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More on Glaxo's $3 billion settlement with DOJ

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In a Boston federal court on Thursday, British drug maker, GlaxoSmithKline, entered into a guilty plea, and agreed to pay $3 billion for criminal and civil violations involving ten drugs. As part of the guilty plea, GSK pleaded guilty to fraudulently promoting its popular antidepressant drugs, Paxil and Wellbutrin, for unapproved uses.

Government officials said in the original complaint that the company promoted Paxil as safe for children and adolescents, even though the U.S. Food and Drug Administration hadn't approved it for those patients and the company's clinical trials raised concerns about an increased suicide risk.

Prosecutors also charged that GSK promoted Wellbutrin for unapproved uses that included treating attention deficit disorder, bipolar disorder, obesity, sexual dysfunction and anxiety when it wasn't shown to be safe and effective for those uses.

The company also admitted that it failed to report to the government some safety problems with Avandia. In 2010, the diabetes drug was restricted in the U.S. and banned in Europe after it was found to sharply increase the risks of heart attacks and congestive heart failure.

This is the nation's largest health care fraud settlement, with $35 million of the $3 billion to be paid to the Massachusetts Medicaid program to resolve allegations that GSK engaged in illegal schemes related to marketing and pricing of some of its drugs.

Assistant U.S. Attorney Sara Bloom said the government agreed to the settlement because the company no longer incentivizes its sales representatives based on sales alone and has its research driven by GSK’s research arm rather than its marketing arm. If true, this is a much bigger development than the amount of the settlement. I had a pharmaceutical case against GSK back when it was SmithKline Beecham, and recall thinking that the company could have avoided that particular litigation if it had listened to its scientists about safety issues rather than its marketing people.

Judge Rya Zobel thanked the attorneys for “cleaning up what was clearly a mess." The settlement requires GSK to abolish incentive compensation for its sales force and publish all GSK human research studies, not just those with outcomes that GSK likes. "With these groundbreaking changes, GSK has committed to putting patients before profits; science before sale," according to Carmen Ortiz, U.S. Attorney for the District of Massachusetts. I say, let's not get carried away, Carmen. This practice, as I observed in my case in the 1990s, has been going on for decades. It will not disappear over night.

Indeed, in a commentary in the Christian Science Monitor entitled, "Big Pharma's Slap on the Wrist", former Labor Secretary, Robert Reich, opined that the $3 billion drug settlement "may sound like a lot of money, but during these years Glaxo made $27.5 billion on these three antidepressants alone…-so the penalty could almost be considered a cost of doing business."