GSK Agrees to Pay $3 Billion in Healthcare Fraud Case

July 02, 2012

July 2, 2012 — Psychiatrists who enjoyed free deep-sea fishing and golf at educational forums sponsored by drug maker GlaxoSmithKline more than a decade ago could have hardly known at the time that they were witnessing history of a dubious sort.

In 2012, however, what happened at those meetings is clear. Federal prosecutors announced today that GlaxoSmithKline has agreed to pay the government $3 billion in what they call the largest healthcare fraud settlement ever in the United States.

GlaxoSmithKline has pled guilty to criminal misdemeanor charges of illegally promoting off-label uses of 2 psychiatric drugs — paroxetine (Paxil) and bupropion (Wellbutrin) — to physicians, a well as failing to report negative safety data to the US Food and Drug Administration (FDA) about the diabetes drug rosiglitazone (Avandia).

Paroxetine (Paxil), bupropion (Wellbutrin), rosiglitazone (Avandia)

The company also has agreed to settle civil charges of promoting off-label uses of paroxetine, bupropion, and 3 other drugs; paying physicians kickbacks for prescribing its products; making false and misleading statements about the safety of rosiglitazone; submitting false price information about its drugs to the government; and consequently underpaying Medicaid drug rebates.

The illegal promotion of paroxetine and bupropion happened in the late 1990s and early 2000s, whereas the failure to disclose negative safety data about rosiglitazone occurred between 2001 and 2007, according to the US Department of Justice.

Sir Andrew Witty, chief executive officer of GlaxoSmithKline, alluded to the time lag between the illegal activities and today's announcement in a statement of remorse.

"Whilst these [matters] originate in a different era for the company, they cannot and will not be ignored," Witty said in a company press release. "On behalf of [GlaxoSmithKline], I want to express our regret and reiterate that we have learnt from the mistakes that were made." As part of its reform efforts, he said, the company has "removed employees who have engaged in misconduct."

The resolution of the case "underscores the administration's firm commitment to protecting the American people and holding accountable those who commit healthcare fraud," US Deputy Attorney General James Cole said in a press release. "This historic action is a clear warning to any company that chooses to break the law."

Misleading Journal Article, Educational Junkets

Although it is legal for physicians to prescribe FDA-approved drugs for off-label uses, it is not legal for a drug manufacturer to promote such uses.

In a court document called a criminal information, to which GlaxoSmithKline pled guilty, the government said the manufacturer promoted the use of paroxetine for patients younger than 18 years, even though the drug's label lacked a pediatric indication. To bolster the case it was making to physicians, the company helped prepare, publish, and distribute a misleading medical journal article that erroneously claimed that the drug effectively treated pediatric depression, according to the government.

To promote prescribing paroxetine for children and adolescents, GlaxoSmithKline invited psychiatrists to educational forums in 2000 and 2001 at resorts in Hawaii, California, and Puerto Rico. The company paid for their airfare, lodging, meals, and recreational activities such as deep-sea fishing, kayaking, golf, and balloon rides. At the events, attendees heard a leading child psychiatrist say that depressed pediatric patients fared significantly better on paroxetine than on a placebo — a claim that was repeated by company sales representatives.

Likewise, the government said, GlaxoSmithKline promoted the use of bupropion, indicated for major depressive disorder in adults, for off-label purposes such as weight loss and treating attention-deficit/hyperactivity disorder and sexual dysfunction. Sales representatives called it the "happy, horny, skinny pill." The company trained and paid physicians to educate their peers at numerous meetings, some in Jamaica and Bermuda, about bupropion and its off-label applications. Two of the company's go-to speakers earned more $1.5 million apiece for their work from 2000 to 2003.

The government's findings tell a different story about rosiglitazone, approved by the FDA in 1999. Once the FDA approves a drug, the manufacturer is obliged to file periodic reports with the agency about the product's ongoing safety performance, including adverse events. Between 2001 and 2007, according to the government, such reports on rosiglitazone omitted data from several postmarketing studies, including 2 that the company initiated at the request of the European Medicines Agency, which was worried about the drug's cardiovascular safety.

The FDA later added 2 boxed warnings to rosiglitazone about the potential increased risk for congestive heart failure and myocardial infarction.

Under the criminal guilty plea, GlaxoSmithKline will pay a fine of nearly $957 million and forfeit another $43 million. The company will pay the government an additional $2 billion as part of the civil settlement, which does not constitute an admission of any liability or wrongdoing.

GlaxoSmithKline also agreed to a 5-year "corporate integrity agreement" with the US Department of Health and Human Services. Among other things, the agreement calls for the company to compensate its sales representatives in a way that does not encourage them to repeat the misdeeds of the past. The company also can recoup compensation from executives if they or their subordinates "engage in significant misconduct." GlaxoSmithKline said that the agreement builds on its current compliance programs.