In it for the money
Pharmaceutical giant pleads guilty to three criminal charges over mis-selling of drugs and withholding of data

GlaxoSmithKline has agreed to plead guilty to misdemeanour criminal charges and pay $3bn to settle what government officials describe as the largest case of healthcare fraud in US history.

The agreement, which still needs court approval, would resolve allegations that the British drug maker broke US laws in the marketing and development of pharmaceuticals. The terms of the settlement were announced in November.

GSK targeted the antidepressant Paxil at patients under age 18 when it was approved only for adults, and promoted the drug Wellbutrin for uses it was not approved for, including weight loss and treatment of sexual dysfunction, according to a US justice department investigation.

The company went to extreme lengths to promote the drugs, such as distributing a misleading medical journal article and providing doctors with meals and spa treatments that amounted to illegal kickbacks, prosecutors said.

"The sales force bribed physicians to prescribe GSK products using every imaginable form of high-priced entertainment, from Hawaiian vacations [and] paying doctors millions of dollars to go on speaking tours, to tickets to Madonna concerts," said US attorney Carmin Ortiz.

In a third case, GSK failed to give the US Food and Drug Administration safety data about its diabetes drug Avandia, in violation of US law, prosecutors said.

The misconduct began in the late 1990s and continued, in the case of Avandia's safety data, through to 2007. GSK agreed to plead guilty to three misdemeanour criminal counts, one each related to the three drugs.

Guilty pleas in cases of alleged corporate misconduct are exceedingly rare, making GSK's agreement especially unusual.

The agreement to settle the charges "is unprecedented in both size and scope", said James Cole, the no 2 official at the US justice department. He called the action "historic" and "a clear warning to any company that chooses to break the law".

The settlement includes $1bn in criminal fines and $2bn in civil fines.

Chief executive officer Andrew Witty said the misconduct originated "in a different era for the company" and would not be tolerated. "I want to express our regret and reiterate that we have learned from the mistakes that were made," he said in a written statement.

The GSK settlement surpasses what had been the largest criminal case involving a drug maker in US history. In 2009, Pfizer Inc agreed to pay $2.3bn to settle allegations that it improperly marketed 13 drugs.

The cases follow a trend of US authorities cracking down on how pharmaceuticals are sold, in part because of the rising cost of providing drugs through government programmes.

Source: Reuters