Microsoft word - us_glaxosmithkline_pressrelease_2.7.12.doc

GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud
Allegations and Failure to Report Safety Data
Largest Health Care Fraud Settlement in U.S. History
Monday, July 2, 2012

Global health care giant GlaxoSmithKline LLC (GSK) agreed to plead guilty and to pay $3
billion to resolve its criminal and civil liability arising from the company’s unlawful
promotion of certain prescription drugs, its failure to report certain safety data, and its civil
liability for alleged false price reporting practices, the Justice Department announced today.
The resolution is the largest health care fraud settlement in U.S. history and the largest
payment ever by a drug company.
GSK agreed to plead guilty to a three-count criminal information, including two counts of
introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count
of failing to report safety data about the drug Avandia to the Food and Drug Administration
(FDA). Under the terms of the plea agreement, GSK will pay a total of $1 billion, including
a criminal fine of $956,814,400 and forfeiture in the amount of $43,185,600. The criminal
plea agreement also includes certain non-monetary compliance commitments and
certifications by GSK’s U.S. president and board of directors. GSK’s guilty plea and
sentence is not final until accepted by the U.S. District Court.
GSK will also pay $2 billion to resolve its civil liabilities with the federal government under
the False Claims Act, as well as the states. The civil settlement resolves claims relating to
Paxil, Wellbutrin and Avandia, as well as additional drugs, and also resolves pricing fraud
“Today’s multi-billion dollar settlement is unprecedented in both size and scope. It
underscores the Administration’s firm commitment to protecting the American people and
holding accountable those who commit health care fraud,” said James M. Cole, Deputy
Attorney General. “At every level, we are determined to stop practices that jeopardize
patients’ health, harm taxpayers, and violate the public trust – and this historic action is a
clear warning to any company that chooses to break the law.”
“Today’s historic settlement is a major milestone in our efforts to stamp out health care
fraud,” said Bill Corr, Deputy Secretary of the Department of Health and Human Services
(HHS). “For a long time, our health care system had been a target for cheaters who thought
they could make an easy profit at the expense of public safety, taxpayers, and the millions of
Americans who depend on programs like Medicare and Medicaid. But thanks to strong
enforcement actions like those we have announced today, that equation is rapidly changing.”
This resolution marks the culmination of an extensive investigation by special agents from HHS-OIG, FDA and FBI, along with law enforcement partners across the federal government. Moving forward, GSK will be subject to stringent requirements under its corporate integrity agreement with HHS-OIG; this agreement is designed to increase accountability and transparency and prevent future fraud and abuse. enforcement partnerships and fraud prevention are hallmarks of the Health Care Fraud
Prevention and Enforcement Action Team (HEAT) initiative, which fosters government
collaboration to fight fraud.
Criminal Plea Agreement
Under the provisions of the Food, Drug and Cosmetic Act, a company in its application to the
FDA must specify each intended use of a drug. After the FDA approves the product as safe
and effective for a specified use, a company’s promotional activities must be limited to the
intended uses that FDA approved. In fact, promotion by the manufacturer for other uses –
known as “off-label uses” – renders the product “misbranded.”
Paxil: In the criminal information, the government alleges that, from April 1998 to August
2003, GSK unlawfully promoted Paxil for treating depression in patients under age 18, even
though the FDA has never approved it for pediatric use. The United States alleges that,
among other things, GSK participated in preparing, publishing and distributing a misleading
medical journal article that misreported that a clinical trial of Paxil demonstrated efficacy in
the treatment of depression in patients under age 18, when the study failed to demonstrate
efficacy. At the same time, the United States alleges, GSK did not make available data from
two other studies in which Paxil also failed to demonstrate efficacy in treating depression in
patients under 18. The United States further alleges that GSK sponsored dinner programs,
lunch programs, spa programs and similar activities to promote the use of Paxil in children
and adolescents. GSK paid a speaker to talk to an audience of doctors and paid for the meal
or spa treatment for the doctors who attended. Since 2004, Paxil, like other antidepressants,
included on its label a “black box warning” stating that antidepressants may increase the risk
of suicidal thinking and behavior in short-term studies in patients under age 18. GSK agreed
to plead guilty to misbranding Paxil in that its labeling was false and misleading regarding the
use of Paxil for patients under 18.
Wellbutrin: The United States also alleges that, from January 1999 to December 2003, GSK
promoted Wellbutrin, approved at that time only for Major Depressive Disorder, for weight
loss, the treatment of sexual dysfunction, substance addictions and Attention Deficit
Hyperactivity Disorder, among other off-label uses. The United States contends that GSK
paid millions of dollars to doctors to speak at and attend meetings, sometimes at lavish resorts,
at which the off-label uses of Wellbutrin were routinely promoted and also used sales
representatives, sham advisory boards, and supposedly independent Continuing Medical
Education (CME) programs to promote Wllbutrin for these unapproved uses. GSK has agreed
to plead guilty to misbranding Wellbutrin in that its labeling did not bear adequate directions
for these off-label uses. For the Paxil and Wellbutrin misbranding offenses, GSK has agreed
to pay a criminal fine and forfeiture of $757,387,200.

Avandia: The United States alleges that, between 2001 and 2007, GSK failed to include
certain safety data about Avandia, a diabetes drug, in reports to the FDA that are meant to
allow the FDA to determine if a drug continues to be safe for its approved indications and to
spot drug safety trends. The missing information included data regarding certain post-
marketing studies, as well as data regarding two studies undertaken in response to European
regulators’ concerns about the cardiovascular safety of Avandia. Since 2007, the FDA has
added two black box warnings to the Avandia label to alert physicians about the potential
increased risk of (1) congestive heart failure, and (2) myocardial infarction (heart attack).
GSK has agreed to plead guilty to failing to report data to the FDA and has agreed to pay a
criminal fine in the amount of $242,612,800 for its unlawful conduct concerning Avandia.
“This case demonstrates our continuing commitment to ensuring that the messages provided
by drug manufacturers to physicians and patients are true and accurate and that decisions as to
what drugs are prescribed to sick patients are based on best medical judgments, not false and
misleading claims or improper financial inducements,” said Carmen Ortiz, U.S. Attorney for
the District of Massachusetts.
“Patients rely on their physicians to prescribe the drugs they need,” said John Walsh, U.S.
Attorney for Colorado. “The pharmaceutical industries’ drive for profits can distort the
information provided to physicians concerning drugs. This case will help to ensure that your
physician will make prescribing decisions based on good science and not on misinformation,
money or favors provided by the pharmaceutical industry.”
Civil Settlement Agreement
As part of this global resolution, GSK has agreed to resolve its civil liability for the following
alleged conduct: (1) promoting the drugs Paxil, Wellbutrin, Advair, Lamictal and Zofran for
off-label, non-covered uses and paying kickbacks to physicians to prescribe those drugs as
well as the drugs Imitrex, Lotronex, Flovent and Valtrex; (2) making false and misleading
statements concerning the safety of Avandia; and (3) reporting false best prices and
underpaying rebates owed under the Medicaid Drug Rebate Program.
Off-Label Promotion and Kickbacks: The civil settlement resolves claims set forth in a
complaint filed by the United States alleging that, in addition to promoting the drugs Paxil
and Wellbutrin for unapproved, non-covered uses, GSK also promoted its asthma drug,
Advair, for first-line therapy for mild asthma patients even though it was not approved or
medically appropriate under these circumstances. GSK also promoted Advair for chronic
obstructive pulmonary disease with misleading claims as to the relevant treatment guidelines.
The civil settlement also resolves allegations that GSK promoted Lamictal, an anti-epileptic
medication, for off-label, non-covered psychiatric uses, neuropathic pain and pain
management. It further resolves allegations that GSK promoted certain forms of Zofran,
approved only for post-operative nausea, for the treatment of morning sickness in pregnant
women. It also includes allegations that GSK paid kickbacks to health care professionals to
induce them to promote and prescribe these drugs as well as the drugs Imitrex, Lotronex,
Flovent and Valtrex. The United States alleges that this conduct caused false claims to be
submitted to federal health care programs.
GSK has agreed to pay $1.043 billion relating to false claims arising from this alleged
conduct. The federal share of this settlement is $832 million and the state share is $210
This off-label civil settlement resolves four lawsuits pending in federal court in the District of
Massachusetts under the qui tam, or whistleblower, provisions of the False Claims Act, which
allow private citizens to bring civil actions on behalf of the United States and share in any
Avandia: In its civil settlement agreement, the United States alleges that GSK promoted
Avandia to physicians and other health care providers with false and misleading
representations about Avandia’s safety profile, causing false claims to be submitted to federal
health care programs. Specifically, the United States alleges that GSK stated that Avandia had
a positive cholesterol profile despite having no well-controlled studies to support that message.
The United States also alleges that the company sponsored programs suggesting
cardiovascular benefits from Avandia therapy despite warnings on the FDA-approved label
regarding cardiovascular risks. GSK has agreed to pay $657 million relating to false claims
arising from misrepresentations about Avandia. The federal share of this settlement is $508
million and the state share is $149 million.
Price Reporting: GSK is also resolving allegations that, between 1994 and 2003, GSK and
its corporate predecessors reported false drug prices, which resulted in GSK’s underpaying
rebates owed under the Medicaid Drug Rebate Program. By law, GSK was required to report
the lowest, or “best” price that it charged its customers and to pay quarterly rebates to the
states based on those reported prices. When drugs are sold to purchasers in contingent
arrangements known as “bundles,” the discounts offered for the bundled drugs must be
reallocated across all products in the bundle proportionate to the dollar value of the units sold.
The United States alleges that GSK had bundled sales arrangements that included steep
discounts known as “nominal” pricing and yet failed to take such contingent arrangements
into account when calculating and reporting its best prices to the Department of Health and
Human Services. Had it done so, the effective prices on certain drugs would have been
different, and, in some instances, triggered a new, lower best price than what GSK reported.
As a result, GSK underpaid rebates due to Medicaid and overcharged certain Public Health
Service entities for its drugs, the United States contends. GSK has agreed to pay $300 million
to resolve these allegations, including $160,972,069 to the federal government, $118,792,931
to the states, and $20,235,000 to certain Public Health Service entities who paid inflated
prices for the drugs at issue.
Except to the extent that GSK has agreed to plead guilty to the three-count criminal
information, the claims settled by these agreements are allegations only, and there has been no
determination of liability.
“This landmark settlement demonstrates the Department’s commitment to protecting the
American public against illegal conduct and fraud by pharmaceutical companies,” said Stuart
F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.
“Doctors need truthful, fair, balanced information when deciding whether the benefits of a
drug outweigh its safety risks. By the same token, the FDA needs all necessary safety-related
information to identify safety trends and to determine whether a drug is safe and
effective. Unlawful promotion of drugs for unapproved uses and failing to report adverse
drug experiences to the FDA can tip the balance of those important decisions, and the Justice
Department will not tolerate attempts by those who seek to corrupt our health care system in
this way.”
Non-monetary Provisions and Corporate Integrity Agreement
In addition to the criminal and civil resolutions, GSK has executed a five-year Corporate
Integrity Agreement (CIA) with the Department of Health and Human Services, Office of
Inspector General (HHS-OIG). The plea agreement and CIA include novel provisions that
require that GSK implement and/or maintain major changes to the way it does business,
including changing the way its sales force is compensated to remove compensation based on
sales goals for territories, one of the driving forces behind much of the conduct at issue in this
matter. Under the CIA, GSK is required to change its executive compensation program to
permit the company to recoup annual bonuses and long-term incentives from covered
executives if they, or their subordinates, engage in significant misconduct. GSK may recoup
monies from executives who are current employees and those who have left the
company. Among other things, the CIA also requires GSK to implement and maintain
transparency in its research practices and publication policies and to follow specified policies
in its contracts with various health care payors.
“Our five-year integrity agreement with GlaxoSmithKline requires individual accountability
of its board and executives,” said Daniel R. Levinson, Inspector General of the U.S.
Department of Health and Human Services. “For example, company executives may have to
forfeit annual bonuses if they or their subordinates engage in significant misconduct, and sales
agents are now being paid based on quality of service rather than sales targets.”
“The FDA Office of Criminal Investigations will aggressively pursue pharmaceutical
companies that choose to put profits before the public’s health,” said Deborah M. Autor, Esq.,
Deputy Commissioner for Global Regulatory Operations and Policy, U.S. Food and Drug
Administration. “We will continue to work with the Justice Department and our law
enforcement counterparts to target companies that disregard the protections of the drug
approval process by promoting drugs for uses when they have not been proven to be safe and
effective for those uses, and that fail to report required drug safety information to the FDA.”
“The record settlement obtained by the multi-agency investigative team shows not only the
importance of working with our partners, but also the importance of the public providing their
knowledge of suspect schemes to the government,” said Kevin Perkins, Acting Executive
Assistant Director of the FBI’s Criminal, Cyber, Response and Services Branch. “Together,
we will continue to bring to justice those engaged in illegal schemes that threaten the safety of
prescription drugs and other critical elements of our nation’s healthcare system.”
“ Federal employees deserve health care providers and suppliers, including drug
manufacturers, that meet the highest standards of ethical and professional behavior,” said
Patrick E. McFarland, Inspector General of the U.S. Office of Personnel Management.
“Today’s settlement reminds the pharmaceutical industry that they must observe those
standards and reflects the commitment of Federal law enforcement organizations to pursue
improper and illegal conduct that places health care consumers at risk.”
“Today’s announcement illustrates the efforts of VA OIG and its law enforcement partners in
ensuring the integrity of the medical care provided our nation’s veterans by the Department of
Veterans Affairs,” said George J. Opfer, Inspector General of the Department of Veterans
Affairs. “The monetary recoveries realized by VA in this settlement will directly benefit VA
healthcare programs that provide for veterans’ continued care.”
“This settlement sends a clear message that taking advantage of federal health care programs
has substantial consequences for those who try,” said Rafael A. Medina, Special Agent in
Charge of the Northeast Area Office of Inspector General for the U.S. Postal Service. “The
U.S. Postal Service pays more than one billion dollars a year in workers' compensation
benefits and our office is committed to pursuing those individuals or entities whose fraudulent
acts continue to unfairly add to that cost.”
A Multilateral Effort
The criminal case is being prosecuted by the U.S. Attorney’s Office for the District of Massachusetts and the Civil Division’s Consumer Protection Branch. The civil settlement was reached by the U.S. Attorney’s Office for the District of Massachusetts, the U.S. Attorney’s Office for the District of Colorado and the Civil Division’s Commercial Litigation Branch. Assistance was provided by the HHS Office of Counsel to the Inspector General, Office of the General Counsel-CMS Division and FDA’s Office of Chief Counsel as well as the National Association of Medicaid Fraud Control Units. This matter was investigated by agents from the HHS-OIG; the FDA’s Office of Criminal Investigations; the Defense Criminal Investigative Service of the Department of Defense; the Office of the Inspector General for the Office of Personnel Management; the Department of Veterans Affairs; the Department of Labor; TRICARE Program Integrity; the Office of Inspector General for the U.S. Postal Service and the FBI. This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Kathleen Sebelius, Secretary of HHS. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. Over the last three years, the department has recovered a total of more than $10.2 billion in settlements, judgments, fines, restitution, and forfeiture in health care fraud matters pursued under the False Claims Act and the Food, Drug and Cosmetic Act. 12-842 Civil


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Microsoft word - m miller - bio summary.doc

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