GSK WellbutrinGSK Avandia

The biggest player of the pharmaceutical industry, GlaxoSmithKline plc (NYSE:GSK), makes the biggest settlement of healthcare fraud in US trial history. This brings an end to a long-running case against the pharmaceutical giant that was under investigation for many years now. FDA, FBI and Department of Health and Human Services had been probing the matter.

The drugs that the company is paying a huge price for are called Paxil, Wellbutrin and Avandia. While Paxil and Wellbutrin are antidepressants and the criminal charges are ‘misbranding’, GlaxoSmithKline plc (NYSE:GSK) faced allegations of misrepresenting the drug safety data, in case of Avandia. The settlement includes a payment of $1billion to compensate for criminal fraud and $2billion for civil liabilities such as the pricing fraud surrounding all three above mentioned drugs. The many complaints filed in the US vs GSK lawsuit were:

  • GSK failed to quote safety data on Avandia when the company clearly knew that its use could elevate risk of heart failure.
  • Paxil was illegally promoted to patients under 18 when the drug wasn’t approved for this age group.
  • The U.S.  court also alleged that the company published and distributed a misleading content in medical journals and grossly misrepresented the drug’s efficacy.
  • GSK sponsored doctors with payments, lavish parties and other luxuries to promote the prescription of Wellbutrin.

The CEO of GSK, Andrew Witty was quoted as saying in a company post-settlement statement, “”Today brings to resolution difficult, long-standing matters for GSK, 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.”

GSK made the largest pay-off but it is certainly not the only one, previously Pfizer Inc. (NYSE:PFE) and Eli Lilly & Co. (NYSE:LLY) have paid $2.3 billion and $1.4 billion in separate settlements.