GlaxoSmithKline LLC to Pay the Largest Health Care Fraud Settlement in U.S. History


A False Claims Bulletin

The United States Department of Justice (DOJ) announced on July 2, 2012, that drug maker GlaxoSmithKline LLC (GSK) has agreed to plead guilty and pay $3 billion — the largest penalty ever paid by a pharmaceutical company — to resolve its criminal and civil liability for off-label promotion of several drugs, failure to report safety data, and false price reporting practices.

According to DOJ’s press release, GSK was criminally charged with violating the Food, Drug and Cosmetic Act by promoting several drugs, including Paxil, Wellbutrin, Advair, Lamictal and Zofran, for uses not approved by the U.S. Food and Drug Administration — a practice known as off-label promotion. GSK was also charged with offering kickbacks to doctors including lavish vacations, concert tickets and paid speaking engagements. In addition, GSK was charged with failure to report to the FDA certain safety data about its drug, Avandia.

In the civil settlement, GSK has agreed to resolve its civil liability under the False Claims Act in connection with 1) promoting its drugs Paxil, Wellbutrin, Advair, Lamictal and Zofran, for off-label, non-covered uses and paying kickbacks to physicians to prescribe these drugs as well as Imitrex, Lotroniex, Flovent and Valtrex; 2) making false and misleading statements about the safety of Avandia, and 3) reporting false best prices and underpaying rebates owed under the Medicaid Drug Rebate Program.

In its press release, DOJ reported that Acting Assistant Attorney General for DOJ’s Civil Division Stuart F. Delery stated, “For far too long, we have heard that the pharmaceutical industry views these settlements merely as the cost of doing business."

As a part of the settlement agreement, GSK has entered into a five year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (OIG) that will allow the government to monitor their company compliance for the next five years.

OIG Inspector General Daniel R. Levinson was also quoted as saying, “Our five-year integrity agreement with GlaxoSmithKline requires individual accountability of its board and executives….For example, company executives may have to forfeit annual bonuses if they or their subordinates engage in significant misconduct, and sales agents are now being paid based on quality of service rather than sales targets.”
In recent months, the government has prosecuted or settled similar cases in the pharmaceutical industry, including a $2.3 billion settlement against Pfizer and a $1.5 billion settlement against Abbott Laboratories. In both cases, the companies were charged with off-label promotion of two prescription drugs under the False Claims Act.

These settlements are part of the government’s focus on combating health care fraud through the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative. This initiative, announced in May 2009 as a partnership between the two departments, has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.

According to the DOJ press release, “Over the last three years, the department has recovered a total of more than $10.2 billion in settlements, judgments, fines, restitution, and forfeiture in health care fraud matters pursued under the False Claims Act and the Food, Drug and Cosmetic Act.”

Supporting Documents

GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud Allegations and Failure to Report Safety Data
July 2, 2012 U.S. Department of Justice press release

Complaints and Settlement Documents
Complete set of all complaints, settlement documents, corporate integrity agreement and more related to the GSK settlement

Industries & Practices

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