Department of Justice Announces $3 Billion Settlement with GlaxoSmithKline – Largest Health Care Fraud Settlement in History

This week, the Department of Justice announced a $3 billion settlement with one of the world’s largest health care companies: GlaxoSmithKline (“GSK”).  This settlement is the largest health care fraud settlement in US history, as well as the largest payment ever by a drug company.  The settlement resolves both criminal and civil allegations that the company has agreed to plead guilty to surrounding its promotion of prescription drugs, its failure to report safety data about some of its drugs, and its false drug reporting practices.

Approximately, $2 billion of the settlement money will go towards the civil allegations brought against GSK.  The civil settlement resolves three major claims.  First, it resolves claims relating to Paxil, Wellbutrin, Advair, Lamictal, Zofran, Imitrex, Lotronex, Flovent, and Valtrex for off-label, non-covered uses and paying kickbacks to doctors to prescribe those drugs.  GSK has agreed to pay $1.043 billion relating to these accusations.  The federal government will receive $832 million and the states will receive $210 million.  Second, the settlement resolves claims relating to Avandia for making false and misleading statements about the drug’s safety.  GSK has agreed to pay $657 million relating to these claims.  Of that $657 million, $508 million will go to the federal government and $149 million will go to the states.  Finally, the civil settlement resolves allegations that GSK reported false prices and underpaid rebates.  GSK has agreed to pay $300 million to settle these allegations.  The $300 million will be divided up with $160,972,096 going to the federal government, $118,792,931 going to state governments, and $20,235,000 to various Public Health Services who paid inflated prices for the drugs.

The off-label civil settlement resolves four separate lawsuits that were filed under the qui-tam provisions of the False Claims Act.  The lawsuits were filed by private citizens on behalf of the US government.  At least two whistleblowers, Blair Hamrick and Greg Thorpe, were former pharmaceutical sales reps for GSK.  At this time, the whistleblowers do not know how much of the civil settlements they will receive; however, the qui-tam provisions of the False Claims Act allow courts to reward whistleblowers anywhere between 15 and 30 percent of the recoveries.

In addition to the civil settlement, GSK agreed to plead guilty to a three-count criminal information.  Two of the counts are for introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce.  The third count is for failing to report safety data about Avandia to the FDA.  As a part of this agreement, GSK will pay an additional $1 billion.  This $1 billion includes a $956,814,400 criminal fine and a $43,185,600 forfeiture.

GSK has also agreed to enter into a five year Corporate Integrity Agreement (“CIA”) with the Department of Health and Human Services, Office of Inspector General.  As part of the CIA, GSK will be required to change its compensation program for its executives.  Under the CIA, GSK’s executives will not receive their annual bonuses and incentives if they, or their subordinates, are found to be engaging in misconduct.  This provision will provide executives with a much higher incentive to oversee their employees and take active steps against any potential wrongdoing.  The CIA will also require significantly more transparency in the company’s research and publication policies.  This transparency will make it harder for the company to hide health risks associated with drugs or misbrand and promote off-label uses for its drugs.

Too often, companies take advantage of our country’s health care system.  It is terrible for companies to exploit a system put in place to help sick and ailing individuals.  Stealing from the government through health care fraud is never acceptable.  If you are aware of a company committing health care fraud, it is important that you take action in order to ensure the long-term solvency of Medicare and Medicaid.  Contact the attorneys at Tycko & Zavareei today for information on whistleblower actions.

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