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GlaxoSmithKline to Pay $3 Billion for Illegal Drug Marketing

July 2, 2012 — Today the U.S. Department of Justice announced that pharmaceutical company GlaxoSmithKline (GSK) had pled guilty to federal and civil lawsuits alleging that the company illegally marketed several of its drugs, failed to report safety data, and falsely reported price information. The company will pay the U.S. government a fine of $3 billion — the largest ever paid by a drug company. GSK also agreed to be monitored by government officials for the next five years to ensure compliance.

The judgment amounts to $1 billion in criminal fines and another $2 billion in civil fines. GSK pled guilty to three criminal counts, including the following:

  • Illegally engaging in off-label promotion of the drug Paxil. GSK promoted Paxil for treating depression in children between April 1998 through August 2003, although the FDA never approved Paxil for use in anyone under 18 years of age.
  • Illegally engaging in off-label promotion of Wellbutrin. From January 1999 to December 2003, GSK promoted Wellbutrin for weight loss, sexual dysfunction, substance addictions, and attention deficit hyperactivity disorder (ADHD), although the FDA only approved Wellbutrin for treatment of major depressive disorder.
  • Illegally failing to report safety data regarding the drug Avandia to the U.S. Food and Drug Administration (FDA) between 2001 and 2007. The company failed to report the results of two post-marketing safety studies which linked Avandia to increased risk of congestive heart failure and heart attack.

In recent years, the Justice Department has become more aggressive in pursuing cases against pharmaceutical companies who deliberately engage in off-label promotion of drugs. Because new drugs take many years and billions of dollars to develop, there is high pressure for a new drug to become very successful.

According to Acting Assistant Attorney General, Stuart F. Delery, “For far too long, we have heard that the pharmaceutical industry views these settlements merely as the cost of doing business. That is why this administration is committed to using every available tool to defeat health care fraud.”

The government crackdown is also, in part, a reaction to skyrocketing public health costs. When drug companies convince doctors to prescribe their drugs for off-label use, they expand their potential customers. Doctors may also be convinced to prescribe a new, expensive drug instead of an older, cheaper, equally-effective generic medication. The added expense often falls on the U.S. taxpayer under government Medicaid and Medicare programs.

The company aggressively promoted the drugs by providing doctors with meals, spa treatments, European pheasant hunts, Hawaiian vacations, multi-million dollar speaking tours, and more. Prosecutors say that these “perks” amount to illegal kickbacks.

The last settlement of this size was a $2.3 billion fine against Pfizer in 2009. The company agreed to settle allegations that it improperly marketed 13 drugs.

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