GlaxoSmithKline to pay $3 billion in fraud settlement

British drugmaker GlaxoSmithKline agreed to plead guilty to criminal charges and pay $3 billion in fines in the largest health care fraud settlement in US history, according to the Department of Justice.

In the resolution, which still needs approval by the US District Court, GlaxoSmithKline agreed to plead guilty to three criminal counts, including two counts of misbranding the drugs Paxil (paroxetine) and Wellbutrin (bupropion hydrochloride) and one count for failing to report safety information about the drug Avandia (rosiglitazone) to the FDA. GlaxoSmithKline will pay $1 billion in criminal fines and $2 billion to resolve its civil liabilities under the False Claims Act.

“Today’s multi-billion dollar settlement is unprecedented in both size and scope," said James M. Cole, the deputy attorney general. "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.”

The US government contends that GlaxoSmithKline promoted the antidepressant Paxil to patients aged younger than 18 years when the drug was not approved for pediatric use. The government also alleges that the drug company promoted Wellbutrin — approved only for major depressive disorder at the time — for the treatment for a variety of off-label uses, including sexual dysfunction, weight loss, substance addictions and attention-deficit/hyperactivity disorder.

Prosecutors said GlaxoSmithKline went to extreme lengths to promote the drugs, including paying millions of dollars to doctors to promote off-label uses of the drugs and publishing and distributing a medical journal article that misrepresented the efficacy of Paxil in a clinical trial.

GlaxoSmithKline was also accused of failing to disclose safety information about the diabetes drug Avandia in reports to the FDA from 2001 to 2007.

Part of the settlement relates to allegations that GlaxoSmithKline reported false drug prices and underpaid rebates owed under the Medicaid Drug Rebate Program.

The settlement originated from claims made by four GlaxoSmithKline employees who tipped off the government about a variety of improper practices that started from the late 1990s and continued to the mid-2000s.

In a written statement on the drug company’s website, CEO Andrew Witty said: “Today brings to resolution difficult, long-standing matters for GSK. 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.”

Last year, GlaxoSmithKline agreed to pay $41 million in an unrelated case for substandard manufacturing practices at a Puerto Rico factory. In 2010, the company paid $2.4 billion in a settlement with patients in connection with Avandia.

“This case demonstrates our continuing commitment to ensuring that the messages provided by drug manufacturers to physicians and patients are true and accurate and that decisions as to what drugs are prescribed to sick patients are based on best medical judgments, not false and misleading claims or improper financial inducements,” Carmen Ortiz, US Attorney for the District of Massachusetts, said in a press release.