GlaxoSmithKline (NYSE: GSK) agreed to plead guilty and pay a $3 billion settlement to resolve criminal and civil charges linked to the company’s illegal promotion of several prescription drugs and its failure to report safety data, according to a Justice Department statement today.
The agreement is the largest health-care fraud settlement in the U.S. and the largest payment by a drug company, the department said in the statement.
An agreement on the matter was first announced last November.
In its own announcement, GSK noted: ”The civil settlement reached with the Government does not constitute an admission of any liability or wrongdoing in the selling and marketing of Lamictal, Zofran, Imitrex, Lotronex, Flovent, Valtrex, Avandia or Advair products, nor in its nominal pricing practices.”
In a charging document filed Monday, London-based Glaxo admits to illegally promoting Paxil for children and adolescents, wrongfully marketing Wellbutrin for weight loss and purposes other than those approved by U.S. regulators, and failing to report data regarding the safety of its Avandia diabetes drug to regulators. The company has agreed to admit to the charges, which are misdemeanors, according to the filings.
GSK last year set aside $3.5 billion to cover the cost of the settlement, which resolves a seven-year investigation of the company’s marketing practices for the three drugs. The reserve brought to $6.4 billion the amount the drugmaker has set aside for legal costs tied to Avandia and the other medicines.
GSK also has paid more than $700 million to resolve patient lawsuits alleging Avandia caused heart attacks and strokes, according to people familiar with the accords, with settlements in those cases averaging around $50,000.
Many of those cases had been consolidated before a federal judge in Philadelphia as part of a multidistrict litigation for pretrial exchanges of information.
Federal prosecutors began an investigation in Colorado in 2004, later taken over by the U.S. attorney in Massachusetts, into whether Glaxo promoted drugs for unapproved uses, and into ways Glaxo potentially influenced doctors. The probe concerns nine of the company’s best-selling products from 1997 to 2004, including the Advair lung treatment, Glaxo said in its annual report.
GSK operates its North American headquarters in Research Triangle Park, N.C.
“Today brings to resolution difficult, long-standing matters for GSK,” said Andrew Witty, Glaxo’s chief executive officer, in a statement.
“Whilst these originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made.
“We are deeply committed to doing everything we can to live up to and exceed the expectations of those we work with and serve. Since I became CEO, we have had a clear priority to ingrain a culture of putting patients first, acting transparently, respecting people inside and outside the organisation and displaying integrity in everything we do.
“In the US, we have taken action at all levels in the company. We have fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct. In the last two years, we have reformed the basis on which we pay our sales representatives and we have enhanced our ability to ‘claw back’ remuneration of our senior management.
“We have a vital role to play in bringing innovative medicines to patients and we understand how important it is that our medicines are appropriately promoted to healthcare professionals and that we adhere to the standards rightly expected by the US Government.”
[Bloomberg news contributed to this report.]