The pharma company’s $3 billion settlement on improper drug promotions and misbranding charges is the largest yet for the drug industry.
The Department of Justice scored its biggest healthcare fraud settlement yet on July 2 when GlaxoSmithKline agreed to pay $3 billion for promoting off-label uses of its Paxil and Wellbutrin antidepressants and for holding back safety data from the Food and Drug Administration about its Avandia diabetes drug. The previous record-holder was Pfizer, which in 2009 agreed to a $2.3 billion settlement for misbranding and fraudulent promotions.
The plea agreement includes a criminal fine of almost a billion dollars and a $43 million forfeiture, as well as nonmonetary commitments that include a five-year corporate integrity agreement. GSK also will pay $2 billion to resolve civil liabilities with the federal government under the False Claims Act.
Among the criminal charges were that the company paid a speaker to promote the use of Paxil as an antidepressant for children under 18, and paid for meals or spa treatments for docs who attended the talk, during the April 1998 to August 2003 time span. Paxil is not approved for use in children and adolescents. GSK also pleaded guilty to paying millions of dollars to docs to speak at and attend meetings at which off-label uses of Wellbutrin were promoted from January 1999 to December 2003. According to the DOJ press release, the company “also used sales representatives, sham advisory boards, and supposedly independent Continuing Medical Education (CME) programs to promote Wellbutrin for these unapproved uses.” It also pled guilty to failing to report to the FDA data on Avandia’s potential cardiovascular risks.
The five-year corporate integrity agreement between GSK and the HHS-OIG focuses mainly on changing sales force compensation policies “to remove compensation based on sales goals for territories, one of the driving forces behind much of the conduct at issue,” according to the DOJ. It also makes executive compensation dependent on compliance—if underlings get caught engaging in “significant misconduct,” executives may lose their annual bonuses.
The company already has been working on its sales force issues, according to GSK CEO Andrew Witty. “In the U.S., we have taken action at all levels of the company,” said Witty. “We have fundamentally changed our procedures for compliance, marketing, and selling. When necessary, we have removed employees who have engaged in misconduct. In the last two years, we have reformed the basis on which we pay our sales representatives and we have enhanced our ability to ‘claw back’ remuneration of our senior management.”
The corporate integrity agreement also addresses grants for continuing medical education, which the company provides on a limited basis and only to a select group of academic medical centers, hospitals, or professional associations that represent healthcare professionals involved in patient care it chooses on an annual basis. Third party providers are not eligible. GSK also outlined its CME granting process, which includes a review of all proposals from invited providers by its medical affairs organization, which is completely separate from its sales and marketing departments. Under the CIA, GSK can continue its current CME granting process for the CIA’s five-year term as long as it includes a grants monitoring audit program within 120 days that will audit a set number of grants during each reporting period.
“As we did with Abbott Laboratories a few weeks ago, [this] resolution seeks not only to punish wrongdoing and recover taxpayer dollars, but to ensure GSK’s future compliance with the law,” said Stuart F. Delery, acting assistant attorney general for the Department of Justice’s Civil Division, at a press conference. “The Corporate Integrity Agreement … exemplifies best practices in compliance.” (In May Abbott Laboratories Inc. agreed to pay $1.5 billion to resolve its criminal and civil liability arising from the company’s off-label promotion of the prescription drug Depakote.)
The settlement “brings to resolution difficult, longstanding matters for GSK,” said GSK CEO Witty in a statement. “Whilst these originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made.”
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