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Post date: July 2 2012

A.G. Schneiderman Announces $146 Million For NYS In Record Fraud Settlement With Pharma Giant Glaxosmithkline

In Largest Health Care Fraud Settlement In U.S. History, GSK Pays $3 Billion Over Kickbacks, Misrepresenting Drug Safety & Defrauding Taxpayers

Schneiderman: Pharmaceutical Corporations Are Not Above The Law


NEW YORK – In the largest health care fraud settlement in U.S. history, Attorney General Eric T. Schneiderman announced today that GlaxoSmithKline (GSK) has agreed to pay $3 billion to resolve charges that the pharmaceutical giant engaged in various illegal schemes related to the marketing and pricing of drugs it manufactures, including Paxil, Wellbutrin and Advair. GSK will pay a total of $2 billion in damages and civil penalties to compensate for the corporation’s illegal conduct as part of a national settlement with New York, 42 states, the District of Columbia and the federal government. In addition, GSK has agreed to plead guilty to federal criminal charges for misconduct related to drug labeling and FDA reporting, and has agreed to pay an additional $1 billion criminal fine in connection with those charges. New York’s Medicaid program will receive over $146 million in recoveries from GlaxoSmithKline.

New York and its state and federal government partners charged that GSK engaged in a pattern of unlawfully marketing certain drugs for uses not approved by the Food and Drug Administration (FDA); making false representations regarding the safety and efficacy of certain drugs; offering kickbacks to medical professionals; and underpaying rebates owed to government programs for various drugs paid for by Medicaid and other federally-funded healthcare programs.

“GlaxoSmithKline’s misconduct was breathtaking in its scale and scope. As a result of today’s landmark settlement, this pharmaceutical giant will now be held accountable for putting corporate profits ahead of the safety of the public,” said Attorney General Schneiderman. “There are no excuses for deceptively marketing unapproved drugs to children, offering kickbacks to health care professionals and ripping off the taxpayers by defrauding Medicaid and other programs. With this settlement, the message we are sending is clear: pharmaceutical corporations are not above the law.”

This record agreement, which was unsealed today, settles charges that GSK engaged in the following activities:

  • Marketing the depression drug Paxil for off-label uses, such as use by children and adolescents; 
  • Marketing the depression drug Wellbutrin for off-label uses, such as for weight loss and treatment of sexual dysfunction, and at higher-than-approved dosages;
  • Marketing the asthma drug Advair for off-label uses, including first-line use for asthma;
  • Marketing the seizure medication Lamictal for off-label uses, including bipolar depression, neuropathic pain, and various other psychiatric conditions;
  • Marketing the nausea drug Zofran for off-label uses, including pregnancy-related nausea;
  • Making false representations regarding the safety and efficacy of Paxil, Wellbutrin, Advair, Lamictal, Zofran, and the diabetes drug Avandia;
  • Offering kickbacks, including entertainment, cash, trips to Florida, Texas and Arizona, tickets to basketball and hockey games and meals to healthcare professionals to induce them to promote and prescribe Paxil, Wellbutrin, Advair, Lamictan, Zofran, the migraine drug Imitrex, the irritable bowel syndrome drug Lotronex, the asthma drug Flovent, and the shingles and herpes drug Valtrex; and
  •  Submitting incorrect pricing data for various drugs, thereby underpaying rebates owed to Medicaid and other federal healthcare programs.

As part of the settlement, GSK has also agreed to plead guilty to criminal charges that it violated the federal Food, Drug, and Cosmetic Act (“FDCA”) in connection with certain activities. The government alleges that GSK introduced Wellbutrin and Paxil into interstate commerce when the drugs were misbranded, meaning containing labels that were not in accordance with their FDA approvals, and that GSK failed to report certain clinical data regarding Avandia to the FDA.

The settlement is based on four qui tam actions brought by private individuals pursuant to state and federal false claims acts and filed in or transferred to the U.S. District Court for the District of Massachusetts, as well as investigations conducted by the U.S. Attorney’s Office for the District of Massachusetts and the Civil Frauds Division of the U.S. Department of Justice.

A National Association of Medicaid Fraud Control Units (NAMFCU) team participated in the investigation and analysis of the claims and conducted the settlement negotiations with GSK on behalf of the settling states. In addition to New York, members included representatives from Massachusetts, California, Colorado and Ohio.

Jay Speers, Counsel for the Medicaid Fraud Control Unit, Michael LaCasse, Assistant Chief Auditor for the Civil Enforcement Division, Nicholas Furnari, Computer Programmer Analyst, and Meghan Collins, Associate Special Auditor Investigator, represented New York on the NAMFCU team under the supervision of Deputy Attorney General Monica Hickey-Martin, Director of the New York Medicaid Fraud Control Unit.