• 09
  • November
    2011

Last week, GlaxoSmithKline Plc agreed to pay out $3 billion to take care of criminal and civil investigations regarding its marketing of various drugs, including the diabetes medication Avandia.

The investigation leading up to the settlement reportedly began in Colorado back in 2004. There had been concerns that Glaxo had been promoting various drugs for unapproved uses, as well as concerns over the way Glaxo was influencing doctors. Nine drugs were involved in the investigation.

The specific amount of the settlement money to be dealt out is not yet clear, and will be decided sometime next year. Glaxo did say, though, that the cost of the investigations will be paid from the pharmaceutical's cash resources.

Last year, Glaxo set aside $3.5 billion in expectation it would reach a settlement agreement. Its $3 billion settlement would exceed the $2.3 billion Pfizer Inc. paid out in 2009 to settle claims over various meditations, as well as the $1.4 billion paid out by Eli Lilly & Co. over its anti-psychotic medication Zyprexa. Sources said Pfizer's 2003 settlement was the largest pharmaceutical marketing settlement in U.S. history.

The criminal charges, which were handled by the U.S. Department of Justice, concerned the way the drug Avandia had been developed and marketed. Pharmaceuticals are required to provide rebates to Medicaid, but the DOJ had been investigating Glaxo's reporting prices charged to other payers. Those prices are apparently used in calculating Medicaid rebates.

Glaxo has attempted to distance itself from allegations of wrongdoing, insisting that the company's compliance and marketing procedures have changed. Whatever the case may be, Glaxo will be paying a heavy price for its missteps.

Source: Washington Post, "Glaxo to pay $3 billion to settle U.S. sales, Avandia cases," Phil Serafino and Makiko Kitamura, November 3, 2011.