Posted On: July 9, 2012 by Patrick A. Malone

GlaxoSmithKline Settlement Sets a Record for Penalties and Consumer Abuse

We’ve written a lot about pharmaceutical company misbehavior because pharmaceutical companies misbehave a lot, and their actions can pose serious health harms.

One such breach of decency and law was so monumental that last week it made top-of-the-news headlines across all media. GlaxoSmithKline, manufacturers of well-known drugs including Flonase, Levitra and Zantac, agreed to plead guilty to three criminal misdemeanor charges of illegally marketing some of its other drugs and withholding safety information from government regulators.

In November, it had agreed to pay $3 billion to settle several lawsuits over its antidepressants Paxil and Wellbutrin, and its diabetes drug, Avandia. It was the largest health-care fraud settlement in U.S. history. But not until last week did the company plead guilty to the criminal charges, and the details of the complicated case emerge. The fine represents $1 billion in fines and $2 billion to settle civil liabilities.

As noted in the Wall Street Journal, it was the fourth time Glaxo has settled with the U.S. government in recent years. This was not only its most expensive resolution, it was the most far-reaching.

The illegal activity for the depression drugs involved promoting them for uses that hadn’t been approved by the FDA, a practice called off-label marketing. Glaxo also withheld data that showed that Avandia had been linked to an increased risk of heart problems.

Using outside ghostwriters to prepare a medical journal article falsely reporting that Paxil was effective in treating depression in children, Glaxo then used the piece to promote it for the adolescent market, never mind reports of increased suicidal tendencies among teens who took the drug. Glaxo promoted Wellbutrin, which was approved only to treat depression, for weight loss, substance addiction, attention deficit hyperactivity disorder (ADHD) and, most colorfully, for sexual dysfunction. Sales reps referred to it as “the happy, horny, skinny pill.”

All false claims, and all dangerous, especially when you consider that the robust marketing effort financially rewarded sales people according the number of prescriptions they persuaded doctors to write.

And get this: Prosecutors don’t know how much money the company made by promoting the drugs off-label for so many years, so it’s possible the revenue from dirty deeds exceeded even the $3 billion the company will pay. Is it a penalty or an investment?

Avandia, like Paxil and Wellbutrin, remains on the market in the U.S., but the packaging now bears a black-box warning about heart risk. (European regulators deemed it too risky for everybody, and withdrew it from the market in 2010.)

The settlement also addresses conduct the Justice Department says resulted in the overpayment of public funds for drugs issued via programs such as Medicaid. That included kickbacks paid to doctors. At some point do you start to wonder which organization is capable of whacking more people, the Mafia or Big Pharma?

Settlement terms include an “executive financial recoupment program” requiring changes in Glaxo’s executive compensation policies. They permit the company to recoup bonuses and incentive pay from employees who engage in significant misconduct. This seems thin: How about using docked pay to compensate victims?

In 2003, some company insiders filed a lawsuit against Glaxo under the Federal False Claims Act, which prohibits people or businesses from defrauding the government. The whistleblowers, whose information was critical to the government’s case, will receive a handsome share of the settlement penalty.

The rest of us will benefit, one hopes, from the hammer coming down hard, and the rest of the world hearing about it. But we agree with Dr. Sidney Wolfe, director of the Public Citizen Health Research Group: “Until more meaningful penalties and the prospect of jail time for company heads who are responsible for such activity become commonplace, companies will continue defrauding the government and putting patients' lives in danger.”

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