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Jul 02

GlaxoSmithKline to Pay $3 Billion in Settlement with Government

On July 2, 2012, GlaxoSmithKline (“GSK”) announced its intention to plead guilty in its ongoing healthcare fraud case in what will result in the largest settlement of its kind in the United States. In particular, the pharmaceutical giant will be pleading guilty to marketing two of its drugs, Paxil and Wellbutrin, for unapproved uses and for failing to report post-marketing safety issues associated with its diabetes drug Avandia. In addition to the hefty fine, totaling some $3 billion dollars, GlaxoSmithKline will be subject to continued monitoring by the government for the next five (5) years. GSK’s( GlaxoSmithKline ) Press Release discussing the settlement may be accessed here.

Under the Federal Food, Drug and Cosmetic Act (“FFDCA”), the legislation enforced by the U.S. Food and Drug Administration (“FDA”), drugs are approved for specific uses, known as the “intended uses.” Under the FFDCA, pharmaceutical manufacturers and/or distributors may not market or otherwise represent their products for uses other than those approved by the FDA. While this practice, known as “off-label” marketing is forbidden, this is not to say that off-label use is also prohibited by the FFDCA. In fact, countless drugs are used for uses other than those approved in labeling. In the present case, because the FFDCA prohibits marketing of these uses, GlaxoSmithKline was targeted by the FDA for claiming that Paxil and Wellbutrin were beneficial in treating adolescents, a segment of the population for which the drugs were not approved.

In addition to off-label marketing prohibitions, manufacturers of pharmaceuticals are typically required to conduct post-marketing studies as a condition of approval. These studies are required in order to demonstrate the continued safety for consumers. With respect to GlaxoSmithKline , the Company allegedly failed to disclose data concerning the safety of its diabetes drug Avandia. Ultimately, this case illustrates that no matter how large and established, manufacturers must be diligent in their efforts to comply with federal laws and regulations or be prepared to face ample consequences.

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