Pharma Giant Glaxo-Smith Kline Will Pay Largest Health Care Fraud Settlement in US History

Big pharma giant Glaxo-Smith Kline will pay the largest health care fraud settlement in US history  --  $3 billion -- for criminal and civil violations, the Justice Department announced yesterday. Glaxo-Smith Kline will plead guilty to illegally promoting the anti-depressant drugs Paxil and Wellbutrin for unapproved uses and failing to report to to the government safety problems with the diabetes drug Avandia, among other charges.  The company is also accused of overcharging the Medicaid program for some drugs, and allegedly paid kickbacks to doctors who prescribed some of their medications. 

From the Associated Press:

Glaxo is scheduled to plead guilty to the criminal charges and have the settlement approved at a hearing Thursday in U.S. District Court in Boston. In addition to the $3 billion penalty — which includes a $1 billion criminal fine and forfeiture and $2 billion to resolve civil claims — Glaxo agreed to be monitored by the government for five years to ensure that it complies with marketing and other rules.

The case against Glaxo was originally brought in January 2003 by two whistleblowers, former Glaxo sales representatives Greg Thorpe and Blair Hamrick. In January 2011, the federal government joined in the case.

Prosecutors said Glaxo illegally promoted Paxil for treating depression in children from 1998 to 2003, even though it wasn't approved for anyone under age 18. The company also promoted Wellbutrin from 1999 through 2003 for weight loss, sexual dysfunction, substance addictions and attention deficit hyperactivity disorder, although it was only approved for treatment of major depression.

Punishing the whistle-blower:

Starting in 2001, Thorpe reported to his district manager, then to Glaxo's human resources department and finally to Glaxo's chief of global compliance about a number of improper marketing practices. The compliance chief began an internal investigation, which confirmed Thorpe's allegations through various ways including marketing materials and interviews with Hamrick and other sales representatives, according to lawyers for the two men.

Brian Kenney and Tavy Deming, attorneys for the two salesmen, said top management did nothing to stop the illegal practices, pressured Thorpe to resign and later fired Hamrick for allegedly not cooperating with the company's investigation of one kickback allegation.

According to Deming, Hamrick reported that at a 2000 regional meeting of sales representatives in Las Vegas, they were directed to promote Wellbutrin as the drug that makes patients happy, skinny and sexually turned on, part of a catchy national slogan repeated to doctors.

Thorpe said in a statement Monday that he was penalized after he reported kickbacks being paid to doctors and sales reps encouraging doctors to promote drugs for unapproved uses, including using Paxil and Wellbutrin in children.

Read more details here

AlterNet / By Kristen Gwynne

Posted at July 3, 2012, 4:09am