GlaxoSmithKline fined $3BN in US biggest ever healthcare fraud case

GlaxoSmithKline Plc. has pleaded guilty to misdemeanor criminal charges and has to pay $3 billion to settle the largest case of healthcare fraud in U.S. history.

The Justice Department says GSK pleaded guilty to promoting two popular drugs for unapproved uses and to failing to report important safety data about a diabetes drug to the Food and Drug Administration.

Prosecutors say GSK encouraged use of Paxil for children although it was not approved for anyone under 18.

The company also promoted Wellbutrin for uses besides major depressive disorder, its only approved use.

They say that between 2001 and 2007 GSK failed to report on two studies of the cardiovascular safety of Avandia, a diabetes drug.

Of the penalties, $1 billion covers criminal fines and forfeitures and $2 billion is for civil settlements with the federal and state governments.

Deputy U.S. Attorney General James Cole said at a news conference in Washington that the settlement “is unprecedented in both size and scope”.

As part of the settlement, GSK agreed to strict oversight of its sales force by the U.S. government to prevent the use of kickbacks or other prohibited practices.

GlaxoSmithKline said in a statement it would pay the fines through existing cash resources. The company announced a $3 billion charge in November related to legal claims.

Chief Executive Andrew Witty said GSK’s U.S. unit has “fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct”.