GlaxoSmithKline to pay $3bn in US drug fraud scandal

WASHINGTON – British drugmaker GlaxoSmithKline Plc (GSK) has agreed to plead guilty to misdemeanor criminal charges, and pay $3bn to settle what government officials described as the largest case of healthcare fraud in US history.

Monday’s agreement , which still needs court approval, would resolve allegations that the British drugmaker broke US laws in marketing two popular drugs for unapproved uses and to failing to disclose important safety information on a third.

The three billion dollar combined criminal-civil fine will be the largest penalty ever paid by a drug company, James M Cole, deputy attorney general said.

“Let me be clear, we will not tolerate health care fraud,” Cole told a news conference at the Justice Department.

He would not say whether any company executives were under investigation.

GSK agreed to plead guilty to three misdemeanor 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.

GSK targeted the antidepressant Paxil to patients under age 18 when it was approved for adults only, and it pushed the drug Wellbutrin for uses it was not approved for, including weight loss and treatment of sexual dysfunction, according to an investigation led by the US Department of Justice.

The company went to extreme lengths to promote the drugs, including distributing a misleading medical journal article, providing doctors with expensive resort vacations, European hunting trips, high-paid speaking tours and even tickets to a Madonna concert.

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

The misconduct continued for years beginning in the late 1990s and continued, in the case of Avandia’s safety data, through 2007.

The agreement to settle the charges “is unprecedented in both size and scope,” said Cole, the number two 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 one billion dollars in criminal fines and two billion dollars civil fines.

GSK said in a statement it would pay the fines through existing cash resources.