Glaxo Smith Kline Settles Largest Health Care Fraud Case in U.S. History

The Department of Justice announced today, Monday, July 2, 2012, that Glaxo Smith Kline, LLC (GSK) has agreed to plead guilty and to pay 3 billion in criminal and civil fines for the company’s unlawful promotion of its drugs: Paxil, Wellbutrin, Avandia, Lamictal and Zofran; making false statements about the safety of Avandia and failing to report these safety concerns; paying kickbacks to physicians to promote these drugs as well as Imitrex, Lotronex, Flovent, and Valtrex; and reporting false best pricing and underpaying rebates owed under the Medicaid Drug Rebate Program.  GSK will pay a total of 1 billion under the criminal plea agreement as well as 2 billion to resolve its civil liabilities under the False Claims Act.  The settlement resolves four qui tam lawsuits alleging GSK promoted off-label uses for its drugs which were pending in the federal court in the District of Massachusetts.

Under the criminal plea agreement, the government alleged that from April 1998 to August 2003, GSK promoted the drug Paxil for treating depression in children under the age of 18 even though the drug had not received FDA approval to do so, among other allegations.  GSK agreed to plead guilty to this misbranding allegation, more familiarly referred to as off-label marketing.

Additionally, the government alleged that from January 1999 to December 2003, GSK marketed Wellbutrin as a weight loss drug, and a treatment for sexual dysfunction, substance addictions, and Attention Deficit Hyperactivity Disorder as well as other off-label uses despite the drug being approved by the FDA only as a treatment of Major Depressive Disorder.  GSK agreed to plead guilty of misbranding Wellbutrin, as its label did not include adequate directions for these off-label uses.  GSK will pay $757,387,200 in criminal fines and forfeiture for the Paxil and Wellbutrin offenses.

The government also included criminal allegations for GSK’s drug Avandia.  The government alleged that between 2001 and 2007, GSK did not include safety data about Avandia in its reports to the FDA which were to determine whether Avandia was still a safe drug for its approved use – Diabetes – and to identify drug safety trends. Since 2007, GKS has been required to include a black box warning on Avandia’s labels alerting physicians to the potential increased risk of congestive heart failure and myocardial infarction – heart attacks.  GLS plead guilty to this failure to report data allegations and agreed to pay a fine of $242,612,800 for its criminal conduct.

This historic settlement also resolved four pending civil False Claims allegations – qui tam lawsuits – against GSK.  The civil false claims allegations involved off-label marketing of Paxil and Wellbutrin as well as off-label allegations that GSK marketed its asthma drug, Advair, for first line therapy for mild asthma, and for chronic obstructive pulmonary disease including misleading claims as to the relevant treatment guidelines.  Furthermore, GSK promoted Lamictal its anti-epileptic medication for off-label non-covered psychiatric uses, neuropathic pain and pain management. GSK also promoted Zofran, FDA approved for post operative nausea, to pregnant women to treat morning sickness.  The government further alleges that GSK paid kickbacks through various schemes to physicians to induce the promotion and prescription of all these drugs as well as Imitrex, Lotronex, Flovent and Valtrex. GSK agreed to pay $1.04 billion for this conduct, with the federal government’s share equalling $832 million and the states’ share equalling $200 million.

Also under the civil settlement, the government alleged that GSK promoted Avandia with false and misleading representations regarding the drug’s safety profile.  GSK agreed to pay $657 million relating to the false misrepresentation of Avandia’s positive cholesterol profile and cardiovascular benefits.

Finally, under the civil settlement, GSK resolved allegations that between 1994 and 2003, GSK and its corporate predecessors reported false drug prices resulting in the underpayment of rebates it owed to the states’ Medicaid programs.  GSK bundled the sales of drugs which included deep discounts commonly known as “nominal” pricing, but did not report such discounts to the Medicaid programs as required by law.  By not reporting the discounts given, GSK effectively underpaid rebates owed to the Medicaid programs.  GSK agreed to pay $300 million to resolve these pricing allegations, which includes $118,792, 931 going to the states’ Medicaid programs.

In addition to the criminal and civil fines, GSK executed a five year Corporate Integrity Agreement under which GSK must change the way in which it compensates its sales force, no longer able to do so based on sales goals or volume of sales, and allowing GSK to recoup annual bonuses and long term incentives from its executive ranks for employees who engage in significant misconduct.

Posted in Anti-Kickback Statute, Best Price, False Claims, Healthcare Fraud, Off-Label Marketing, SettlementsNo Comments

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