Posted: Jul 2, 2012 9:30 AM by Dennis Bragg - KPAX News
Updated: Jul 2, 2012 11:50 AM
GlaxoSmithKline is agreeing to pay a $3 billion settlement to end a massive fraud case involving the labeling of several of its products.
The case is widely considered as the largest case of healthcare fraud ever prosecuted by the U.S. government, involving several states as well as the District of Columbia.
The investigation was originally started by the U.S. Attorney's office in Colorado in 2004 and then shifted to the U.S. Attorney's office in Massachusetts and later taken over by the U.S. Justice Department. The complaint focused on GSK's sales and marketing practices for nine different products, including a possible "inappropriate use" of Medicaid price exemptions for Avandia.
Monday morning's announcement is the final settlement in the case, building on the agreement that was hammered out between the government and company attorneys on the case last November.
Under the terms, GSK will make payments which are "covered by existing provisions and will be funded through existing cash resources." The settlement includes $1-billion in criminal fines and $2-billion in civil fines. GSK will also follow a "corporate integrity agreement" for some of its manufacturing operations.
"Today brings to resolution difficult, long-standing matters for GSK," said CEO Sir Andrew Witty in a prepared statement. "Whilst these 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."
"We are deeply committed to doing everything we can to live up to and exceed the expectations of those we work with and serve. Since I became CEO, we have had a clear priority to ingrain a culture of putting patients first, acting transparently, respecting people inside and outside the organization and displaying integrity in everything we do," stated Witty.
Witty said the company has made fundamental changes in its procedures for "compliance, marketing and selling" as a result of the case and has removed employees who had been responsible for "misconduct."
GSK points out the civil settlement reached with the Government "does not constitute an admission of any liability or wrongdoing in the selling and marketing of Lamictal, Zofran, Imitrex, Lotronex, Flovent, Valtrex, Avandia or Advair products, nor in its nominal pricing practices."
GSK has been planning for the settlement and expects it to have a "neutral" impact on total earnings.
GlaxoSmithKline's lab in Hamilton focuses on manufacture of the cervical cancer vaccine under the brand name Cervarix, and has been adding more workers as demand for that product has been growing over the past year.