Criminal Prosecutions of GlaxoSmithKline

In 2003, GlaxoSmithKline (GSK), settled its civil liability under the Fraudulent Claims Act for repackaging Paxil (an anti-depressant) and Flonase (a nasal spray) for sale at deep discounts to the same large HMO. Again, the company concealed these discounts, and so underpaid rebates due to the Medicaid program. GSK agreed to pay more than $87 million, and to comply with the terms of a Corporate Integrity Agreement designed to ensure that GSK will accurately reports its "best price" information to the government in the future.

In 2005, GlaxoSmithKline paid the United States $140 million to settle allegations of fraudulent drug pricing and marketing that resulted in the submission of inflated claims to Medicare, Medicaid, and other federally funded health care programs. The United States alleged that GlaxoSmithKline, one of the world's largest pharmaceutical manufacturers, reported inflated prices for the drugs, Zofran and Kytril, knowing that those prices would be used by federal programs to set reimbursement rates. GlaxoSmithKline used the artificial spread between the reported, inflated prices and its customers' significantly lower actual cost to purchase the drugs as a marketing tool. Zofran and Kytril are anti-emetic drugs used primarily to reduce the negative side effects of radiation and other cancer treatments. The settlement was the result of a qui tam suit filed by Ven-A-Care of Florida Keys, Inc., a small home-infusion company, and its principals. In addition to the $140 million federal share of the recovery, GlaxoSmithKline paid $10 million to reimburse state Medicaid funds.

In October 2010, GSK paid $600 million to resolve FCA allegations and related state claims in connection with its manufacturing and distribution of certain adulterated drugs made at GSK's now-closed Cidra, Puerto Rico, facility. In addition, SB Pharmco Puerto Rico Inc., a GSK subsidiary, pled guilty to a criminal felony for releasing into interstate commerce adulterated Kytril, Bactroban, Paxil CR, and Avandamet, in violation of the Food, Drug, and Cosmetic Act (FDCA) and paid a criminal fine of $150 million. A criminal information charged that SB Pharmco's manufacturing operations failed to ensure that Kytril and Bactroban finished products were free of contamination from microorganisms. The criminal information further charged that SB Pharmco's manufacturing process caused Paxil CR two-layer tablets to split, which led the company to distribute tablets that did not have any therapeutic effect and tablets that did not contain any controlled release mechanism.

Source: HHS Health Care Fraud and Abuse Control Program, Annual Report for FY 2030 and 2011

This article was revised on July 15, 2012.

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