GSK Pays for its Past, But What About its Future

July 03, 2012

Federal prosecutors announced Monday a record-breaking $3 Billion settlement with the pharmaceutical giant GlaxoSmithKline (“GSK”). The company, which agreed to plead guilty to criminal charges, is accused of illegally promoting its popular antidepressants Paxil and Wellbutrin as well as failing to report safety data about the diabetes drug Avandia.

The terms of the settlement were announced in November, but according to a New York Times article published Monday, Andrew Witty, Chief Executive of GSK, claims the company has changed its ways. In a statement, he said “Whilst these (actions) originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made.”

These “mistakes” seem to run rampant in the pharmaceutical industry. Just 3 years ago, Pfizer paid a $2.3 Billion to settle civil and criminal charges stemming from allegations that it illegally marketed its painkiller Bextra. This was Pfizer’s fourth settlement over illegal marketing activities since 2002, and it was the largest in history – until GSK came along and shattered all previous records.

In fact, pharmaceutical settlements with the justice department over the past 8 years for the use of off-label marketing read like a who’s who of the industry:

–          2004: Pfizer pays a $430 Million settlement for the seizure drug Neurotin

–          2005: Serono pays a $704 Million settlement for its AIDS-wasting drug Serostim.

–          2007: Purdue Pharma pays a $700 Million settlement for OxyContin.

–          2007: Bristol-Myers Squibb pays a $515 Million settlement for the antipsychotic drug Abilify.

–          2009: Eli Lilly pays a $1.4 Billion settlement for its antipsychotic drug Zyprexa.

–          2011: Merck pays a $950 Million settlement for its painkiller Vioxx.

–          2012: Abbott Laboratories pays $1.6 Billion for its off label marketing of Depakote.

Over the past decade, the top 10 marketing settlements surpass $11 Billion in fines and penalties. Like a twisted game of one-upmanship, one has to wonder how stratospheric these penalties will soar until these companies actually start to change the way they do business. Part of the business GSK was engaged in while illegally marketing the drugs Wellbutrin, Paxil and Advair among others included paying physicians $25,000 for being a GSK “advisory board” member.

GSK’s $3 Billion fine is record-breaking in many ways. It is the largest settlement of its kind. It is the largest payment ever made by a drug company. It is the most expensive failed internal investigation in corporate history. It is serious, and other pharmaceutical companies should take note. However, given their past conduct, you’ll have to excuse me for not taking GSK’s Andrew Whitty’s promise of a new tomorrow all that seriously.

Photo Credit: Ian Wilson


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