The Department of Justice announced today, Monday July 2nd, 2012, that GlaxoSmithKline (GSK) has entered into a plea agreement and agreed to pay $3 billion dollars to resolve civil and criminal charges related to the unlawful promotion of prescription drugs, failure to report safety data to the FDA and false price reporting for a variety of drugs manufactured by the pharmaceutical company. This resolution represents the largest health care fraud settlement to date.
GSK will pay a criminal fine of $1 billion under the terms of the plea agreement. Under the agreement, GSK pled guilty to two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about the drug Avandia to the FDA.
GSK will also pay $2 billion to settle civil liability for pricing fraud allegations relating to the sale of drugs including Paxil, Wellbutrin, Advair, Lamictal, Zofran, Imitrex, Lotronex, Flovent and Valtrex. This civil settlement resolves the government’s allegations that GSK promoted off-label uses for Paxil, Wellbutrin, Advair, Lamictal and Zofran, and kickback allegations related to Imitrex, Lotronex, Flovent and Valtrex. The settlement also resolves the allegation that GSK made false statements concerning the safety of its diabetes drug, Avandia.
In addition to monetary payments, GSK has entered into a five-year CorporateIntegrity Agreement (CIA) whereby GSK is required to meet certain compliance obligations in order to avoid exclusion from federal health care programs. According to the press release the CIA includes novel provisions which require that GSK make major changes to the way the company compensates its employees and executives. GSK must eliminate compensation plans based on sales goals for territories and create a provision which allows the company to recoup compensation from executives who have engaged in significant misconduct. The CIA also requires GSK to implement transparency policies in its research and publication practices.
This CIA represents one more of a recent trend in OIG and DOJ settlements which utilize this tool. CIA’s with health care companies have typically included provisions which require strengthening of compliance policies and subjecting these policies to independent review at the company’s expense. The CIA announced today goes further than previous CIA’s by requiring GSK to alter the way it compensates its employees.