GlaxoSmithKline to pay $750 million in settlement with U.S. Department of Justice for manufacturing plant complaints

According to the U.S. Department of Justice, SB Pharmco Puerto Rico Inc., a subsidiary of GlaxoSmithKline, PLC (GSK), has agreed to plead guilty to charges relating to the manufacture and distribution of certain adulterated drugs made at GSK’s now-closed Cidra, Puerto Rico, manufacturing facility. The resolution includes a criminal fine and forfeiture totaling $150 million and a civil settlement under the False Claims Act and related state claims for $600 million.

The drugs, manufactured at the plant between 2001 and 2005, are Kytril, an anti-nausea medication; Bactroban, a topical anti-infection ointment; Paxil CR, the controlled release formulation of the popular anti-depressant drug; and Avandamet, a combination type II diabetes drug.

The criminal information filed alleges that SB Pharmco’s manufacturing operations failed to ensure that Kytril and Bactroban finished products were free of contamination from microorganisms, the DOJ wrote in a press release. The criminal information further alleges that SB Pharmco’s manufacturing process caused Paxil CR two-layer tablets to split. The splitting, which the company itself called a "critical defect," caused the potential distribution of tablets that did not have any therapeutic effect and tablets that did not contain any controlled release mechanism.

The criminal information also alleges that Avandamet tablets manufactured by SB Pharmco did not always have the FDA-approved mix of active ingredients, and, as a result, potentially contained too much or too little of the ingredient with the therapeutic effect. Finally, the criminal information alleges that SB Pharmco’s Cidra facility suffered from longstanding problems of product mix-ups, which caused tablets of one drug type and strength to be commingled with tablets of another drug type and/or strength in the same bottle.

Under the civil settlement, GSK has agreed to pay an additional $600 million to the federal government and the states to resolve claims that it caused false claims to be submitted to government health care programs for certain quantities of adulterated Kytril, Bactroban, Paxil CR and Avandamet, the release noted. By selling the drugs, in which the quality or purity fell below that specified in the drugs’ FDA applications, the DOJ contends that GSK knowingly caused false and/or fraudulent claims to be submitted to Medicaid and the other federal health care programs.

"Adulterated drugs undermine the integrity of the FDA’s approval process, can introduce substandard or ineffective drugs on to the market and, in the worst cases, can potentially put patients’ health at risk," Tony West, assistant attorney general for the Civil Division of the DOJ, stated in the release. "We will continue to work with our law enforcement partners to hold pharmaceutical companies accountable for this type of conduct and protect taxpayers from fraud, waste, and abuse."

The civil settlement resolves one lawsuit filed in federal court in the District of Massachusetts under the qui tam, or whistleblower, provisions of the False Claims Act. As part of the resolution, the whistleblower, former GSK employee Cheryl Eckard, will receive approximately $96 million from the federal share of the settlement amount.

In a GSK-issued press release, P.D. Villarreal, GSK’s senior vice president and head of global litigation, stated,

“This settlement resolves a significant and long-standing legal issue facing the company. We regret that we operated the Cidra facility in a manner that was inconsistent with current Good Manufacturing Practice (cGMP) requirements and with GSK's commitment to manufacturing quality.GSK worked hard to resolve fully the manufacturing issues at the Cidra facility prior to its closure in 2009 and we are committed to continuous improvement in our manufacturing processes. Our commitment to compliance with cGMP is demonstrated by the fact that we have not received an FDA warning letter at any plant since the Cidra facility was cited in July 2002.”