Glaxo to Pay $750 Million to Settle Federal Whistleblower Suit Over Defective Paxil, Other DrugsOct 27, 2010 | Parker Waichman LLP
GlaxoSmithKline has agreed to plead guilty and pay a $750 million fine to settle a US Justice Department investigation into the manufacture of defective pills, including the antidepressant Paxil, at its plant in Cidra, Puerto Rico. The government’s case against Glaxo stemmed from a whistleblower lawsuit filed by a former employee. Under the federal whistleblower statute, that individual is entitled to receive $96 million from the Glaxo settlement.
The GlaxoSmithKline settlement includes a criminal fine and forfeiture totaling $150 million and a civil settlement under the False Claims Act and related state claims for $600 million, according to a Justice Department statement. Under the agreement, Glaxo unit SB Pharmco agreed to plead guilty to a criminal felony for releasing into interstate commerce adulterated medications in violation of the Food, Drug and Cosmetic Act (FDCA). The total monetary penalties are the fourth-largest amount a drug company has ever paid to resolve a government probe.
In addition to Paxil and the controlled release version Paxil CR, the adulterated drugs manufactured at the now-closed Cidra plant included Kytril, a sterile anti-nausea medication; Bactroban, a topical anti-infection ointment commonly used to treat skin infections; and Avandamet, a combination Type II diabetes drug. According to the Justice Department, the adulterated drugs were manufactured between 2001 and 2005.
The Justice Department alleges that SB Pharmco’s manufacturing operations failed to ensure that Kytril and Bactroban finished products were free of contamination from microorganisms. The criminal information further alleges that SB Pharmco’s manufacturing process caused Paxil CR two-layer tablets to split. The splitting, which the company itself called a “critical defect,” caused the potential distribution of tablets that did not have any therapeutic effect and tablets that did not contain any controlled release mechanism.
The department also alleges that Avandamet tablets manufactured by SB Pharmco did not always have the Food and Drug Administration (FDA)-approved mix of active ingredients, and, as a result, potentially contained too much or too little of the ingredient with the therapeutic effect. Finally, the Justice Department alleged that GlaxoSmithKline’s SB Pharmco facility in Cidra suffered from longstanding problems of product mix-ups, which caused tablets of one drug type and strength to be commingled with tablets of another drug type and/or strength in the same bottle.
Under terms of the agreement, SB Pharmco will pay a criminal fine of $150 million, which includes forfeiting assets of $10 million. The guilty plea and sentence is not final until accepted by the U.S. District Court in Boston.
Under the civil settlement, GlaxoSmithKline has agreed to pay an additional $600 million to the federal government and the states to resolve claims that it caused false claims to be submitted to government health care programs for certain quantities of the adulterated drugs. The federal share of the civil settlement amount is $436,440,000, and GlaxoSmithKline will pay up to $163,560,000 to states that participate in the agreement.
“Adulterated drugs undermine the integrity of the FDA’s approval process, can introduce substandard or ineffective drugs onto the market and, in the worst cases, can potentially put patients’ health at risk,” Tony West, assistant attorney general for the Civil Division of the Department of Justice, said in a statement.