Pharmaceutical giant GlaxoSmithKline Plc finally caved after battling seven years of federal investigations into and agreed to a $3 billion product liability settlement with the U.S. government.
The company pleaded guilty to criminal and civil charges stemming from "unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices."
The charges include two counts of introducing misbranded drugs called Paxil and Wellbutrin into interstate commerce, and another count of failing to report safety data about a drug called Avandia to the FDA.
It is the largest healthcare fraud settlement in U.S. history and the biggest payment ever made by a drug company. But for Glaxo, this $3 billion is only part of the overall cost of their liability issues. The company has set aside a total of $6.4 billion for liabilities related to Avandia and the other medicines.
The settlement includes $2 billion to resolve civil liabilities that will go to the states and to the federal government for violations of the False Claims Act. Another billion dollars is for a $956.814 million fine and $43 million forfeiture.
The settlement is the grand culmination of seven years of investigations that began in Colorado in 2004. The investigation was later moved to the U.S. Attorney's Office in Massachusetts. Federal agencies involved include in the investigations and settlement the FDA, FBI and the HHS-OIG.
The investigations were about whether the U.K.-based Glaxo promoted its drugs for unapproved uses and was paying kickbacks to physicians to prescribe those drugs. They were also charged with Medicaid fraud between 1994 and 2003, for reporting false drug prices that resulted in GSK’s underpaying rebates owed under the Medicaid Drug Rebate Program.
Apart from the three counts GSK pleaded guilty to, the rest of the charges arising from all the investigations remain allegations, with no determination of liability.
Did you know?
There are three types of drug-related product liability claims.
The first type is a defectively manufactured drug that causes harm or does not function as it should. The second type is an improperly marketed drug that does not provide adequate instructions or side-effect warnings. The third type of liability refers extended use side-effects that even the company may not have been aware or may have deliberately hidden.