Glaxo To Pay $3B To Settle Marketing Probes

Glaxo To Pay $3B To Settle Marketing Probes

November 4th, 2011 // 12:22 pm @

In the largest settlement of its kind involving a drugmaker, GlaxoSmithKline has agreed to pay $3 billion to resolve a trio of US investigations into its sales, marketing and pricing practices dating back more than a decade. The deal, which is expected to be finalized, some time next year, would settle both civil and criminal charges related to promoting several drugs, as well as rebates offered Medicaid.

The deal had been expected, since the drugmaker had set aside nearly $3.5 billion last year to cover the probes (see here). Nonetheless, the agreement dwarfs previous deals struck by its rivals – two years ago, Pfizer paid $2.3 billion to resolve charges of illegally marketing the Bextra painkiller and other drugs, and Eli Lilly paid $1.4 billion to settle similar charges involving its Zyprexa antipsychotic.

What were the feds looking at? Glaxo was charged with illegal promotion of nine drugs, including its Advair lung med, between 1997 and 2004, as well as a separate probe into marketing of the controversial Avandia diabetes pill, which was linked to cardiovascular risks and later restricted by the FDA (look here). The settlement also extends to yet another probe into Medicaid rebates.

As one might imagine, Glaxo execs are happy to get this over with. “This is a significant step toward resolving difficult, longstanding matters which do not reflect the company that we are today,” Glaxo ceo Andrew Witty says in a statement. “In recent years, we have fundamentally changed our procedures for compliance, marketing and selling in the US to ensure that we operate with high standards of integrity.”

Witty was referring to, among other things, an initiative launched last year to alter compensation for sales reps. Glaxo will no longer pay bonuses based on achieving sales targets and, instead, will pay them extra based primarily on feedback from customers (docs and hospitals, of course), scientific and business knowledge and whether reps adhere to what the drugmaker called “values of transparency, integrity, respect and patient-focus” (read this).

Speaking of integrity, such settlements often include a Corporate Integrity Agreement that requires good behavior for five years. The Glaxo announcement does not mention such a stipulation, though, so we have asked both the drugmaker and the US Department of Justice to clarity whether a CIA is part of the deal. Similarly, we have asked whether the feds are seeking to exclude any Glaxo execs from doing business with US healthcare programs. A Glaxo spokeswoman writes us to say that, since the final terms have not been reached, she “can’t make any projections about the outcome.”

This is the second time in the past year, by the way, that Glaxo has struck a deal to resolve federal charges of bad behavior. In June, the drugmaker agreed to pay $40.8 million to 37 US states and the District of Columbia. This was on top of a $750 million payment to settle criminal and civil charges related to numerous production problems – contaminated meds, mislabeled packaging and incorrect dosages – at a facility in Cidra, Puerto Rico, which was closed two years ago

Source: Pharmalot

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