GlaxoSmithKline Pleads Guilty & Will Pay U.S. $3 Billion To Resolve Fraud Allegations

In the largest health care fraud settlement in U.S. history, prescription drug giant GlaxoSmithKline is set to plead guilty and pay $3 billion to the U.S. government. The settlement will resolve federal criminal and civil inquiries about things ranging from the company’s illegal promotion of some of its products to its failure to report safety data and alleged false price reporting.

GSK agreed to plead guilty to three criminal counts, including two counts involving the misbranding of drugs Paxil and Wellbutrin and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration.

Prosecutors said GSK marketed Paxil to be used for kids even though it wasn’t approved for those under 18. They say it also promoted Wellbutrin for things other than treating major depressive disorder, which is the only use it is approved for. It was also alleged that GSK failed to report on two studies of heart safety and a diabetes drug, Avandia.

“Today’s multibillion-dollar settlement is unprecedented in both size and scope,” Deputy Attorney General James Cole said. “At every level, we are determined to stop practices that jeopardize patients’ health, harm taxpayers, and violate the public trust – and this historic action is a clear warning to any company that chooses to break the law.”

The plea agreement will have GSK paying $1 billion to resolve the allegations, including a criminal fine of $956,814,400, and an additional $2 billion to settle civil claims under the federal government’s False Claims Act.

The violations of FDA regulations are misdemeanors. GSK has been readying itself while the government probed its marketing practices for the three drugs, and has already set aside $3.5 billion to cover the costs.

In addition to the settlement, GSK has paid more than $700 million to resolve patient lawsuits against it related to Avandia.

Drug giant pleads guilty, fined $3B for drug marketing [USA Today]



Edit Your Comment

  1. Blueskylaw says:

    I am eagerly awaiting my portion of the settlement. What’s that you say, the little guy who actually suffered damages won’t get anything out of it?

    Well then, at least the three billion dollars will go towards reducing the national debt, right?

  2. Marlin says:

    Pay 3 billion but made how much again…

    “Cost of doing business…”

  3. TPA says:

    So a 6% hit to sales. Compared to how much they made due to these shenanigans, this is just a small cost of doing business, far less than the profit they made for such questionable behavior.

  4. AtlantaCPA says:

    If there is no jail time then it’s all just someone else’s money. However, I am glad to see that the fine is substantial and they had to plead guilty instead of the whole “we admit no wrongdoing but are paying anyway…”

  5. CrazyEyed says:

    Even for a drug company, 3 billion is more than just a drop in the bucket although GSK didn’t seem to have problems setting aside those billions. I hope some of that money finds its way in the hands of the common people who actually may have suffered from improper use and implementation of those drugs.

  6. Veeber says:

    They actually plead guilty? Most of the time we get the ” does not admit fault …”

  7. wagnerism says:

    If somebody ended up in jail over this, we might actually have a deterrent. If any entity (like an individual person not hiding behind a company) could commit billions of dollars of fraud without the risk of jail time, why wouldn’t they try it?

    It was worth the risk. $3B is not a deterrent. It is a data point on taking risk in the future.

    It wouldn’t surprise me if there were better odds in this venture than any typical gambling scenario. If a company loses big, it just goes bankrupt and those involved try their hand at it elsewhere. They can’t lose.

    • poco says:

      This. If executives could be held responsible instead of shareholders we’d see a lot less of this kind of behavior. Unfortunately, our justice system won’t punish the decision makers at these companies for their grossly illegal actions so…

    • DrLumen says:

      Agreed. They admitted to various types of fraud and the possibility people were injured or killed from their cover-up of data. For those, even jail would seem to be too little.

      But they will have millions ready for more TORT ‘reform’.

  8. RobHoliday says:

    Corporations are people? So, why isn’t this “person” going to jail? I demand that this person pays for their crimes by serving jail time! If I defrauded and misled people to the tune of a billion dollars, do you think I would spend time in jail? Why do corporation get their cake AND eat it too?

  9. jp7570-1 says:

    Petty cash for GSK. Their business plan is to do whatever they want, including illegal practices, while paying lobbyists and elected officials to enable their activities. Then, when they get caught, they just write a check which is a fraction of their profits.

  10. PsiCop says:

    Far be it from me to try to defend GSK’s conduct, but I have to take issue with one of the prosecutor’s claims:

    “They say it also promoted Wellbutrin for things other than treating major depressive disorder, which is the only use it is approved for.”

    In fact, Wellbutrin is not solely approved for treating depression. The drug bupropion (for which Wellbutrin is a brand name) was approved for smoking cessation in the mid 90s (and for that purpose was sold under a different brand name, Zyban).

    I grant that GSK may have promoted its use for things other than depression & smoking, but the cold fact is that it has at least two FDA-approved uses, not just one, as the prosecutor was quoted as saying.

  11. HomerSimpson says:

    “This sort of travesty is what kills jobs!!!!!”