GlaxoSmithKline ($GSK) has reached an agreement with the U.S. government to settle ongoing investigations into the drugmaker's sales and marketing practices. The final settlement remains subject to negotiation and is expected to be wrapped up next year.
The settlement will bring to an end the investigation begun by the U.S. Attorney's office of Colorado in 2004 related to the marketing practices of Paxil and Wellbutrin, The Philadelphia Inquirer notes. It also will wrap up the Justice Department's probe into the possible inappropriate use of the nominal price exception under the Medicaid Rebate Program, as well as its investigation of the development and marketing of Avandia, according to a company statement.
"This is a significant step toward resolving difficult, long-standing matters which do not reflect the company that we are today," CEO Andrew Witty (photo) said in a statement. "In recent years, we have fundamentally changed our procedures for compliance, marketing and selling in the U.S. to ensure that we operate with high standards of integrity and that we conduct our business openly and transparently. We reiterate our full commitment to ensuring appropriate promotion of our medicines to healthcare professionals and to the standards rightly expected by the U.S. Government."
GSK further notes that since 2008, it has established a new framework for compliance in the U.S. It also has other initiatives to encourage change in commercial procedures, including the implementation of a new incentive compensation system for sales reps who work directly with healthcare professionals.
Although the settlement amount is large, analysts at Helvea said the deal was positive news and would reduce financial uncertainty for the group, Reuters notes. Furthermore, "[t]hese were the three main government investigations, though others remain ongoing, notably UN oil for Food program and HIV product sales & marketing. The settlement is in line with GSK's expectations [...] and (Glaxo) thus don't expect to have a significant further P&L impact from the ongoing legal issues," JPMorgan analysts say, as quoted by The Wall Street Journal Source Blog.