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GlaxoSmithKline pays $3bn to settle dispute over rosiglitazone and other drugs

BMJ 2011; 343 doi: http://dx.doi.org/10.1136/bmj.d7234 (Published 07 November 2011) Cite this as: BMJ 2011;343:d7234
  1. Nigel Hawkes
  1. 1London

GlaxoSmithKline is to pay a record $3bn (£1.9bn; €2.2bn) to settle longstanding disputes with the US government over marketing of some of its best known drugs.

The disputes, some of which go back to 1997, include an investigation by the US Justice Department into the marketing of the antidiabetes drug rosiglitazone (marketed as Avandia) and GSK’s alleged attempts to market the antidepressant bupropion (Wellbutrin) as a slimming aid. The settlement also includes the alleged misuse of “nominal pricing” arrangements to overcharge the Medicaid programme.

Comparison with other large fines levied by the US authorities is difficult, because so many different drugs are involved in the GSK case, but the amount it is prepared to pay exceeds the previous highest levied at one time, the $2.3bn fine imposed on Pfizer in 2009 (BMJ 2009;339:b3657, doi:10.1136/bmj.b3657).

The decision by GSK to agree a settlement reflects a desire by the company to put the past behind it. Andrew Witty, its chief executive, said, “This is a significant step towards resolving difficult, longstanding matters which do not reflect the company that we are today.

“We have fundamentally changed our procedures for compliance, marketing, and selling in the US to ensure that we operate with high standards of integrity and that we conduct our business openly and transparently.”

The final figure will not be negotiated until late next year, but GSK says that it has ample cash available to cover it, so its dividends will not be affected. The settlement will cover all GSK’s best selling drugs in the US but will not completely clear its books.

It has set aside a further $1bn in provision for other cases, including a subpoena from the New York US Attorney’s Office that involves three antiretrovirals and an investigation by the US Department of Justice under the Foreign Corrupt Practices Act involving sales in a number of countries.

Last year GSK settled a number of patient liability claims resulting from rosiglitazone, which was shown to increase the risk of heart attacks (BMJ 2010;340:c2654 doi:10.1136/bmj.c2654). This settlement cost the company $2.4bn.

The deal reflects an increasingly tough regime for drug companies in the US as authorities there clamp down on unfair practices. Since 2000 the number of industry settlements has risen markedly as authorities have taken a strong line on practices such as marketing drugs for unapproved uses.

Despite the high cost, equivalent to about 2.8% of GSK’s market value, the company’s shares rose on the London stock market as investors accepted the need to clear the decks of long running legal claims. Analysts described the deal as positive news as it would reduce financial uncertainty for the group.

Frances Miller of Boston University, a health policy expert, told the New York Times: “Although $3bn is a very big number in terms of drug industry settlements, it’s not a very big number in relation to almost $50bn in annual revenue for the world’s fourth-largest pharmaceutical company” (www.nytimes.com/2011/11/04/business/glaxo-to-pay-3-billion-in-avandia-settlement.html).

But Patrick Burns, spokesman for Taxpayers Against Fraud, a US advocacy group for whistleblowers, asked, “Who at Glaxo is going to jail as a part of this settlement? Who in management is being excluded from doing future business with the US government?”

Last year the US Justice Department accused a former vice president and associate general counsel of GSK, Lauren Stevens, of obstruction of justice and making false statements. But she was acquitted of the charges in May, a US District Court judge ruling that she had been advising the company in good faith (BMJ 2011;342:d3060, doi:10.1136/bmj.d3060).

Notes

Cite this as: BMJ 2011;343:d7234

Footnotes

  • bmj.com Feature: Rosiglitazone: what went wrong? (BMJ 2010;341:c4848, doi:10.1136/bmj.c4848)