GSK settles healthcare fraud case for $3 billion

Agreement settles several U.S. state cases in addition to ones with the U.S. federal government and the nation's capital as well

Jeffrey Bouley
LONDON and PHILADELPHIA—GlaxoSmithKline PLC (GSK) announcedJuly 2 that it has reached an agreement with the U.S. government, multiplestates and the District of Columbia to conclude the company's most significantongoing federal government investigations. The final settlement is a result ofnegotiations which reached agreement in principle in November 2011. GSK willmake payments totaling $3 billion, which are covered by existing provisions andwill be funded through existing cash resources.
 
 
The agreement resolves criminal and civilliabilities related to: an investigation begun by the U.S. Attorney's office ofColorado in 2004 and later taken over by the U.S. Attorney's Office ofMassachusetts into GSK's sales and marketing practices for nine products; theU.S. Department of Justice's investigation of possible inappropriate use of thenominal price exception under the Medicaid Rebate Program; and the Departmentof Justice's investigation of the marketing and regulatory submissions ofAvandia.
 
 
As part of the agreement, GSK has entered into acorporate integrity agreement (CIA) with the Office of Inspector General (OIG)of the U.S. Department of Health and Human Services. The CIA will also cover aportion of GSK's manufacturing operations, related to the company's settlementin 2010 on events in the early 2000s at GSK's former manufacturing facility inCidra, Puerto Rico. In both areas, the CIA will build on the company's existingcomprehensive compliance programs.
 
 
Commenting on the agreement, GlaxoSmithKline CEOSir Andrew Witty said: "Today brings to resolution difficult,long-standing matters for GSK. Whilst these originate in a different era forthe company, they cannot and will not be ignored. On behalf of GSK, I want toexpress our regret and reiterate that we have learnt from the mistakes thatwere made.
 
 
"We are deeply committed to doing everythingwe can to live up to and exceed the expectations of those we work with andserve. Since I became CEO, we have had a clear priority to ingrain a culture ofputting patients first, acting transparently, respecting people inside andoutside the organization and displaying integrity in everything we do.
 
 
"In the U.S., we have taken action at alllevels in the company. We have fundamentally changed our procedures forcompliance, marketing and selling. When necessary, we have removed employees whohave engaged in misconduct. In the last two years, we have reformed the basison which we pay our sales representatives and we have enhanced our ability to'claw back' remuneration of our senior management.
 
 
"We have a vital role to play in bringinginnovative medicines to patients and we understand how important it is that ourmedicines are appropriately promoted to healthcare professionals and that weadhere to the standards rightly expected by the U.S. government."
 
 
Under the terms of the settlement, GSK will pleadguilty to misdemeanor violations of the Federal Food, Drug, and Cosmetic Actrelated to certain aspects of the marketing of Paxil for paediatric use and ofWellbutrin for certain uses, and for failure to include information about theinitiation or status of certain Avandia studies in periodic and annual reportssubmitted to FDA.
 
 
The civil settlement reached with the governmentdoes not constitute an admission of any liability or wrongdoing in the sellingand marketing of Lamictal, Zofran, Imitrex, Lotronex, Flovent, Valtrex, Avandiaor Advair products, nor in its nominal pricing practices.
 
 
GSK says it has made fundamental changes to itsprocedures for compliance, marketing and selling in the United States over thelast few years. The company has adopted new policies, enhanced others, andimplemented measures to strengthen training and compliance programs, includingadding compliance staff. Since January 2011, the company has put in place a newincentive compensation system for GSK professional sales representatives whowork directly with health care professionals. Reportedly, the new systemeliminates individual sales targets as a basis for bonuses, and instead basesincentive compensation on the quality of the service these representativesdeliver to customers to support improved patient health.
 
 
These changes ensure that the company's programsand activities are well-controlled and aligned with the evolving expectation ofits stakeholders. Most importantly, the changes are in keeping with thecompany's core values, GSK notes, "ensuring that its activities andrelationships are transparent, based on integrity and respect, and focused onthe best interests of patients."
 
 
SOURCE: GSK news release
 


Jeffrey Bouley

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