GlaxoSmithKline to pay $3bn for fraud | News | DW | 02.07.2012
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GlaxoSmithKline to pay $3bn for fraud

GlaxoSmithKline has been fined billions after admitting to promoting their drugs using dubious methods. It is the biggest pharmaceutical payout in history.

British drug-making giant GlaxoSmithKline (GSK) was hit with $3 billion (2.38 billion euros) worth of fines by American authorities on Monday after it was found guilty of fraud. The charges included marketing drugs for unauthorized reasons; retaining safety information; and cheating the US Medicaid program.

The case has been referred to as the biggest healthcare payout in history.

"Today's resolution is significant not just because GSK's conduct was egregious or because it is the largest health care fraud settlement in the department's history," acting Assistant Attorney General Stuart Delery said.

"For far too long, we have heard that the pharmaceutical industry views these settlements merely as the cost of doing business. That is why this administration is committed to using every available tool to defeat health care fraud," he added.

GSK, one of the world's biggest pharmaceutical firms, pleaded guilty on three counts and agreed to pay fines for their conduct. Its misconduct is traceable back to the late 1990s until 2007.

A catalogue of damning charges

The company pled guilty to claims that it had pushed the antidepressants Paxil and Wellbutrin for uses other than those with explicit approval from US authorities, including usage on children and adolescents.

Andrew Witty

GSK head Andrew Witty was apologetic about the firm's conduct but said it was in the past.

The company also offered inappropriate kickbacks. Carmen Ortiz, the US attorney for Massachusetts who was part of the team working on the case, said physicians were tempted with gifts including concert tickets and vacations in Hawaii in order to secure their endorsement of GSK's drugs

GSK will pay up to $1 billion to cover criminal fines and forfeitures. It will also have to cover $1.7 billion worth of civil fines for illegally promoting drugs, and making claims about the safety and effectiveness of the diabetes drug Avianda. A further $300 million will go towards settling rebates it owes to US Medicaid.

GSK chief: it's all in the past

GSK's Chief Executive Officer Andrew Witty commented on the ruling by insisting that it took place "in a different era for the company.”

"I want to express our regret and reiterate that we have learnt from the mistakes that were made," he said in a written statement.

GSK has said that it will settle the fine using its existing cash stockpile.

The case is in line with America's increasing eagerness to crack down on methods employed to sell legalized drugs, a drive which is partly fuelled by the increasing costs of drug provision through government programs.

sej/slk (AFP, Reuters)