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GlaxoSmithKline to Pay $3B in Settlement

GlaxoSmithKline to Pay $3B in Settlement, Justice Department Says [the Herald-Sun, Durham, N.C.]

From Herald-Sun (Durham, NC) (July 2, 2012)

July 02--DURHAM -- GlaxoSmithKline will pay $3 billion to resolve investigations of the company’s sales, marketing, and pricing practices, according to an announcement by the U.S. Justice Department on Monday.

The company said in a news release that the agreement was with the U.S. Government, multiple states and the District of Columbia, and was the result of negotiations agreed to in principle in November.

"This action constitutes the largest health care fraud settlement in United States history," said James M. Cole, deputy attorney general, at a press conference held in Washington D.C. on Monday, according to a news release.

According to the justice department, the company agreed to plead guilty to criminal charges and to pay $1 billion in criminal fines and forfeitures for the alleged illegal marketing and promotion of the drugs Paxil and Wellbutrin for uses not approved by the U.S. Food and Drug Administration.

The company also allegedly failed to report important clinical data about the drug Avandia to the administration, according to the department.

The company said it was pleading guilty to misdemeanor violations related to aspects of the marketing of Paxil for pediatric use, and Wellbutrin for certain uses, and for failure to include information about the initiation or status of certain Avandia studies.

The justice department also said GlaxoSmithKline will pay an additional $2 billion to resolve civil allegations that it caused false claims to be submitted to federal health care programs for those drugs, and others, as a result of the company’s illegal promotional practices and payments to physicians, the justice department said.

The settlement also resolves a civil investigation of the company’s alleged underpayment of rebates that were required under the Medicaid Drug Rebate Program, the justice department said.

The company added that it has entered into a corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services, and has made "fundamental changes" to its procedures for compliance, marketing and selling in the United States over the last few years.

Since January of last year, the company has put in place a new incentive compensation system for professional sales representatives who work directly with health care professionals, the company said.

The new system is meant to eliminate individual sales targets as a basis for bonuses, and instead bases incentive compensation on the quality of the service these representatives deliver to customers to support improved patient health.

"In the US, we have taken action at all levels in the company," said GlaxoSmithKline’s CEO Andrew Witty in a prepared statement. "We have fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct."


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Posted: July 2012