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A woman works at a vaccine production line at a GlaxoSmithKline (GSK) plant in this file photo from December 2011. GSK reached a $3 billion legal settlement last week with the Department of Justice, the largest health care fraud settlement in U.S. history. (Francois Lo Presti/AFP/Getty Images)
NEWS ANALYSIS
Following years of deceitful drug marketing, a major international pharmaceutical company agreed last week to a $3 billion settlement with the Justice Department (DOJ)—the biggest health fraud settlement in U.S. history. Federal prosecutors say it shows how seriously they take the problem.
At a July 2 press conference in Washington, D.C., Deputy Attorney General James Cole said the historic sum paid by GlaxoSmithKline (GSK) emphasizes the fierce determination of the U.S. Justice Department to safeguard the integrity of the nation’s health care system. For the past three years, the DOJ has recovered more than $10.2 billion in similar settlements.
“Let me be clear: We will not tolerate health care fraud. And, in every instance where we uncover it, we will use all available tools to hold those responsible to account,” said the deputy attorney general.
We’ve changed the way we promote our products and work with our customers.
—Deirdre Connelly, president of GSK’s North America Pharmaceuticals
State and federal authorities found that GSK engaged in criminal activity for several years. The U.K.-based pharmaceutical giant is charged with deceptive sales and marketing practices, in which they manipulated research reports and concealed outcomes to boost sales and profits.
Paxil, for example, had been a big seller for GSK, with sales of over $1.8 billion a year by 2001. But the company showed a driving interest to expand its market. The drug had only been approved to treat depression in adults, but researchers published a promising report suggesting that Paxil would also work well with children.
A bottle of Paxil, an antidepressant made by GlaxoSmithKline, is shown in this file photo. The Justice Department investigation found that GlaxoSmithKline misrepresented data in the marketing of Paxil and other drugs. (Joe Raedle/Getty Images)
GSK sales associates presented doctors with a cover letter touting the “cutting edge, landmark study” that clearly demonstrated “remarkable efficacy and safety in the treatment of adolescent depression.” Paxil prescriptions for teens quickly spread across the country as doctors learned of the new findings, but the actual research told a different story.
Even after three trials, researchers never could prove any benefit for teens taking Paxil, but investigators found that GSK hired a contractor to treat the data with a positive spin. The intentionally misleading article also concealed evidence of adverse effects, and Paxil was later discovered to significantly contribute to teen suicides.
Wellbutrin was another GSK drug with a deceptively inflated credibility. While it’s approved for depression, falsified reports indicated that Wellbutrin could also treat weight loss, ADHD, and more. The company also concealed findings that showed that its diabetes drug, Avandia, could aggravate heart problems. GSK had previously cast doubt on studies that pointed to negative effects, but by 2010 Avandia use was linked to tens of thousands of heart attacks.
Credibility Damaged
GSK said things are different at the company, since these crimes took place several years ago. But while the $3 billion settlement legally resolves past problems, it will take more time for public perception to trust GSK again. The GSK president and CEO have both expressed regret for past misdeeds, but they insist that “expectations of our industry—and the people who work in it—have changed.”
“We’ve changed the way we promote our products and work with our customers,” said Deirdre Connelly, GSK’s president for North America Pharmaceuticals, in a blog post this week. “In fact, we started making changes before we were asked by the government, including compensating our sales representatives on the value they bring to their customers, not on sales targets.”
In exchange for the settlement and a guilty plea, prosecutors will close the book on the long standing investigations. But critics say it still doesn’t go far enough, as $3 billion represents only a tiny portion of annual GSK earnings. Even more concerning: Executives directly responsible for crimes that risked the health of millions have never faced punishment.
Only time will tell if the threat of another multibillion dollar settlement will actually be enough to deter pharmaceutical industry fraud. For now, company leaders say they are committed to winning back their credibility.“Negative perceptions remain,” said Connelly, at a recent drug industry conference. “Some of it is because we haven’t done enough to communicate what we do and don’t do. Some of it is because industry bashing is good politics. Some of it is because we still make mistakes. No matter the reasons, at the end of the day, we must regain the public’s trust in our industry.”
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