In the largest health care fraud settlement ever, GlaxoSmithKline has agreed to pay the whopping sum of $3 billion, the U.S. Justice Department announced earlier today. The reason? GlaxoSmithKline was caught marketing two popular antidepressant drugs — Paxil and Wellbutrin — for populations and indications they were never approved for.
In the U.S., the Food and Drug Administration (FDA) must approve all prescription medication uses and who they can be marketed to, based upon scientific studies the pharmaceutical must develop, fund and publish. Pharmaceutical companies then have to ask for permission to add those uses or populations to the drug’s existing approval.
Many drug companies, including GlaxoSmithKline (GSK), have sought to cut corners in getting these additional formal approvals, because all of that additional research costs time, money and effort on their part. So in the past, they’ve “soft marketed” these drugs for these additional uses through the salespeople who try and sell the drug to individual psychiatrists and physicians.
Perhaps, finally, drug companies will get the message. You may get away with such marketing practices for awhile, but eventually some whistleblower is going to (thankfully) turn you in.
So what did GSK do, exactly? Three things:
Prosecutors say GSK encouraged use of Paxil for children although it was not approved for anyone under 18.
The company also promoted Wellbutrin for uses besides major depressive disorder, its only approved use.
They say that between 2001 and 2007 GSK failed to report on two studies of the cardiovascular safety of Avandia, a diabetes drug.
Sadly, the fine is actually less than the company thought it would be:
Glaxo is pleading guilty to these violations of FDA regulations, which are misdemeanors. It has set aside $3.5 billion to cover the cost of the fines and other penalties related to the government’s seven-year probe of the company’s marketing practices for Paxil, Wellbutrin and Avandia, three of its blockbuster drugs.
And overall, we have to put the fine into some sort of context.
GSK had $11.7 billion in Paxil sales 1997-2006, according to data the company supplied as a part of a lawsuit. And that was just in the U.S. for a nine-year period.
It’s likely that GSK realized similar sales numbers for Wellbutrin during the years it was under patent.
According to litigation experts, the company has paid out more than $2 billion prior to this settlement to resolve a series of patient-filed lawsuits over Paxil.
Combined with the $3 billion fine, it still doesn’t appear to make GSK feel any real pain, because the company still managed to make billions of dollars from the sales of all three drugs.
All we can do is hope that such fines don’t make drug companies simply look for more clever ways to hide such marketing efforts, but that that they quit them altogether. And if they do the math, they may find it’s actually cheaper to do the additional research and run it through the FDA’s regulatory process for additional use and population approvals, than it is to try and sneak these things under the table through their sales and marketing departments.
And pharmaceutical companies wonder why they have such a reputation problem…
Read the full story: Drug giant pleads guilty, fined $3B for drug marketing