Drug giant GlaxoSmithKline will plead guilty and pay $3 billion to resolve federal criminal and civil inquiries arising from the company's illegal promotion of some of its products, its failure to report safety data and alleged false price reporting, the Justice Department announced Monday.
The company agreed to plead guilty to three criminal counts, including two counts of introducing misbranded drugs — Paxil and Wellbutrin — and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration.
The $3 billion fine will be the largest penalty ever paid by a drug company, Deputy Attorney General James M. Cole said. The company also agreed to be monitored by government officials for five years to attempt to ensure the company's compliance, Cole said.
Under the terms of the plea agreement, GSK will pay a total of $1 billion, including a criminal fine of $956,814,400. The company also will pay $2 billion to resolve civil claims under the federal government's False Claims Act.
Prosecutors said GlaxoSmithKline illegally promoted the drug Paxil for treating depression in children from April 1998 to August 2003, even though the FDA never approved it for anyone under age 18. The corporation also promoted the drug Wellbutrin from January 1999 to December 2003 for weight loss, the treatment of sexual dysfunction, substance addictions and attention deficit hyperactivity disorder, although it was only approved for treatment of major depressive disorder.
GlaxoSmithKline CEO Sir Andrew Witty expressed regret and said they have learned "from the mistakes that were made."
"Today brings to resolution difficult, long-standing matters for GSK," he said in a statement. "Whilst these originate in a different era for the company, they cannot and will not be ignored."
Crimes and civil violations like those in the GlaxoSmithKline case have been widespread in the pharmaceutical industry and have produced a series of case with hefty fines. One reason some have said the industry regards the fines as simply a cost of doing business is because aggressively promoting drugs to doctors for uses not officially approved — including inducing other doctors to praise the drugs to colleagues at meetings — has quickly turned numerous drugs from mediocre sellers into blockbusters, with more than $1 billion in annual sales.
In the last few years, the Justice Department has become much more aggressive in pursuing such fraud, often in whistleblower cases taken on by a handful of U.S. attorneys focused on such fraud. Among the most active are the U.S. attorneys in Boston, Philadelphia and San Francisco— all in regions with numerous pharmaceutical and biotech company operations.
The prior record-setting case involved Pfizer, the world's biggest drugmaker. Pfizer paid the government $2.3 billion in criminal and civil fines for improperly marketing 13 different drugs, including Viagra and cholesterol fighter Lipitor. Pfizer was accused of encouraging doctors to prescribe its drugs with free golf, massages, and junkets to posh resorts.
It is illegal to promote uses for a drug that have not been approved by the FDA — a practice known as off-label marketing.