In the largest settlement involving a pharmaceutical company, the British drugmaker GlaxoSmithKline
agreed to plead guilty to criminal charges and pay $3 billion in fines
for promoting its best-selling antidepressants for unapproved uses and
failing to report safety data about a top diabetes drug, federal
prosecutors announced Monday. The agreement also includes civil
penalties for improper marketing of a half-dozen other drugs.
The fine against GlaxoSmithKline over Paxil
, Wellbutrin, Avandia
and the other drugs makes this year a record for money recovered by the
federal government under its so-called whistle-blower law, according to
a group that tracks such numbers.
In May, Abbott Laboratories settled for $1.6 billion over its marketing
of the antipsychotic drug Depakote. And an agreement with Johnson &
Johnson that could result in a fine of as much as $2 billion is said to
be imminent over its off-label promotion of another antipsychotic drug,
No individuals have been charged in any of the cases. Even so, the
Justice Department contends the prosecutions are well worth the effort —
reaping more than $15 in recoveries for every $1 it spends, by one
But critics argue that even large fines are not enough to deter drug
companies from unlawful behavior. Only when prosecutors single out
individual executives for punishment, they say, will practices begin to
“What we’re learning is that money doesn’t deter corporate malfeasance,”
said Eliot Spitzer, who, as New York’s attorney general, sued
GlaxoSmithKline in 2004 over similar accusations involving Paxil. “The
only thing that will work in my view is C.E.O.’s and officials being
forced to resign and individual culpability being enforced.”
The federal whistle-blower law, officially the False Claims Act, dates
to 1863 and was originally envisioned as a check on war profiteering
after the Civil War
Whistle-blowers get a share of any money recovered by the federal
government. So far, according to Patrick Burns, spokesman for the
whistle-blower advocacy group Taxpayers Against Fraud, at least $10
billion has been agreed to in settlements this fiscal year, which ends
The settlement, which requires court approval, stems from claims made by
four employees of GlaxoSmithKline, including a former senior marketing
development manager for the company and a regional vice president, who
tipped off the government about a range of improper practices from the
late 1990s to the mid-2000s.
Prosecutors said the company had tried to win over doctors by paying for
trips to Jamaica and Bermuda, as well as spa treatments and hunting
excursions. In the case of Paxil, prosecutors claim GlaxoSmithKline
employed several tactics aimed at promoting the use of the drug in
children, including helping to publish a medical journal article that
misreported data from a clinical trial.
A warning was later added to the drug that Paxil, like other
antidepressants, might increase the risk of suicidal thoughts in
teenagers. Prosecutors said the company had marketed Wellbutrin for
conditions like weight loss and sexual dysfunction when it was approved
only to treat major depressive disorder.
They said that in the case of Avandia, whose use was severely restricted
in 2010 after it was linked to heart risks, the company had failed to
report data from studies detailing the safety risks to the F.D.A.
“Today’s multibillion-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
The initial terms of the settlement were announced in November, and
Glaxo had already set aside cash for the settlement. In a statement
Monday, the company said it has since changed many of its policies,
including no longer rewarding sales representatives for the number of
drug prescriptions sold.
Andrew Witty, the chief executive, sought to portray the illegal actions as part of the company’s past.
“Whilst these originate in a different era for the company, they cannot
and will not be ignored,” he said in the statement. “On behalf of GSK, I
want to express our regret and reiterate that we have learned from the
mistakes that were made.”
The three criminal charges involved Paxil, Wellbutrin and Avandia and
included a criminal fine of $1 billion. The remaining $2 billion
involves fines in connection with a civil settlement over the sales and
marketing practices of the blockbuster asthma drug Advair and several
Part of the civil settlement also includes claims that the company
overcharged the government for drugs. Glaxo did not admit any wrongdoing
in the civil settlement.
Despite the large amount, $3 billion represents only a portion of what
Glaxo made on the drugs. Avandia, for example, racked up $10.4 billion
in sales, Paxil brought in $11.6 billion, and Wellbutrin sales were $5.9
billion during the years covered by the settlement, according to IMS
Health, a data group that consults for drugmakers.
“So a $3 billion settlement for half a dozen drugs over 10 years can be
rationalized as the cost of doing business,” Mr. Burns said.
Mr. Burns and others have said that to institute real change, executives
must be prosecuted criminally or barred from participating in the Medicare
programs, an action known as “exclusion.”
This has occurred in only a handful of cases, and rarely in a case
involving a major pharmaceutical company. In 2011, four executives of
the medical device company Synthes were sentenced to less than a year in
prison for conducting clinical trials that were not authorized by the
Food and Drug Administration.
That same year, the former chief executive of K.V. Pharmaceutical was
sentenced to 30 days in jail and fined $1 million for selling misbranded
morphine tablets. The previous year, the Department of Health and Human
Services excluded him from doing business with the federal government.
Those in the pharmaceutical industry have stressed that the activities
revealed in the recent settlements occurred many years ago, and
practices have changed radically since then. The Glaxo settlement
includes an agreement by the company to withdraw bonuses from top
executives if they engaged in or supervised illegal behavior, believed
to be a first.
“That creates pressure and it creates an element of responsibility,”
said Erika Kelton, who represented two of the four whistle-blowers in
the Glaxo case. “I think it’s a good step in the right direction.”
By KATIE THOMAS and MICHAEL S. SCHMIDT from New York Times