GSK to pay $3bn in US settlements

GlaxoSmithKline (GSK) has agreed a $3bn settlement in principle with the US government over sales and marketing practices of its drugs, including diabetes treatment Avandia (rosiglitazone).

The settlement also covers inappropriate use of the nominal price exception under the Medicaid Rebate Program, following an investigation by the US Department of Justice.

Avandia was withdrawn by the European Medicines Agency (EMA) and was given restricted marketing by the US Food and Drug Administration (FDA) after evidence was found that showed the drug increased risk of cardiovascular events.

The final settlement, which addresses both civil and criminal liabilities, is still under negotiation, and is expected to be finalised in 2012.

The company said payments ouldl be funded through existing cash resources.

Commenting on the agreement, CEO at GSK, Andrew Witty said: “This is a significant step towards resolving difficult, long-standing matters which do not reflect the company that we are today. In recent years, we have fundamentally changed our procedures for compliance, marketing and selling in the US to ensure that we operate with high standards of integrity and that we conduct our business openly and transparently.”

Recent changes in the way the company operates include the establishment of a new framework for compliance in the US in 2008.

Other initiatives instigated by GSK include a new incentive compensation system for its professional sales reps who work directly with healthcare professionals. The new scheme gets rid of individual sales targets as a basis for bonuses, and bases incentive compensation on the quality of the service these reps deliver to customers to support improved patient health.