GlaxoSmithKline's ($GSK) latest penalty for improper marketing practices may seem little more than a slap on the wrist--except that it's coming at the worst possible time for the embattled British drugmaker. GSK agreed to pay $105 million to settle charges in California, New York, Texas and more than 40 other states that it illegally promoted its asthma drug Advair and antidepressants Wellbutrin and Paxil.
The states' attorneys general alleged that GSK pushed mild asthma sufferers to request Advair even though the FDA did not approve it for mild cases, and that it marketed Wellbutrin and Paxil off-label for use in children.The states also claimed that the company promoted Wellbutrin for other unapproved uses.
Under the terms of the settlement, announced by Illinois attorney general Lisa Madigan, GSK has agreed to reform its marketing practices and refrain from disseminating information related to off-label uses of its drugs. GSK also agreed to continue for 5 years an internal program that "reduces the level of financial incentives by the company to drug sales representatives," according to Madigan's statement.
"GlaxoSmithKline put its business interests ahead of what was best for vulnerable patients," Madigan said in the statement. "This settlement will put a stop to the illegal marketing practices the company used to boost its sales."
This is far from the first trouble GSK has faced in the U.S. over allegations of off-label marketing. In 2012, the company paid $3 billion to settle investigations by the U.S. Department of Justice related to allegations that it marketed Paxil for use in children and that it pushed Wellbutrin for such off-label uses as weight loss and substance abuse. A third count charged the company with failing to report safety data on Avandia, its diabetes drug that was later slapped with two black-box warnings about cardiovascular risks. It was the largest healthcare fraud settlement in history, surpassing Pfizer's ($PFE) $2.3 billion deal in 2009.
This latest settlement comes at a time when GSK is facing major hassles overseas. In May, China hurled corruption charges at three of the company's executives, after looking into allegations that they paid bribes to healthcare workers to increase sales. U.S. authorities are now looking into the allegations, as is Britain's Serious Fraud Office, which said last week it has opened a criminal investigation into GSK.
Clearly, though, authorities here in the U.S. aren't content to let the DOJ do all the heavy lifting. Sometimes the states win--as they did in the latest GSK case--and sometimes they lose. Johnson & Johnson ($JNJ), for example, paid $181 million in 2012 to resolve allegations in 36 states that it improperly marketed its antipsychotic Risperdal, but then it got a major reprieve this March: The Arkansas Supreme Court threw out a $1.2 billion judgment in a later case brought by those states against J&J.
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