Drug company giant GlaxoSmithKline pleads guilty in “Largest Health Care Fraud Settlement in U.S. History”

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Earlier this month, the U.S. Department of Justice (DOJ) announced that pharmaceutical giant GlaxoSmithKline (GSK) agreed to pay $3 billion and plead guilty for “misbranding” its antidepressants Paxil and Wellbutrin, and failing to report safety data about its diabetes drug Avandia to the FDA. (“Misbranding” or “off label use” means the drug manufacturer marketed the drug for uses not approved by the FDA.) GSK was sentenced in federal court to pay $1 billion in criminal fines and $2 billion to resolve civil liabilities with the federal government and the states. This decision is one of the most significant in recent years. It’s the largest health care fraud settlement in U.S. history and includes an agreement by the company to withdraw bonuses from top executives if they engaged in or supervised illegal behavior, believed to be a first in the pharmaceutical industry.

Deputy Attorney General of the DOJ James Cole said: “Today’s multi-billion dollar settlement is unprecedented in both size and scope. It underscores the Administration’s firm commitment to protecting the American people and holding accountable those who commit health care fraud. At every level, we are determined to stop practices that jeopardize patients’ health, harm taxpayers, and violate the public trust – and this historic action is a clear warning to any company that chooses to break the law.”

GSK’s CEO Andrew Witty said that his company has made changes in the way it does business in the U.S. “Whilst these originate in a different era for the company, they cannot and will not be ignored,” he said in the company’s statement. “On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made.”

When we asked our Facebook followers what they thought of this historic outcome, several people thought the $3 billion fine wasn’t big enough. Ricky M. commented, “It’s a drop in the bucket compared to their yearly profits.” GSK’s 2011 annual report shows their annual gross profit was nearly $8.8 billion.

The $3 billion settlement doesn’t really compare to the billions more in profit GSK made per drug.

According to the New York Times:

Despite the large amount, $3 billion represents only a portion of what Glaxo made on the drugs. Avandia, for example, racked up $10.4 billion in sales, Paxil brought in $11.6 billion, and Wellbutrin sales were $5.9 billion during the years covered by the settlement, according to IMS Health, a data group that consults for drugmakers.

Unfortunately, the GSK settlement isn’t an isolated incident. In the last few years, other major drug companies have agreed to shell out a billion or more to settle claims of misconduct. In September 2009, Pfizer agreed to pay $2.3 billion (the largest health care fraud settlement at the time) to settle civil and criminal allegations over its marketing of drugs including its painkiller Bextra, which Pfizer pulled off the market in 2005 because of its risks to the heart and skin. In May 2012, Abbott Laboratories settled for $1.6 billion over its marketing of the antiseizure drug Depakote, reported the New York Times. Johnson & Johnson agreed to pay as much as $2.2 billion for marketing practices of the anti-psychotic drug Risperdal, the AP recently reported.

Beyond the billions of dollars, human lives are affected. Illegal actions by drug companies, such as withholding safety data from FDA, leave unsuspecting patients at risk. Years can pass before a drug’s safety problems are revealed to the public.

The government alleged that between 2001 and 2007, GSK failed to provide clinical data about the cardiovascular safety of the diabetes drug Avandia in reports to the FDA that are meant to allow the agency to determine if a drug continues to be safe for its approved use and to identify drug safety issues. In 2010, the FDA announced it would significantly restrict use of Avandia to patients who can’t use other medications due to concerns it could cause a heart attack or stroke.

Consumer Reports provided helpful tips for anyone who takes prescription drugs. You can find them here.