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Last month’s announcement of the largest health fraud settlement ever reached between a pharmaceutical company and the federal and state governments demonstrates that despite the seemingly large sums, the fines imposed on pharmaceutical companies for dangerous and illegal conduct pale in comparison to the profits generated from such activity. The industry is therefore tacitly encouraged to continue its illegal activity.
In the settlement, GlaxoSmithKline (GSK) agreed to pay $3 billion to...
Last month’s announcement of the largest health fraud settlement ever reached between a pharmaceutical company and the federal and state governments demonstrates that despite the seemingly large sums, the fines imposed on pharmaceutical companies for dangerous and illegal conduct pale in comparison to the profits generated from such activity. The industry is therefore tacitly encouraged to continue its illegal activity.
In the settlement, GlaxoSmithKline (GSK) agreed to pay $3 billion to resolve allegations stemming from illegal activity spanning 10 years and involving several of its biggest-selling drugs. The settlement breaks the previous $2.3 billion settlement record set in 2009 by Pfizer and includes the second-highest criminal fine ($1 billion) ever imposed on a pharmaceutical company.
GSK pleaded guilty to illegal off-label promotion of two widely used antidepressants (the blockbuster drugs paroxetine [PAXIL] and bupropion [WELLBUTRIN]) and to concealing critical evidence from the Food and Drug Administration (FDA) relating to the dangerous diabetes drug rosiglitazone (AVANDIA). GSK paid doctors to attend lavish resort conferences to promote PAXIL for use in children and adolescents, despite evidence known to the company that the drug did not benefit, and actually harmed, this population, causing suicidal thoughts.
The company also hid critical safety information that revealed AVANDIA’s deadly cardiovascular risks, which have since led to the drug’s withdrawal in Europe and to severe restrictions on its use in this country. False claims about AVANDIA and criminally withholding safety information about the drug accounted for $899 million of the $3 billion dollar fine. Public Citizen petitioned the FDA to ban AVANDIA in 2008.
The July settlement of criminal and civil violations is nothing new for GSK. According to a 2010 Public Citizen report (“Rapidly Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry: 1991 to 2010”), GSK racked up more in fines and settlement payouts to the federal and state governments ($4.5 billion) than any other pharmaceutical company from 1991 through Nov. 1, 2010.
Until more meaningful penalties and the prospect of jail time for company executives who are responsible for such activity become commonplace, companies will continue defrauding the government and putting patients’ lives in danger.
