Fred Mogul, Reporter, WNYC News
Fred Mogul has been covering healthcare and medicine for WNYC since 2002.
GlaxoSmithKline will pay $146 million to New York State as part of its settlement in the largest health care fraud settlement in U.S. history.
New York will receive more from the settlement than any other state, according to a spokesman for Attorney General Eric Schneiderman. California is second, with $46 million.
States joined forces in the lawsuit to curtail losses to their Medicaid systems. Money from the settlement will go back into those programs.
The national settlement which includes a $3 billion fine will be the largest penalty ever paid by a drug company, Deputy Attorney General James Cole said. The corporation also agreed to be monitored by government officials for five years to attempt to ensure the company's compliance, Cole said.
“We will not tolerate health care fraud," Cole said at a news conference at the Justice Department. He would not say whether any company executives were under investigation. The company's guilty plea and sentence have to be approved by a federal court in Massachusetts.
Prosecutors said GlaxoSmithKline illegally promoted the drug Paxil for treating depression in children from April 1998 to August 2003, even though the FDA never approved it for anyone under age 18.
The corporation also promoted the drug Wellbutrin from January 1999 to December 2003 for weight loss, sexual dysfunction, substance addictions and attention deficit hyperactivity disorder, although it was only approved for treatment of major depressive disorder.
Off-patent prescribing by doctors is legal, but drug companies are prohibited from actively encouraging doctors to use medications for indications outside FDA approval. Professor Erik Gordon, from the University of Michigan Business School, says quiet promotion is widespread in the pharmaceutical industry and in certain major classes of drugs, such as antidepressants and cancer medications, could represent between 30 and 50 percent of sales.
“Off-label marketing is too big, it’s too profitable and the pharma companies are under tremendous pressure to grow sales at a time, when they don’t have any new drugs coming out,” Gordon told WNYC. “They’ve got to find sales wherever they can find them.”
GSK last year had gross profits of $20 billion on $27 billion in revenue.
Gordon doubted the fine will have any impact on GSK and the drug industry.
“It’s like a teenager going 60 miles an hour and hitting a speed bump,” he said. “Their head hits the ceiling, they say Ouch, and they slow down for a few minutes, until they’re tempted to drive fast again.”
Justice Department officials also said that between 2001 and 2007 GlaxoSmithKline failed to report to the FDA on safety data from certain post-marketing studies and from two studies of the cardiovascular safety of the diabetes drug Avandia. Since 2007, the FDA has added warnings to the Avandia label to alert doctors about potential increased risk of congestive heart failure and heart attack.
The drug corporation also agreed to resolve civil liability for promoting the drugs Paxil, Wellbutrin, Advair, Lamictal and Zofran for off-label, non-covered uses. The company also resolved accusations that it paid kickbacks to doctors to prescribe those drugs as well as the drugs Imitrex, Lotronex, Flovent and Valtrex.