GlaxoSmithKline settles healthcare fraud case for $3 billion

Mon Jul 2, 2012 3:03pm EDT
 
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By David Ingram

WASHINGTON (Reuters) - GlaxoSmithKline Plc agreed to plead guilty to misdemeanor criminal charges and pay $3 billion to settle what government officials on Monday described as the largest case of healthcare fraud in U.S. history.

The agreement, which still needs court approval, would resolve allegations that the British drugmaker broke U.S. laws in the marketing and development of pharmaceuticals.

GSK targeted the antidepressant Paxil to patients under age 18 when it was approved for adults only, and it pushed the drug Wellbutrin for uses it was not approved for, including weight loss and treatment of sexual dysfunction, according to an investigation led by the U.S. Justice Department.

The company went to extreme lengths to promote the drugs, such as distributing a misleading medical journal article and providing doctors with meals and spa treatments that amounted to illegal kickbacks, prosecutors said.

In a third instance, GSK failed to give the U.S. Food and Drug Administration safety data about its diabetes drug Avandia, in violation of U.S. law, prosecutors said.

The misconduct continued for years beginning in the late 1990s and continued, in the case of Avandia's safety data, through 2007. GSK agreed to plead guilty to three misdemeanor criminal counts, one each related to the three drugs.

Guilty pleas in cases of alleged corporate misconduct are exceedingly rare, making GSK's agreement especially unusual.

The agreement to settle the charges "is unprecedented in both size and scope," said James Cole, the No. 2 official at the U.S. Justice Department. He called the action "historic" and "a clear warning to any company that chooses to break the law."   Continued...

 
A GlaxoSmithKline logo is seen outside one of its buildings in west London in this February 6, 2008 file photograph. GlaxoSmithKline Plc has agreed to plead guilty to criminal charges and pay $3 billion to settle the largest case of healthcare fraud in U.S. history, according to court filings and prosecutors. The settlement includes $1 billion in criminal fines and $2 billion in civil fines in connection with the sale of the drug company's Paxil, Wellbutrin and Avandia products. REUTERS/Toby Melville/Files