Glaxo Agrees to Pay $3 Billion in Fraud Settlement

British pharmaceutical giant GlaxoSmithKline has agreed to pay $3 billion in civil and criminal fines for promoting two drugs, Paxil and Wellbutrin, for unapproved uses, and failing to report key safety data about the diabetes drug Avandia.

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ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, HOST:

And I'm Melissa Block. In what the government is calling the biggest health care fraud settlement in history, drug maker Glaxo SmithKline has agreed to plead guilty to misdemeanor criminal charges and pay $3 billion. As NPR's Carrie Johnson reports, the Justice Department says Glaxo used illegal tactics to promote two popular depression drugs and failed to report safety data on a third drug for diabetes.

CARRIE JOHNSON, BYLINE: Over the past three years, the Obama administration has stepped up its efforts to police the pharmaceutical industry, collecting $10 billion in settlements and fines, but today's blockbuster deal with Glaxo SmithKline had a different feel. Deputy Attorney General Jim Cole.

JIM COLE: This action constitutes the largest health care settlement in United States history. It underscores our robust commitment to protecting the American people from the scourge of health care fraud.

JOHNSON: Under the terms of the settlement, Glaxo agreed to plead guilty to three misdemeanor charges. One charge says the company encouraged children with depression to use the drug Paxil even though it had not won regulatory approval for patients under age 18. Dan Levinson is the inspector general at the Department of Health and Human Services.

DAN LEVINSON: This unlawful promotion put children at risk of taking drugs that were unproven to be effective for them and have been shown to increase the risk of suicide.

JOHNSON: In the second criminal charge, Glaxo agreed it had unlawfully marketed Wellbutrin as a sort of wonder drug for uses like weight loss that had not been found safe or effective. U.S. Attorney Carmen Ortiz of Boston.

CARMEN ORTIZ: GSK hired a public relations firm to create a buzz about getting skinny and how you could have more sex simply by using this drug.

JOHNSON: Ortiz said Glaxo sales people bribed doctors to prescribe its drugs.

ORTIZ: ...using every imaginable form of high-priced entertainment, from Hawaiian vacations to paying doctors millions of dollars to go on speaking tours, to a European pheasant hunt, to tickets for Madonna concerts.

JOHNSON: The third charge accuses Glaxo of failing to turn over data about its diabetes drug Avandia and whether it increased the risk of heart troubles. Glaxo didn't want to go on tape, but its chief executive, Andrew Witty, expressed regret for the past misconduct in a written statement. He said the company had learned from its mistakes and made big changes in the way it does business. Inspector General Dan Levinson gave the company some credit.

LEVINSON: Sales representatives are now being paid based on the quality of service they deliver to customers, not on sales targets.

JOHNSON: Justice officials refused to say whether any individual executives at Glaxo would be charged with a crime, but lawyers who follow the case say they doubt it. Federal prosecutors accused a Glaxo lawyer of obstructing justice in the Wellbutrin investigation. But last year, a judge threw out the case even before the defense presented any evidence. Brian Kenney represents two former Glaxo employees who raised alarms about its marketing practices a decade ago. Kenney says the company buried the allegations.

BRIAN KENNEY: Had they been responsible corporate citizens, they could have solved their problems in 2002 instead of going through 10 years of investigations and ultimately paying $3 billion today.

JOHNSON: The message, Kenney says, is to listen to employees who blow the whistle. Carrie Johnson, NPR News, Washington.

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