Pharmaceutical Giant GSK to Pay $3B in Largest-Ever Health Care Fraud Case

July 2, 2012 — -- Healthcare giant GlaxoSmithKline has agreed to an unprecedented $3 billion settlement with the U.S. government over allegations that the company advertised drugs for uses not approved by the Food and Drug Administration and then used lavish gifts to convince doctors to prescribe the drugs.

The multi-billion dollar settlement is the largest in U.S. history for alleged healthcare fraud, government officials said.

In one instance, a drug was widely promoted to help treat depression even though the FDA had never tested it for such a use, according to the Department of Justice. In another, prosecutors said GlaxoSmithKline, or GSK, advertised the drug Paxil for use on children, despite the FDA not having approved antidepressant for anyone under 18. A notice posted on the website for the U.S. National Library of Medicine warned that a small number children to young adults taking Paroxetine -- which is sold under the brand name Paxil -- in clinical studies "became suicidal."

The government also said that GSK failed to report relevant safety information about the popular diabetes treatment Avandia to the FDA and even directly paid medical professionals to push the product on doctors for its alleged benefits for the heart -- even though GSK had no scientific data to back up that claim.

In all, GSK pleaded guilty to three criminal charges for which it will pay $1 billion and another $2 billion will be paid in civil liabilities under the False Claims Act.

GSK is a major manufacturer of prescription medication, vaccines and consumer healthcare products. On its website, the company boasts, "every minute more than 1,100 prescriptions are written for GSK products."

In a 2011 Corporate Responsibility Report, GSK addressed the government's allegations broadly, saying, "Some people are concerned that marketing by pharmaceutical companies may exert undue influence on doctors, that sales representatives may not always give doctors full information about the products they are promoting, or that there may be promotion of medicines for unapproved uses."

GSK goes on in that document to say that the company has "fundamentally changed our procedures for compliance, marketing and selling in the USA to ensure that we operate with high standards of integrity and that we conduct our business openly and transparently."

But critics at the Taxpayers Against Fraud non-profit group said that while recovering the money was a positive step, little is being done on a personal level to combat widespread fraud from the industry's top moneymakers – including putting executives behind bars.

"The bad news is that monetary penalties are not enough to stop rampant fraud... If we want to stop fraud, we need to recover America's stolen billions and we need to make sure that key players lose their jobs, their bank accounts, and their freedom," said Patrick Burns of Taxpayers Against Fraud. "Once the pain is personal and well-timed, the change in conduct in fraudster-companies will be very rapid."

CLICK HERE for several documents related to the case provided by the U.S. Department of Justice.

ABC News' Lee Ferran and Brian Hartman contributed to this report.

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