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GlaxoSmithKline in $3 billion fraud settlement
By Charles Riley and Emily Jane Fox
@CNNMoney
July 2, 2012: 12:49 PM ET
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visit the source, CNN for the article
NEW YORK (CNNMoney) -- GlaxoSmithKline was slapped
with a $3 billion fine Monday by the U.S. Justice
Department after failing to report safety data on
some of the company's most popular drugs.
The payment -- with $1 billion going to settle
criminal wrongdoing, and $2 billion to cover civil
liabilities -- is the largest fraud settlement in
U.S. history, and the largest payment ever by a drug
company.
GlaxoSmithKline (GSK)
will plead guilty to two counts of introducing
misbranded drugs, Paxil and Wellbutrin, into
interstate commerce.
Specifically, the government alleged that the drugs
were marketed as a treatment for conditions for
which they had not been approved. It said Paxil,
which treats depressive and anxiety disorders in
adults, was marketed to children and adolescents,
and Wellbutrin, an antidepressant, was marketed as a
weight-loss aid.
A third count involves a failure to report safety
data about the drug Avandia, a diabetes drug, to the
Food and Drug Administration between 2001and 2007.
In addition to the criminal and civil resolutions,
GlaxoSmithKline has reached a 5-year compliance
agreement with the Department of Health and Human
Services. Under terms of the deal, according to
department Inspector General Daniel R. Levinson,
company executives could forfeit annual bonuses if
they or their subordinates engage in significant
misconduct, and sales agents are now being paid
based on quality of service rather than sales
targets.
GlaxoSmithKline said in a statement that the
settlement will be funded through existing cash
resources.
"On behalf of GSK, I want to express our regret and
reiterate that we have learnt from the mistakes that
were made," CEO Andrew Witty said in a statement,
adding that the company has changed its procedures
for compliance, marketing and selling since the
incidents.
Shares of GlaxoSmithKline stock rose 1.3% in Monday
trading.
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