The largest fraud settlement case would help ensure that doctors make prescribing decisions based on good science and not on misinformation, money, or favours provided by the pharmaceutical industry

Yogesh Sapkale & Raj Pradhan

Global pharma giant, GlaxoSmithKline (GSK) has agreed to plead guilty to criminal charges for promoting certain prescription drugs and pay a fine of $3 billion to settle the case in the US. This is the largest healthcare fraud settlement in the US history and also the largest payment ever by a drug company.

According to the US Department of Justice, the company agreed to plead guilty and pay $3 billion to resolve its criminal and civil liability arising from its unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices.

"For a long time, our healthcare system had been a target for cheaters who thought they could make an easy profit at the expense of public safety, taxpayers, and the millions of Americans who depend on programs like Medicare and Medicaid. But thanks to strong enforcement actions like those we have announced today, that equation is rapidly changing," said Bill Corr, deputy secretary of the Department of Health and Human Services (HHS).

GSK agreed to plead guilty to a three-count criminal information, including two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce; and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration (FDA).

According to S Srinivasan, managing trustee, Low Cost Standard Therapeutics (LOCOST), the Indian sales of these drugs may be a couple of crore rupees and may not affect the company's bottomline much. "Rosglitazone or Avandia has been banned in India about a year ago. Its related drug pioglitazone has not been banned although there is risk of heart failure attached to it. Wellbutrin or bupropion (in India Zyban), which is used mostly to quit smoking is not recommended officially for persons under 18 by GSK. I do not see warning for under-18 on Paxil or paroxetine (in India Xet by Zydus Neurosciences). But then it depends on how it has been approved by the Drugs Controller General of India (DCGI). Zydus may be legally correct but technically in error," he said.

Under the terms of the plea agreement, GSK will pay a total of $1 billion, including a criminal fine of $956.81 million and forfeiture in the amount of $43.2 million. The criminal plea agreement also includes certain non-monetary compliance commitments and certifications by GSK's US president and board of directors.

GSK's guilty plea and sentence is not final until accepted by the US district court.

GSK will also pay $2 billion to resolve its civil liabilities with the federal government under the False Claims Act, as well as the states. The civil settlement resolves claims relating to Paxil, Wellbutrin, and Avandia, as well as additional drugs, and also resolves pricing fraud allegations.

According to the US FDA, promotion of a prescribed drug by the manufacturer for other uses—known as “off-label uses”—renders the product ‘misbranded’.

“Patients rely on their physicians to prescribe the drugs they need,” said John Walsh, US Attorney for Colorado. “The pharmaceutical industry’s drive for profits can distort the information provided to physicians concerning drugs. This case will help to ensure that your physician will make prescribing decisions based on good science and not on misinformation, money, or favours provided by the pharmaceutical industry,” he added.

Paxil
The US government alleged that between April 1998 and August 2003, GSK unlawfully promoted Paxil for treating depression in patients under age 18, even though the FDA has never approved it for paediatric use. GSK sponsored dinner programs, lunch programs, spa programs and similar activities to promote the use of Paxil in children and adolescents. GSK paid a speaker to talk to an audience of doctors and paid for the meal or spa treatment for the doctors who attended. The company agreed to plead guilty to misbranding Paxil in that it’s labelling was false and misleading regarding the use of Paxil for patients under 18.

Wellbutrin
Between January 1999 and December 2003, GSK promoted Wellbutrin, approved at that time only for a major depressive disorder, for weight loss, the treatment of sexual dysfunction, substance addictions, and attention deficit hyperactivity disorder, among other off-label uses. According to the US government, GSK paid millions of dollars to doctors to speak at and attend meetings, sometimes at lavish resorts, at which the off-label uses of Wellbutrin were routinely promoted and also used sales representatives, sham advisory boards, and supposedly independent Continuing Medical Education (CME) programs to promote Wllbutrin for these unapproved uses. GSK has agreed to plead guilty to misbranding Wellbutrin in that its labeling did not bear adequate directions for these off-label uses.

For the misbranding offenses for Paxil and Wellbutrin, GSK agreed to pay a criminal fine and forfeiture of $757.4 million.

Avandia
The US alleges that, between 2001 and 2007, GSK failed to include certain safety data about Avandia, a diabetes drug, in its reports to the FDA. The reports are meant to allow the FDA to determine if a drug continues to be safe for its approved indications and to spot drug safety trends. Since 2007, the FDA has added two black box warnings to the Avandia label to alert physicians about the potential increased risk of congestive heart failure and myocardial infarction or heart attack. GSK has agreed to plead guilty to failing to report data to the FDA and has agreed to pay a criminal fine in the amount of $242.6 million for its unlawful conduct concerning Avandia.

In its civil settlement agreement, the United States alleged that GSK promoted Avandia to physicians and other healthcare providers with false and misleading representations about the drug's safety profile, causing false claims to be submitted to federal healthcare programs. GSK has agreed to pay $657 million relating to false claims arising from misrepresentations about Avandia.

In the civil settlement agreement, GSK agreed to pay $1.0 billion relating to false claims arising from this alleged conduct.
1. Promoting the drugs Paxil, Wellbutrin, Advair, Lamictal, and Zofran for off-label, non-covered uses and paying kickbacks to physicians to prescribe those drugs as well as the drugs Imitrex, Lotronex, Flovent, and Valtrex
2. Making false and misleading statements concerning the safety of Avandia; and
3. Reporting false best prices and underpaying rebates owed under the Medicaid Drug Rebate Program.

"These products under scrutiny are not patented in India hence any company can manufacture and market them. Even if they were sold, DCGI will be the last person on earth to monitor marketing activities. For instance Danish company Lundbeck (located in Bengaluru) has been promoting Deanxit for two unapproved indications for over a decade. It was left to the Parliamentary Committee on Health, in its 59th Report, to inform DCGI about unlawful activity!" said Dr Chandra M Gulhati.

Off-Label promotion and kickbacks
The US government alleged that in addition to promoting the drugs Paxil and Wellbutrin for unapproved, non-covered uses, GSK also promoted its asthma drug, Advair, for first-line therapy for mild asthma patients even though it was not approved or medically appropriate under these circumstances. GSK promoted Lamictal, an anti-epileptic medication, for off-label, non-covered psychiatric uses, neuropathic pain, and pain management. The company also promoted certain forms of Zofran, approved only for post-operative nausea, for the treatment of morning sickness in pregnant women.

According to the allegations from the US government, GSK gave kickbacks to healthcare professionals to induce them to promote and prescribe these drugs as well as the drugs Imitrex, Lotronex, Flovent, and Valtrex.

Price Reporting
The US government alleged that during 1994 to 2003, GSK and its corporate predecessors reported false drug prices, which resulted in GSK’s underpaying rebates owed under the Medicaid Drug Rebate Program. GSK had bundled sales arrangements that included steep discounts known as ‘nominal’ pricing and yet failed to take such contingent arrangements into account when calculating and reporting its best prices to the Department of Health and Human Services.

As a result, GSK underpaid rebates due to Medicaid and overcharged certain Public Health Service entities for its drugs, the United States contends. GSK has agreed to pay $300 million to resolve these allegations, including $161 million to the federal government, $119 million to the states, and $20.2 million to certain Public Health Service entities who paid inflated prices for the drugs at issue.

“Doctors need truthful, fair, balanced information when deciding whether the benefits of a drug outweigh its safety risks. By the same token, the FDA needs all necessary safety-related information to identify safety trends and to determine whether a drug is safe and effective. Unlawful promotion of drugs for unapproved uses and failing to report adverse drug experiences to the FDA can tip the balance of those important decisions,” said Stuart F Delery, acting assistant attorney general for the Justice Department’s Civil Division.

Earlier in 2003, another pharma giant Bayer AG, agreed to pay the American government $257 million after pleading guilty to a criminal charge involving a scheme to overcharge the Medicaid programme for the antibiotic Cipro. The fraud was exposed by an unnamed whistle-blower, who told the authorities how Cipro was relabelled and sold to Kaiser Permanente with a different drug identification number, to be able to charge more money. But Bayer was apparently not alone in the re-labelling racket.

GlaxoSmithKline also agreed to pay $87.6 million at that time in settlement of a civil charge that it overcharged the American Medicaid programmed for Paxil, an antidepressant and Flonaise, an allergy spray. Both companies were selling the over-priced products to Kaiser, but the American federal regulators have not charged Kaiser with any wrongdoing