GlaxoSmithKline to pay $3billion fine after pleading guilty to healthcare fraud - the biggest in U.S. history



A UK drugs firm has been hit with a $3billion penalty after admitting to the ‘biggest healthcare fraud in history’.

GlaxoSmithKline paid U.S. medics to prescribe potentially dangerous medicines to adults and children.

It handed out cash as well as everything from Madonna concert tickets to pheasant-hunting trips. Authorities branded GSK as ‘cheaters who thought they could make an easy profit at the expense of public safety, taxpayers, and millions of Americans’.

Landmark: GlaxoSmithKline Plc has agreed to plead guilty to criminal charges and pay $3billion to settle the largest case of healthcare fraud in U.S. history

The enormous settlement – believed to be the largest ever for a drugs firm – covers offences relating to some of GSK’s best-selling drugs between 1997 and 2004.

It bribed doctors to prescribe Paxil to children even though the authorities had not approved its use for under-18s.



The controversial depression drug has been linked to a higher risk of suicide both in the US and here, where it is known as Seroxat.

The main charges also relate to Wellbutrin, another drugs for treating depression, and Avandia, a diabetes treatment.

THE DRUGS IN QUESTION Three drugs were at the centre of the $3 billion ruling against GlaxoSmithKline: Avandia, Seroxat and Wellbrutin. Avandia was used by 100,000 diabetic Britons until it was withdrawn two years ago amid safety concerns. One expert claimed it caused an extra 1,000 heart attacks in the UK every year. The US government claims GSK tried to conceal the dangers of the drug from watchdogs. Seroxat or Paxil is a common anti-depressant prescribed to millions of UK patients every year. It was also given routinely to children until a ban in 2003 over concerns it triggered suicides. Officials say GSK wrongly encouraged doctors and children when it had not been approved or shown to be effective. In Britain, Wellbrutin pills are used to treat depression but in the US they were sold as slimming pills as well as a treatment for lost libido and ADHD – even though they had never been approved for these uses.

Last night a spokesman for the mental health charity Mind said UK patients who had suffered side effects might try to sue for compensation.

And the mother of an 18 year old who committed suicide while on Seroxat said she would consider legal action.

Jean Bambrough, 51, whose son Jamie Hoole had been taking the tablets for two months, said: ‘I believe he would still be here if he hadn’t been prescribed those drugs.’

GSK, which is based in West London, is Britain’s fifth biggest public company with a market valuation of $113 billion. Its roster of household names includes Lucozade, Aquafresh, Ribena and Horlicks.

It accounts for almost 5 per cent of the benchmark FTSE 100 index and is a favourite investment for pension fund managers.

GSK has agreed to pay a fine of around $1000 million to the US authorities and a further payment of around $2 billion in civil settlements to state and federal authorities.

The company’s marketeers promoted Wellbutrin as a weight loss treatment when it was approved only for treating depression.

US deputy attorney general James Cole said at a news conference in Washington that the settlement was ‘unprecedented’.

As part of the deal, GSK agreed to strict oversight of its sales force to prevent further bribery.

Sir Andrew Witty, the firm’s chief executive who was paid a total of $10.7 million last year, apologised and said the guilty employees had been removed.

‘Whilst these [offences] originate in a different era for the company, they cannot and will not be ignored,’ he added.

‘On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made.

‘We are deeply committed to doing everything we can to live up to and exceed the expectations of those we work with and serve.

‘In the US, we have taken action at all levels in the company. We have fundamentally changed our procedures for compliance, marketing and selling.’

Carmen Ortiz, the US attorney for Massachusetts, said: ‘GSK’s sales force bribed physicians to prescribe GSK products using every imaginable form of high priced entertainment, from Hawaiian vacations to paying doctors millions of dollars to go on speaking tours, to a European pheasant hunt, to tickets to Madonna concerts.’

GSK also admitted distributing a misleading medical journal article about Paxil while failing to publish data from other studies that showed it was not effective in treating depression in young people.

Andrew Witty: CEO of GlaxoSmithKline, said the U.S. unit has 'fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct'

GSK sponsored dinner programmes, lunch programmes, spa programmes and similar activities to promote Paxil’s use in children and adolescents. In the case of Avandia it failed to include details of side effects.

GSK was also involved between 1994 and 2003 in the reporting of drug prices. In the US – unlike the UK – drugs firms are allowed to target doctors and patients by encouraging them to use certain drugs.

A spokesman for the Medicines and Healthcare products Regulatory Agency said it would look into the issue.

‘Promoting medicines for unapproved uses is prohibited,’ he added. ‘We gave clear advice in 2003 that Seroxat (paroxetine) should not be used in children and we have already removed Avandia from use in UK in September 2010 as part of EU-wide action.

‘Anyone using Seroxat or Zyban (Wellbrutin) should not worry but continue to take their medicine.

‘If you have any questions please speak to your healthcare professional.

‘We have robust controls in place for the advertising and promotion of medicines and we won’t hesitate to investigate and take action on any potential breaches of medicines legislation.

‘We will be following this issue up with GSK as a matter of priority.’

The previous biggest fine paid by a healthcare company was in 2009 by American drugmaker Pfizer, the inventors of Viagra, which paid out $2.2 billion for illegally promoting four drugs for unapproved uses.

In 2010, Glaxo paid a record $96 million to a whistleblower who exposed contamination problems and a management cover-up at a drugs factory in Puerto Rico.