GlaxoSmithKline to Pay U.S. Gov’t $3 Billion; Drug Giant Found Guilty of Illegal Marketing and Medicaid Fraud

Drug Giant Found Guilty of Illegal Marketing and Medicaid Fraud

The British drug company GlaxoSmithKline (GSK) has agreed to pay the U.S. government $3 billion, as it faces thousands of criminal and civil lawsuits. The settlement is the largest to date between a drug company and the federal government.

Pushing dangerous drugs

Many of the suits allege that GSK knowingly marketed dangerous medications as safe, particularly the diabetes drug Avandia. Over the past five years, several reputable studies have linked Avandia with heart attacks. A 2007 report published in the New England Journal of Medicine said that Avandia increased the risk of a heart attack by 43 percent.

“Our data show that treatment with [Avandia] was associated with a significant increase in the risk of [heart attack[ and death,” the report said. “Our findings are worrisome because of the high incidence of cardiovascular events in patients with diabetes.”

Medicaid fraud

GSK is also being charged with Medicaid fraud, for both selling contaminated drugs and for unfairly manipulating prices.

At least 20,000 lawsuits against GSK are still pending in local courts. GSK has already settled around 10,000 suits, for about $50,000 each. It’s estimated that about 500,000 people use Avandia worldwide.

The GSK settlement caps a tumultuous period for “Big Pharma,” which has been under increasing scrutiny in recent years. Recent payouts include:

  • $1.3 billion by Abbott Laboratories, to the U.S. government – October 2011
  • $2.3 billion by Pfizer, to the FDA – September 2009
  • $1.4 billion by Eli Lilly, to the U.S. government – January 2009

All companies were charged with illegal marketing of drugs.