GlaxoSmithKline Agrees to Largest Healthcare Fraud Settlement in History

Pharmaceutical giant GlaxoSmithKline agreed to pay a whopping $3 billion in fines, amounting to the largest health care fraud settlement in U.S. history, for its past practice of marketing drugs for off label use.

The Justice Department announced last week that GSK would plead guilty to promoting Paxil, Wellbutrin and Advair for off label usage. Additionally, the company will plead guilty to failing to report safety problems with its diabetes drug Avandia and for paying kickbacks to doctors for prescribing Flovent and Valtrex. In addition to the $3 billion penalty, GSK agreed to be monitored by the government for five years to ensure that it complies with marketing and other rules.

The case against the drug company was originally brought in January 2003 by two whistleblowers, former GSK sales representatives Greg Thorpe and Blair Hamrick. In January 2011, the federal government joined in the case. Prosecutors made the case, with the whistleblowers' help, that GSK had illegally promoted Paxil for treating depression in children even though it wasn't approved for use by anyone under 18. The company also promoted Wellbutrin for weight loss, sexual dysfunction, substance addictions and attention deficit hyperactivity disorder, although it was only approved for treatment of major depression.

Thorpe first reported problems to his manager in 2001, then went up the ladder to the human resource department and finally to GSK's chief of global compliance. This last step brought about an internal investigation which confirmed Thorpe's claims. His attorneys say top management did nothing to fix the problem and ended up pressuring him to resign. Hamrick was later fired for not cooperating with GSK's investigation.

The payout for whistleblowers remains undetermined. Of the $3 billion settlement, $1.04 billion in civil fines is connected to Hamrick's case. Whistleblowers in similar cases often receive 15 to 25% of the civil fine, a boon to the currently unemployed Hamrick. The government will recommend the percentage at a later date.

This is the latest in a string of settlements related to drug companies putting profits ahead of patients. In recent years, the government has cracked down on drug makers' tactics, including marketing medicines for unapproved uses. While doctors are allowed to prescribe medicines for any use, pharmaceutical companies cannot promote them in any way that is not approved by the U.S. Food and Drug Administration.

GlaxoSmithKline Settlement Unzips Tampa Whistle-blower's Lips by Jodie Tillman, published at, July 3, 2012.

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Categories: False Claims Act