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July 24, 2012 > $3 billion settlement with GlaxoSmithKline to resolve fraud allegations

$3 billion settlement with GlaxoSmithKline to resolve fraud allegations

Submitted By the Office of the Attorney General

Attorney General Kamala D. Harris, joined by other attorneys general and the U.S. government, has announced a $3 billion settlement with GlaxoSmithKline (GSK) to resolve allegations the company engaged in various illegal schemes related to the marketing and pricing of drugs it manufactures.

The action is the largest healthcare fraud settlement in history. California will receive more than $46M, the largest share among the states under the settlement. The $3 billion settlement includes $2 billion in damages and civil penalties to compensate state and federal healthcare programs, including California's Medi-Cal program, for harm allegedly suffered as a result of the illegal conduct. In addition, GSK has agreed to plead guilty to federal criminal charges related to drug labeling and FDA reporting and pay a $1 billion criminal fine.

"California consumers have the right to expect their health and well-being - and not profit - drives decisions about their care," said Harris. "This settlement protects consumers and ends unscrupulous marketing practices, kickbacks and illegal labeling of prescription drugs."

California, along with 44 other states and the federal government, alleged that GSK engaged in a pattern of unlawfully marketing certain drugs for uses for which they were not approved by the Food and Drug Administration (FDA); making false representations regarding the safety and efficacy of certain drugs; offering kickbacks to medical professionals; and under-paying rebates owed to government programs for various drugs paid for by Medicaid and other federally-funded healthcare programs.

Specifically, the government alleged that GSK engaged in the following activities: 1) Marketing the depression drug Paxil for off-label uses, such as use by children and adolescents; 2) Marketing the depression drug Wellbutrin for off-label uses, such as for weight loss and treatment of sexual dysfunction, and at higher-than-approved dosages; 3) Marketing the asthma drug Advair for off-label uses, including first-line use for asthma; 4) Marketing the seizure medication Lamictal for off-label uses, including bipolar depression, neuropathic pain, and various other psychiatric conditions; 5) Marketing the nausea drug Zofran for off-label uses, including pregnancy-related nausea; 6) Making false representations regarding the safety and efficacy of Paxil, Wellbutrin, Advair, Lamictal, Zofran, and the diabetes drug Avandia; 7) Offering kickbacks, including entertainment, cash, travel, and meals, to healthcare professionals to induce them to promote and prescribe Paxil, Wellbutrin, Advair, Lamictan, Zofran, the migraine drug Imitrex, the irritable bowel syndrome drug Lotronex, the asthma drug Flovent, and the shingles and herpes drug Valtrex; and, 8) Submitting incorrect pricing data for various drugs, thereby underpaying rebates owed to Medicaid and other federal healthcare programs.

As part of the settlement, GSK has also agreed to plead guilty to criminal charges that it violated the federal Food, Drug, and Cosmetic Act ("FDCA") in connection with certain activities. The government alleges that GSK introduced Wellbutrin and Paxil into inter-state commerce when the drugs were misbranded, meaning containing labels that were not in accordance with their FDA approvals, and that GSK failed to report certain clinical data regarding Avandia to the FDA.

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