Glaxo $3 Billion Settlement
Written by Faith Anderson on November 4, 2011
Settlement to Resolve Civil and Criminal Investigations
According to GSK, the tentative settlement covers both civil and criminal liabilities, in what CEO Andrew Witty called “a significant step toward resolving difficult, long-standing matters which do not reflect the company that we are today.” Witty continued, “In recent years we have fundamentally changed our procedures for compliance, marketing and selling in the U.S. to ensure that we operate with high standards of integrity and that we conduct our business openly and transparently.” In its annual report for 2010, GSK said it had made a provision of $4 billion for legal and other disputes, which is double the 2009 figure.
Critics Call for More Strict Penalties for Pharmaceutical Companies
Critics of the settlements made with pharmaceutical companies in recent years have argued for more stringent penalties, including prison sentences for corporate officials. Frances H. Miller, a Boston University law professor and health policy expert, said, “Although $3 billion is a very big number in terms of drug industry settlements, it’s not a very big number in relation to almost $50 billion in annual revenue for the world’s fourth-largest pharmaceutical company.” Patrick Burns, spokesman for advocacy group Taxpayers Against Fraud, said, “Who at Glaxo is going to jail as a part of this settlement? Who in management is being excluded from doing future business with the U.S. government?” Last year, former vice president and associate general counsel of GSK, Lauren C. Stevens, was accused by the Justice Department of obstruction of justice and making false statements. She was acquitted of all six charges in May by a United States District Court judge, who ruled that she had been advising the company in good faith.
GSK Settlement Sets New Record for Illegal Marketing Investigations
The GSK settlement would be the largest yet in a wave of federal cases against pharmaceutical companies accused of illegal marketing, exceeding the previous record of $2.3 billion paid by Pfizer in 2009. Drug companies have been targeted by the federal government in fraud investigations in recent years, recovering tens of billions of dollars for Medicaid and Medicare. In June of this year, GlaxoSmithKline’s U.S. subsidiary agreed to pay more than $40 million to 37 states in the U.S. and Washington, D.C. to settle complaints about the company’s manufacturing processes at a plant in Puerto Rico, which has since been closed. The company also paid a $750 million fine for issues related to the Puerto Rico plant.