Glaxo Agrees to Pay $3 Billion in Fraud Settlement
By KATIE THOMAS and MICHAEL S. SCHMIDT
Published: July 2, 2012 250 Comments
In the largest settlement involving a pharmaceutical company, the British drugmaker GlaxoSmithKline agreed to plead guilty to criminal charges and pay $3 billion in fines for promoting its best-selling antidepressants for unapproved uses and failing to report safety data about a top diabetes drug, federal prosecutors announced Monday. The agreement also includes civil penalties for improper marketing of a half-dozen other drugs.
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The fine against GlaxoSmithKline overPaxil, Wellbutrin, Avandia and the other drugs makes this year a record for money recovered by the federal government under its so-called whistle-blower law, according to a group that tracks such numbers.
In May, Abbott Laboratories settled for $1.6 billion over its marketing of the antipsychotic drug Depakote. And an agreement with Johnson & Johnson that could result in a fine of as much as $2 billion is said to be imminent over its off-label promotion of another antipsychotic drug, Risperdal.
No individuals have been charged in any of the cases. Even so, the Justice Department contends the prosecutions are well worth the effort — reaping more than $15 in recoveries for every $1 it spends, by one estimate.
But critics argue that even large fines are not enough to deter drug companies from unlawful behavior. Only when prosecutors single out individual executives for punishment, they say, will practices begin to change.
“What we’re learning is that money doesn’t deter corporate malfeasance,” said Eliot Spitzer, who, as New York’s attorney general, sued GlaxoSmithKline in 2004 over similar accusations involving Paxil. “The only thing that will work in my view is C.E.O.’s and officials being forced to resign and individual culpability being enforced.”
The federal whistle-blower law, officially the False Claims Act, dates to 1863 and was originally envisioned as a check on war profiteering after the Civil War.
Whistle-blowers get a share of any money recovered by the federal government. So far, according to Patrick Burns, spokesman for the whistle-blower advocacy group Taxpayers Against Fraud, at least $10 billion has been agreed to in settlements this fiscal year, which ends in September.
The settlement, which requires court approval, stems from claims made by four employees of GlaxoSmithKline, including a former senior marketing development manager for the company and a regional vice president, who tipped off the government about a range of improper practices from the late 1990s to the mid-2000s. [Continue Reading]
Labels: corruption, false claims act, glaxo, glaxosmithkline, Prescription fraud
