As GlaxoSmithKline (NYSE: GSK) settled the largest healthcare fraud settlement in U.S. history on Monday, its top executive as well as the company’s leader for North American operations said the drug giant had implmented changes to address problems exposed by a multi-year U.S. government investigation.
The drug giant agreed to pay $3 billion to settle U.S. investigation and also signed a “Corporate Integrity Agreement” that includes the probe of production at its former plant in Puerto Rico.
In both cases, GSK workers became “whistle blowers” and triggered the investigations
From the CEO
“Today brings to resolution difficult, long-standing matters for GSK,” Chief Executive Officer Andrew Witty said.
“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 U.S. Government.”
From North America
“Although the activities covered by this settlement largely occurred years ago, we must learn from the past,” said Deirdre Connelly, president of North America Pharmaceuticals, which is based in RTP. “And we have.
“Today GSK is a company with policies and procedures that are stricter than federal regulations. The measures we’ve adopted illustrate our values of transparency, respect, integrity, and focus on the best interests of patients. These values are at the center of everything we do—as a company and as individuals—to ensure that we are appropriately promoting our medicines and vaccines to the healthcare professionals we serve.
“We take pride in the fact that we provide quality medicines and vaccines that are based on sound science. As we move forward, we remain committed to appropriately informing healthcare providers about our medicines—and the diseases they are approved to treat—so that patients receive the care they need to maintain and improve their health.insiders will share in the payouts.”
The “Corporate Integrity Agreement”
GSK also struck a “Corporate Integrity Agreement,” or CIA, with the U.S. as part of the settlement.
As part of the CIA, GSK also sought to close another costly episode in the company’s history – the federal investigation into the operation of GSK’s former production plant in Puerto Rico.
“As part of our final agreement, we will pay $3 billion to resolve civil and criminal liabilities resulting from these investigations, and we have also entered into a Corporate Integrity Agreement (CIA), with the U.S. Government,” GSK said. “The CIA also covers obligations the company has agreed to relating to the settlement of the federal government’s investigation of its former Cidra, Puerto Rico, manufacturing facility, which was concluded in October 2010.”
In both cases, GSK insiders helped trigger the investigations. Glaxo will pay $832 million to the federal government and $210 million to states participating in the civil off-label marketing settlement as part of the latest settlement. This portion of the settlement will also resolve four whistle-blower lawsuits pending in federal court in Boston.
Cheryl Eckard, who once worked in North Carolina, received some $96 million as part of the $750 million settlement GSK made in the Puero Rico case.