Pharmaceutical Giant GlaxoSmithKline Agrees To Pay $3 Billion To U.S. Government To Settle Civil And Criminal Investigations Relating To Unlawful Marketing Practices

On November 3, 2011, the British pharmaceutical company GlaxoSmithKline announced that it has reached a tentative agreement with the U.S. Government in which the company will pay $3 billion to resolve multiple civil and criminal investigations relating to unlawful marketing practices by the company in connection with its 10 most popular drugs.  The Government has recently sought to clamp down on abusive marketing by drug companies and this latest settlement would be the largest reached thus far as part of that effort.

Some of the alleged misconduct under investigation includes marketing drugs for off-label treatments that had not been approved by the Government.  Specifically, the Government was looking into whether the company had engaged in off-label marking in connection with GSK’s asthma medicine Advair and its diabetes drug Avandia.  The Government was also investigating potential Medicaid reimbursement fraud and fraud respecting the development of Avandia, which has been linked to increased risk of heart attack and stroke.

Although the $3 billion settlement seems like a hefty fine, GSK had more than enough cash on hand to pay it.  Indeed, the company’s stock rose after the news of the settlement broke.  This highlights the need for the Government to take an even tougher stance with these large pharmaceutical companies, whose profits are so vast that even a settlement of this magnitude is unlikely to have any meaningful impact on these companies’ bottom lines or their conduct.

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