Fraud Management & Cybercrime

GlaxoSmithKline Pays $3 Billion Fraud Settlement

Largest Healthcare Fraud Settlement Ever in U.S.
GlaxoSmithKline Pays $3 Billion Fraud Settlement

Pharmaceutical giant GlaxoSmtihKline has reached a $3 billion fraud settlement with the U.S. government and several states for criminal and civil liabilities related to unlawful sales and marketing practices, failure to report certain drug safety data, as well as false pricing practices.

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While the U.S. Department of Justice calls the resolution the largest healthcare fraud settlement and payment in U.S. history, the case did not involve health data privacy or security issues, according to principals involved with the case.

Under terms of a plea agreement, GSK is paying a $1 billion criminal fine related to misconduct in drug labeling and FDA data reporting, and is agreeing to certain non-monetary compliance and certification by the company's U.S. president and board of directors.

While GSK has agreed to plead guilty to three criminal counts, the claims settled by these agreements are allegations only, "and there has been no determination of liability," according to a DOJ statement.

The three criminal counts for which GSK pleaded guilty include two counts of introducing misbranded drugs, Paxil and WellBurtrin into interstate commerce, and one count of failing to report safety data about drug Avendia to the Food and Drug Administration.

GSK also agreed to pay a total of $2 billion in damages and civil penalties as part of a national settlement with 43 states, the District of Columbia and the federal government under the False Claims Act.

The civil liability allegation included GSK promoting the drugs Paxil, Wellbutrin, Advair, and some other drugs for off-label, non-covered uses and paying kickbacks to physicians to prescribe those drugs as well as other medications. The civil allegations also included making false and misleading statements concerning the safety of Avandia and reporting false best prices and underpaying rebates owed under the Medicaid Drug Rebate Program.

A GlaxoSmithKline spokesman said the company is also changing its sales and marketing practices.

In a statement issued by the company, GSK CEO Sir Andrew Witty expressed "regret" and said that GSK has learned from "mistakes that were made."

A spokesman for the attorney general's office in New York - one of the states involved with the case - said that while allegations against GSK included mislabeling of drugs, kickbacks to physicians, reporting incorrect pricing data for rebates, and failure to report safety data, "There were no allegations involving health data privacy or security."

About the Author

Marianne Kolbasuk McGee

Marianne Kolbasuk McGee

Executive Editor, HealthcareInfoSecurity, ISMG

McGee is executive editor of Information Security Media Group's media site. She has about 30 years of IT journalism experience, with a focus on healthcare information technology issues for more than 15 years. Before joining ISMG in 2012, she was a reporter at InformationWeek magazine and news site and played a lead role in the launch of InformationWeek's healthcare IT media site.

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