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GSK pays $3bn to settle US drug fraud charges

Pleads guilty to promoting drugs for off-label uses, making kickbacks to doctors and hiding safety information

GSK - logo on building

GlaxoSmithKline (GSK) faces making a record payout of $3bn after pleading guilty to promoting drugs in unapproved uses and making unsupported safety claims in the US.

The settlement, the largest ever made by a drug company, also covers claims that GSK defrauded the US' Medicaid drug rebate programme, paid kickbacks to doctors to prescribe certain medicines and hid important safety information.

“This landmark settlement demonstrates the department's commitment to protecting the American public against illegal conduct and fraud by pharmaceutical companies,” said Stuart Delery acting assistant attorney general for the Justice Department's civil division.

“Unlawful promotion of drugs for unapproved uses and failing to report adverse drug experiences to the FDA [Food and Drug Administration] can tip the balance of those important decisions, and the Justice Department will not tolerate attempts by those who seek to corrupt our health care system in this way.”

GSK pleaded guilty to charges that it paid doctors and encouraged sales reps to promote the antidepressants Paxil and Wellbutrin in uses not approved by the US FDA betewen 1998 to 2003 for Paxil and from 1999 to 2003 for Wellbutrin.

Specifically, GSK is said to have participated in preparing and distributing a misleading medical journal article which misreported that a clinical trial of Paxil demonstrated efficacy in the treatment of depression in patients under age 18, when the study actually failed to do so.

The company was also accused of failing to make available data from two other Paxil studies, which failed to demonstrate efficacy in younger patients.

Despite this, as well as evidence from short-term studies that demonstrated that antidepressants may increase the risk of suicidal thinking and behaviour in people under 18, GSK is said to have sponsored a variety of programmes to promote off-label use of both Paxil and Wellbutrin.

"The sales force bribed physicians to prescribe GSK products using every imaginable form of high-priced entertainment, from Hawaiian vacations [and] paying doctors millions of dollars to go on speaking tours, to tickets to Madonna concerts," said US attorney Carmin Ortiz in a BBC report.

For the Paxil and Wellbutrin misbranding offenses, GSK faces a criminal fine and forfeiture of just over $750m.

GSK also admitted that it failed to include certain safety data about its diabetes drug Avandia (rosiglitazone), which had its marketing authorisation suspended in the EU and its use limited in the US after it was linked to an increased risk of cardiovascular incidents.

The missing information included data from post-marketing studies, as well as data regarding two studies undertaken in response to the European Medicines Agency's (EMA) concerns about the cardiovascular safety of Avandia, with GSK facing a criminal fine of just under $250m.

In addition to these criminal charges, for which no individual has yet faced prosecution, GSK made several civil settlement agreements, including $657m in civil charges related to “false and misleading representations” in its promotion of Avandia.

Further civil payouts in the total included $1bn for the company's off-label promotion of Paxil and Wellbutrin, as well as similar accusations concerning asthma treatment Advair, anti-epileptic Lamictal, nausea drug Zofran. These products, as well as the drugs Imitrex, Lotronex, Flovent and Valtre, were involved in kickback claims too.

GSK will also face a penalty of $300m to resolve allegations that, between 1994 and 2003, it reported false drug prices, resulting in the underpayment of rebates owed by GSK under the Medicaid drug rebate programme.

Altogether, GSK faces $1bn in criminal fines, $1.7bn in civil fines and $300m to settle the Medicaid charges. The company said its costs would be covered by existing provisions made after a settlement agreement was reached in principle in November, 2011.

Responding to the charges, GSK's Sir Andrew Witty, who became CEO in 2008, said despite the issues occurring before his tenure in charge of the company, they “cannot and will not be ignored”.

He said: “Since I became CEO, we have had a clear priority to ingrain a culture of putting patients first, acting transparently, respecting people inside and outside the organisation and displaying integrity in everything we do.”

Changes made by GSK since Sir Andrew's appointment include the addition of compliance staff and a new incentive compensation system for sales reps who work directly with healthcare professionals that aims to base payment incentives on quality of support to improve patient health rather than individual sales targets.

And although no individuals were named, Sir Andrew also said the company had dealt with rogue staff: “When necessary, we have removed employees who have engaged in misconduct.”

It is the second payout greater than $1bn made by a pharma firm this year following Johnson and Johnson's (J&J) fine of $1.1bn in the state of Arkansas, US, for its mismarketing of antipsychotic Risperdal (risperidone).

Several other states, including West Virginia, Massachusetts, Montana, have ongoing actions against J&J, however, meaning its total payout could rise significantly.

3rd July 2012

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