over the record sum, but will also plead guilty “to resolve its criminal and civil liability arising from the company’s unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices,” the Justice Department announced Monday. The guilty plea is to misdemeanor violations of the Food, Drug, and Cosmetic Act related to “certain aspects of the marketing of Paxil for pediatric use and of Wellbutrin for certain uses, and for failure to include information about the initiation or status of certain Avandia studies in Periodic and Annual Reports submitted to FDA,” a news release from GSK noted.
The government’s announcement noted that one of the allegations was that “from April 1998 to August 2003, GSK unlawfully promoted Paxil for treating depression in patients under age 18, even though the FDA has never approved it for pediatric use.”
The development shows that prosecuting healthcare fraud is a priority for the government. Monday’s announcement the second billion-dollar settlement that the Justice Department has secured since early May, when Abbott agreed to pony up $1.5 billion for off-label promotion of an anti-seizure drug.
The significance of the settlement was not lost, at least on federal government officials.
“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.’For a long time, our health care 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.’
The investigation that started in 2004 involved nine products.
Here are some of the specifics from the release:
GSK agreed to plead guilty to a three-count criminal information, including 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).Under the terms of the plea agreement, GSK will pay a total of $1 billion, including 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 U.S. president and board of directors.GSK’s guilty plea and sentence is not final until accepted by the U.S. District Court.
GSK will also pay $2 billion to resolve its civil liabilities with the federal government under the False Claims Act, as well as the states.The civil settlement resolves claims relating to Paxil, Wellbutrin and Avandia, as well as additional drugs, and also resolves pricing fraud allegations.
In its announcement related to the settlement, GSK CEO Sir Andrew Witty highlighted some of the changes that have occurred as a result of the investigation:
“In the US, 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.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.”
The settlement also required GSK to enter into a Corporate Integrity Agreement with the Justice Department.