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Glaxo Reaches Record $3 Billion Settlement to Resolve Paxil, Wellbutrin and Avandia Fraud Charges

Jul 3, 2012 | Parker Waichman LLP

GlaxoSmithKline has agreed to pay a record settlement to resolve charges that it illegally marketed some of its drugs, including Paxil and Wellbutrin.  The $3 billion settlement with the U. S. Justice Department will also resolve charges that Glaxo failed to report important safety data to the U.S. Food & Drug Administration (FDA) about its diabetes drug Avandia.

According to the Justice Department, the $3 billion Glaxo settlement constitutes the largest healthcare-fraud settlement in U.S. history.

"Today's multibillion-dollar settlement is unprecedented in both scope and size. It underscores this administration's firm commitment to protecting the American people and holding accountable those who commit healthcare fraud," James Cole, U.S. deputy attorney general, said at a news conference in Washington, D.C.

According to a statement from the Justice Department, Glaxo agreed to plead guilty to a three-count criminal information, including two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about the drug Avandia.  Under the terms of the plea agreement, the company will pay a total of $1 billion, including a criminal fine of $956,814,400 and forfeiture in the amount of $43,185,600.  The guilty plea and penalties must still be approved by the U.S. District Court. 

Glaxo has also agreed to pay $2 billion to resolve its civil liabilities with the federal government under the False Claims Act, as well as the states.   The civil settlement resolves claims relating to Paxil, Wellbutrin and Avandia, as well as additional drugs, and also resolves pricing fraud allegations, the Justice Department said.

The government had charged that Glaxo marketed Paxil to patients under 18, even though the FDA had not approved Paxil for use in children.  It further charged that the company promoted off-label uses of Wellbutrin, including for weight-loss and for the treatment of sexual dysfunction and substance abuse addictions.  According to the government, Glaxo paid doctors millions of dollars to promote these unapproved uses of Wellbutrin.

According to a report published by The Los Angeles Times, this is just the latest in a string of large settlements the Justice Department has reached with big pharmaceutical companies for illegally marketing their drugs.  In 2009, Pfizer plead guilty and agreed to pay $2.3 billion to settle allegations it improperly marketed 13 drugs, including its now-recalled painkiller, Bextra; the anti-psychotic Geodon; and its anti-epileptic, Lyrica.  In 2009, Eli Lilly & Co. also agreed to pleaded guilty to a federal misdemeanor charge and pay $1.42 billion for unapproved uses of its schizophrenia drug Zyprexa.

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