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GlaxoSmithKline pays $3 billion to settle off-label drug marketing allegations

Washington: GlaxoSmithKline has paid for one of the most expensive failed internal investigations in corporate history, qui tam whistle-blower attorney Brian Kenney said on Monday. His law firm, Kenny & McCafferty, represents the two whistle-blowers who sparked the nine-year federal probe that ended with Monday’s $3 billion payment to settle off-label drug marketing allegations involving nine prescription drugs.

A writ of qui tam is a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed. Off-label use is the practice of prescribing pharmaceuticals for an unapproved indication.

“When our clients were forced out of their marketing positions, GlaxoSmithKline (GSK) had proof of illegal off-label prescription drug marketing. Our clients properly reported those marketing misdeeds to management in 2001. An ensuing GSK internal investigation verified their allegations, but the company took no action, choosing hefty profits over compliance and patient safety,” said whistle-blower attorney Tavy Deming of Kenney & McCafferty.

“GSK could have saved hundreds of millions, perhaps a billion or more dollars of the $3 billion it paid today by following through on the combined Human Resources / Corporate Compliance investigation they launched. Instead they ignored evidence of improper marketing and physician kickbacks. When you look at the detail and accuracy of Greg Thorpe’s written complaints distributed to the highest levels of Glaxo it’s almost surreal that the company took no corrective action. Now more than a decade later, GSK is essentially admitting that Thorpe had been right in 2001,” Kenney said on Monday. “It’s been a very, very, very long 10 years for whistle-blowers Thorpe and Blair Hamrick.”

GSK’s top management was aware of illegal marketing schemes involving the drugs, according to filed court documents. When the two Kenney & McCafferty-represented whistle-blowers reported their concerns about illegal marketing practices they were witnessing in the field, GSK’s top compliance executive, an attorney who now holds a similar position with another medical device manufacturer, became involved in and oversaw the ensuing internal investigation.

Instead of changing the illegal conduct, the company retaliated against the whistle-blowers and they became the first to file an off-label marketing qui tam whistle-blower complaint against GSK. The original complaint is one of the first ever filed alleging prescription drug off-label promotion, Kenney said.

When the whistle-blowers’ complaints were still under seal and being investigated by the government GSK allegedly falsified and concealed documents in connection with an FDA (US Food and Drug Administration) inquiry into whether GSK marketed the antidepressant drug Wellbutrin off-label for weight loss, a central allegation in the whistle-blowers’ complaints. That led to the indictment of a GSK associate corporate counsel, said Deming. Federal charges against the former associate general counsel later were subsequently dismissed by the court.

Thorpe and Hamrick provided first-hand revelations of GSK’s pervasive marketing misconduct relating to the nine drugs identified in Kenney & McCafferty’s complaint and exhibits unsealed with Monday’s settlement. According to Emily Lambert of Kenney & McCafferty, the government joined the whistle-blowers’ case and filed a complaint-in-intervention adopting the whistle-blower’s claims.

Extremely persuasive proof exposing illegal marketing of the asthma drug Advair for mild asthma was included in the insider evidence that Thorpe and Hamrick provided to the government investigators, Deming said. GSK’s mild asthma marketing campaign contravened Advair’s approved asthma use, which was limited to moderate and severe forms of asthma, and a black box warning on the drug’s label, yet GSK’s marketing efforts continued unabated into 2010. As a result, Advair’s portion of taxpayers’ recovery represents nearly 70 per cent of the government’s total $1.017 billion civil settlement of our clients’ claims, Lambert added.

The nine prescription drugs covered by the settlement included Advair, Wellbutrin, Paxil, Lamictal, Zofran, Imitrex, Lotronex, Flovent and Valtrex.

GSK maintained an elaborate illegal marketing regime for the prescription drugs included in Monday’s settlement, including, according to filed documents:

  • Paying physicians (who could be counted on to influence their peers) as much as $25,000 for being a GSK “advisory board” member;
  • Enrolling 49,000 physicians and health professionals to be part of its speakers bureau;
  • Identifying physicians in academia to pay to speak on behalf of one of the company’s drugs;
  • Creating the PowerPoint “slide kits” that physicians would  use to deliver canned presentations;
  • Using an elaborate “FaxBack” system allowing drug marketing representatives to suggest articles related to off-label uses. The physicians would order these off-label promotional materials by calling a toll-free number, and thus not appear to be responding to an illegal marketing effort by the drug marketing representative;
  • Pushing Imitrex, an adult medicine for migraine, for mild headaches, as well as for use in children, despite the FDA’s rejection of GSK’s application for child use due to lack of efficacy;
  • Pushing Lamictal, a drug approved only for partial seizures, in adults for other diagnoses. In at least one case a patient died from a reaction that the company had evidence could occur;
  • Marketing Paxil, the antidepressant, to children under 18 when it had not been approved for youngsters, and despite GSK’s own clinical trails that had shown that the drug was ineffective for children and also heightened the risk of suicide or other self-harming behaviour three-fold; and,
  • Marketing the antidepressant Wellbutrin as superior to other antidepressant alternatives due to increased sexual functioning and weight loss, pushing the drug as the “happy, horny, skinny drug,” to concisely encapsulate GSK’s off-label Wellbutrin marketing campaign.

Physicians are free to prescribe drugs for off-label uses, but pharmaceutical companies are prohibited from marketing the drugs for uses that have not been approved by the FDA. The US Federal laws also prohibit pharmaceutical companies from paying kickbacks to physicians to induce prescriptions.  Generally, the government-funded healthcare programmes such as Medicare and Medicaid preclude reimbursement for off-label prescriptions. When a pharmaceutical company’s illegal marketing practices cause off-label prescriptions to be written by doctors, and those prescriptions are paid for by Medicare and Medicaid, the payment becomes an actionable False Claims Act (FCA) violation, according to Kenney, who is a former federal prosecutor.

Under the FCA, qui tam actions allow private citizens with knowledge of fraud to help the government recover ill-gotten gains and additional civil penalties. The FCA allows the government to collect up to three times the amount it was defrauded, in addition to civil penalties from $5,500 to $11,000 per false claim.

In successful qui tam whistle-blower cases in which the government intervenes, whistle-blowers are entitled to receive a percentage of qui tam recoveries, typically 15-to-25 per cent, generally known as, “the relator’s share”.

Under the terms of the settlement agreement, the government and the whistle-blowers did not concede that their respective claims are not well founded. In turn, as is typical in civil agreements, GSK expressly denied liability, except for those admissions GSK agreed to make in connection with a criminal plea agreement. Specifically, according to the agreement, GSK has agreed to plead guilty to criminal charges that the company misbranded Wellbutrin and Paxil and it failed to report data relating to clinical experience, along with other data and information regarding the diabetes drug Avandia to the Food and Drug Administration (FDA) in mandatory reports, all in violation of the Food, Drug and Cosmetic Act (FDCA).

In addition to paying a $1.042 billion civil settlement to the federal and state governments, as part of the Settlement Agreement GSK agreed to be bound by a Corporate Integrity Agreement (CIA) with the Office of Inspector General of the United States Department of Health and Human Services (OIG-HHS).

The federal investigation into GSK’s marketing practices was conducted through a collaborative effort of the US Department of Justice, and the US Attorney’s Offices for the District of Massachusetts and the District of Colorado.  Massachusetts Assistant Attorney General Bob Patten led the investigation on behalf of the states and the National Association of Medicaid Fraud Control Units (NAMFCU).

On its part GlaxoSmithKline said, “The company reached this settlement with the government to avoid the delay, expense, inconvenience and uncertainty of protracted litigation of the government’s claims and to put behind us these long-standing investigations of what was, for the most part, very old conduct.”

“As part of our final agreement, we will pay $3 billion to resolve civil and criminal liabilities resulting from these investigations, and we have also entered into a Corporate Integrity Agreement (CIA), with the US Government,” GSK added.

According to GlaxoSmithKline, the civil settlement reached with the government does not constitute an admission of any liability or wrongdoing in the selling and marketing of Lamictal, Zofran, Imitrex, Lotronex, Flovent, Valtrex, Avandia or Advair products, nor in its nominal pricing practices.

Andrew Witty, CEO, GlaxoSmithKline, said on Monday, “Today brings to resolution difficult, long-standing matters for GSK. Whilst these originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made.”

“We have fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct. In the last two years, we have reformed the basis on which we pay our sales representatives and we have enhanced our ability to ‘claw back’ remuneration of our senior management,” Witty added.

“Since January 2011, the company has put in place a new incentive compensation system for GSK professional sales representatives who work directly with health care professionals. The new system eliminates individual sales targets as a basis for bonuses, and instead bases incentive compensation on the quality of the service these representatives deliver to customers to support improved patient health,” according to GlaxoSmithKline.

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