GSK Pays Largest Fine In History and Promises to Make Changes

The fines levied by the Department of Justice against pharmaceutical companies keep going up. Will it change the way pharmaceutical companies do business? GlaxoSmithKline (GSK) assures us that the illegal marketing they engaged in with drugs such as Paxil, Avandia, and Wellbutrin won't happen again. Critics say that even though the company will pay a $3 billion fine—the highest to date paid by a drug maker—it is still not enough to deter unlawful corporate behavior. In my experience as a former federal prosecutor, I have to agree that short of indicting high ranking officials, the chances of changing corporate behavior are slim.

GSK Pays Largest Fine to Date

Before this latest settlement, Pfizer held the dubious honor of paying the most money to settle civil and criminal allegations. In 2009, the company shelled out $2.3 billion for illegally marketing the painkiller Bextra—the fourth settlement over illegal marketing activities Pfizer negotiated since 2002. The New York Times commented that though the fine was a record sum, the $2.3 billion amounted to less than three weeks of Pfizer's sales.

Now GSK has topped that figure with the $3 billion settlement. The fine is split up—$1 billion for criminal wrongdoing, and $2 billion to settle civil liabilities. GSK was accused of promoting its drug for off-label uses. Paxil, for instance, was approved to treat depressive and anxiety disorders in adults, but the company also marketed it to children and adolescents. Among its marketing activities, GSK allegedly helped to publish a medical journal article that misreported data from a clinical trial. Separately, GSK has been sued privately in Paxil birth defects lawsuits by parents and children where mothers who used Paxil while pregnant gave birth to children with Paxil related birth defects.

Wellbutrin is also FDA-approved as an antidepressant, but GSK allegedly marketed it as a weight-loss aid and a treatment for some sexual disorders. The Justice department accused the company of paying millions to doctors to promote the drug for off-label uses, sometimes showering them with lavish trips or sending them on spa trips or hunting excursions.

In the case of Avandia, a diabetes drug, GSK was accused of failing to report safety data from studies detailing heart risks to the FDA.

Company Vows to Make Changes

GSK has made its apologies. CEO Andrew Witty stated that the company had learned from their mistakes, and has changed its procedures for compliance, marketing, and selling. In addition, the company has agreed to withdraw bonuses from top executives found engaging in illegal behavior.

Critics say the giant fine will amount to nothing more than a slap on the wrist, considering Avandia earned $10.4 billion, Paxil earned $11.6 billion, and Wellbutrin earned nearly $6 billion during the years covered by the settlement. Patrick Burns, spokesman for the advocacy group Taxpayers Against Fraud, told the New York Times that to institute real change, executives must be prosecuted criminally.

Meanwhile, it's the patients that were misled about the safety of these drugs that pay the ultimate price. Part of GSK's fine—$460 million—will go to resolve the majority of the 10,000 lawsuits filed by plaintiffs claiming heart injuries and stroke allegedly caused by Avandia. The company faces its first Avandia trial in federal court in Philadelphia in October.