The U.S. Justice Department has announced another record-breaking settlement with a pharmaceutical company accused of illegally marketing some of its drugs. According to a statement issued by the Department late yesterday, GlaxoSmithKline will pay $3 billion to settle charges involving its antidepressants, Paxil and Wellbutrin, as well as its diabetes drug, Avandia.
According to a statement from the Justice Department, the $3 billion Glaxo settlement constitutes the largest health care fraud settlement in U.S. history and the largest payment ever by a drug company. That distinction had previously been held by Pfizer, which in 2009 agreed to pay $2.3 billion to settle allegations it improperly marketed 13 drugs, including Bextra, Geodon and Lyrica.
“Today’s multi-billion dollar settlement is unprecedented in both size and scope. It underscores this Administration’s firm commitment to protecting the American people and holding accountable those who commit health care fraud,” James Cole, U.S. deputy attorney general, said at a news conference in Washington, D.C. “At every level, we are determined to stop practices that jeopardize patients’ health; harm taxpayers; and violate the public trust – and this historic action is a clear warning to any company that chooses to break the law.”
Over the last three years, the Justice Department has recovered more than $10.2 billion in settlements, judgments, fines, restitution and forfeiture in health care fraud matters, Cole said. In addition, its Medicare Strike Forces have brought criminal charges against more than 800 defendants seeking to defraud Medicare.
According to the Justice Department’s statement, Glaxo has agreed to plead guilty and pay $1 billion to settle two criminal counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce, and one criminal count of failing to report safety data about Avandia to the U.S. Food & Drug Administration (FDA). Glaxo has also agreed to pay $2 billion to resolve its civil liabilities with the federal government under the False Claims Act, as well as the states, relating to Paxil, Wellbutrin, Avandia and other drugs. The guilty plea and penalties must still be approved by the U.S. District Court.
According to the government, Glaxo marketed Paxil to patients under 18, even though the FDA had not approved Paxil for use in children. It further charged that the company promoted off-label uses of Wellbutrin, including for weight-loss and for the treatment of sexual dysfunction and substance abuse addictions. Glaxo paid doctors millions of dollars to promote these unapproved uses of Wellbutrin, the Justice Department charged.
According to a report from The New York Times, the Glaxo settlement stems from whistleblower lawsuits filed by four employees of the drug maker, including a former senior marketing development manager for the company and a regional vice president, that alleged a range of improper practices from the late 1990s to the mid-2000s. Under the federal False Claims Act, private citizens with knowledge of fraud can file whistleblower lawsuits on behalf of the government to recover ill-gotten gains and additional civil penalties. The Act allows whistleblowers to collect a portion of any penalties recovered by the government, typically 15-to-25 percent. Patrick Burns, spokesman for the whistle-blower advocacy group Taxpayers Against Fraud, told The New York Times that at least $10 billion has been agreed to in whistleblower settlements this fiscal year, which ends in September.