GlaxoSmithKline To Pay $3 Billion in Fraud Case
The drug giant will plead guilty as part of the largest health care fraud settlement in U.S. history.
| Posted Monday, July 2, 2012, at 3:24 PM
Photo illustration by Joe Raedle/Getty Images
GlaxoSmithKline agreed to plead GuiltyGuiltyGuilty to misdemeanor criminal charges filed by the federal government, saying it will pay $3 billion to settle allegations that the company illegally marketed two drugs for uses not approved by the Food and Drug Administration and failed to disclose safety information on another drug, the Justice Department said Monday.
The agreement, which still has to be approved by the court, amounts to the "largest health care fraud settlement in U.S. history and the largest payment ever by a drug company," according to the Justice Department.
Prosecutors say the British pharmaceutical company promoted the use of the antidepressant Paxil in children, even though it was only approved for adults over 18. The company also promoted Wellbutrin to treat sexual dysfunction and addiction, even though it was only approved for depression. In addition, the company failed to report safety data about another drug, Avandia, the Associated Press reports.
GlaxoSmithKline allegedly went to great efforts to promote the drugs for unapproved uses, including distributing a misleading journal article and providing bribes to doctors in the way of meals and spa treatments, reports Reuters.
The fine will be split, with $1 billion covering criminal fines and forfeitures and $2 billion paying for civil settlements with federal and state governments. The federal investigation lasted seven years.
The Atlantic Wire points out the significance of the sum, given GlaxoSmithKline’s after-tax earning in 2011 of $8.32 billion. The company set aside $3.5 billion last year to take care of the settlement, according to Bloomberg.
Glaxo is already out $700 million from patient lawsuits over Avandia’s alleged prompting heart attacks and strokes, reports USA Today.
In a statement, the company disputed some of the claims by the Justice Department, noting that "the civil settlement agreement contains many allegations that are either inaccurate or incomplete," reports AP. But GlaxoSmithKline CEO Sir Andrew Witty expressed regret and said company officials have learned "from the mistakes that were made."
