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GlaxoSmithKline settles drug-marketing case for $3 billion

The British pharmaceutical giant agrees to pay a record healthcare-fraud settlement for promoting a number of drugs for uses not approved by federal regulators. California will get $46 million.

July 02, 2012|By William D'Urso, Los Angeles Times
  • The U.S. government said GlaxoSmithKline marketed its depression drug Paxil, above, to patients under 18, even though the Food and Drug Administration had not approved the drug for pediatric use.
The U.S. government said GlaxoSmithKline marketed its depression drug… (Joe Raedle, Getty Images )

GlaxoSmithKline, the maker of the popular depression drugs Paxil and Wellbutrin, agreed to plead guilty to federal charges and pay $3 billion in the largest healthcare-fraud settlement in U.S. history.

The British pharmaceutical giant agreed to pay a nearly $1-billion fine for illegally marketing and promoting a number of well-known products for uses not approved by federal drug regulators, the U.S. Justice Department said Monday. The company will pay an additional $2 billion to settle allegations in connection with its sales, marketing and pricing practices on the state and federal level.

As part of the agreement, California is set to receive $46 million, the largest sum of the 44 states involved in the settlement.

"Today's multibillion-dollar settlement is unprecedented in both scope and size. It underscores this administration's firm commitment to protecting the American people and holding accountable those who commit healthcare fraud," James Cole, U.S. deputy attorney general, said at a news conference in Washington.

For its part, Glaxo said in a statement, "The company reached this settlement with the government to avoid the delay, expense, inconvenience and uncertainty of protracted litigation of the government's claims and to put behind us these long-standing investigations of what was, for the most part, very old conduct."

The company's stock rose 79 cents, or 1.73%, to $46.36 on Monday.

Critics of the settlement said the investigation did not go far enough. Public Citizen's Health Research Group issued a statement in which its director, Dr. Sidney Wolfe, called for more aggressive enforcement by federal regulators.

"Until more meaningful penalties and the prospect of jail time for company heads who are responsible for such activity become commonplace, companies will continue defrauding the government and putting patients' lives in danger," he said.

The government said that Glaxo marketed its depression drug Paxil to patients under 18, even though the Food and Drug Administration had not approved the drug for pediatric use. It also said the company promoted Wellbutrin as a weight-loss drug and for the treatment of sexual dysfunction and substance abuse addictions, and paid doctors millions of dollars to promote these unapproved uses of the drug. Doctors are permitted to prescribe drugs for "off label" conditions, but pharmaceutical companies are not allowed to market products for non-FDA-approved uses.

Glaxo was also accused of failing to include important safety data to the FDA about its diabetes drug Avandia.

In 2009, the attorney general's office announced the creation of the Health Care Fraud Prevention and Enforcement Team. The Justice Department has since amassed more than $10.2 billion in settlements and fines and has brought criminal charges against more than 800 defendants.

"California consumers have the right to expect that their health and well-being — and not profit — drives decisions about their care," said Kamala D. Harris, California's attorney general. "This settlement protects consumers and puts an end to unscrupulous marketing practices, kickbacks and illegal labeling of prescription drugs."

Among other notable healthcare fraud cases, Pfizer Inc. pleaded guilty in 2009 to criminal charges in the U.S. and agreed to pay $2.3 billion to settle allegations of improper marketing of 13 drugs. The same year, Eli Lilly & Co. agreed to plead guilty to a federal misdemeanor charge and pay $1.42 billion for unapproved uses of its schizophrenia drug Zyprexa.

Terree Bowers, a partner at the law firm Arent Fox and a former U.S. attorney in Los Angeles, called Monday's fine extraordinary.

"I think what they're trying to do, in essence, is kill three birds with one boulder," Bowers said. "They're using this case as a vehicle to attack at least three different kinds of conduct."

He said the Justice Department is trying to deter companies from marketing their drugs for off label uses, prevent them from paying doctors kickbacks and ensure proper safety information is provided to the FDA.

Bowers said he didn't expect the settlement to affect the long-term health of the company, but he said authorities in other countries may see the settlement and take a second look at the company's activities.

"If you're an international company and you get in trouble in one country," he said, "it can get the interest of authorities in other countries."

william.d'urso@latimes.com

Times staff writer Chad Terhune contributed to this report.

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