GlaxoSmithKline set to make record payout for healthcare fraud
The background
Pharmaceutical giant GlaxoSmithKline (GSK) is set to pay out $3 billion in fines, in the largest-ever healthcare fraud settlement in the US. The company agreed to plead guilty to criminal charges for promoting two of its antidepressants for unapproved uses and for failing to report safety data about a diabetes drug.
What exactly did GSK do?
Two-thirds of the fine relates to civil charges, including misreporting drugs prices to the Medicaid programme. The most headline-grabbing misdemeanours account for the remaining $1 billion. These include promoting Paxil for use by adolescents and children when the drug had only been approved for adults – an illegal practice referred to as “off-label marketing”. The company also promoted antidepressant Welbutrin to treat sexual dysfunction and weight control, which were unapproved uses. GSK was accused of attempting to bribe doctors to prescribe their drugs by sending them on luxury trips.
Fines are not a deterrent
The New York Times pointed out that no individuals from GSK have faced charges in this case: “Critics argue that even large fines are not enough to deter drug companies from unlawful behavior. Only when prosecutors single out individual executives for punishment, they say, will practices begin to change.”
Drug safety rules exist for a reason
“A decade ago, before everyone hated the banks, it was the pharmaceuticals industry which was Public Enemy No 1,” wrote Stephen Foley in The Independent – and the GSK case reminds us why, particularly as part of the charges relate to the mental health of children and adolescents. “When drug companies break the rules, the potential consequences might be more frightening even than anything unleashed by the banks,” Foley said.
GSK taking a step in the right direction
The fraud charges predate current GSK chief executive Andrew Witty, who is trying to improve the company’s reputation, pointed out Matthew Herper at Forbes. “He has pushed forward with efforts to develop medicines for poor nations, including a malaria vaccine that Glaxo is developing with the Bill & Melinda Gates Foundation. He has also taken steps to remove incentives that made pharma salespeople so overzealous, no longer tying compensation to how much of a drug they can sell.” And Witty even managed an apology after the settlement was announced: “In the context of an industry that has almost never seen fit to apologize for anything it is a step in the right direction,” said Herper.
