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Glaxo agrees to pay $3 billion dollar fine in fraud settlement involving Avandia, Advair, Paxil and Wellbutrin

This week the federal Justice Department announced that the English pharmaceutical manufacturer Glaxo would plead guilty to criminal charges and pay $3 billion dollars in fine arising from marketing abuses, violation of FDA regulations, and failing to disclose negative side-effect data on its drugs.  With this settlement, Abbott Laboratories, Johnson & Johnson, and Glaxo will have paid about 6 billion dollars worth of fines in calendar year 2012, experts believe.  Unfortunately, these numbers are deceptive because the drug makers earn such enormous profits from the drugs involved, crime actually does "pay." 

In the case of Glaxo, for example, Avandia grossed $10.4 billion in sales; Paxil brought in $11.6 billion and Wellbutrin sales were $5.9 billion dollars during the period for which fines were assessed.  Avandia profits were not described in media reports of the settlement; Glaxo was fined for failing to disclose report data of heart attack risks associated with the drug to the FDA.

The evidence that brought Glaxo to prosecutors' attention came from insiders who "blew the whistle" under the False Claims Act of 1863.  The latter was adopted to control war profiteering during the Civil War era. Among the illegal marketing tactics described by the whistle blowers were physician trips to Jamaica and Bermuda, spa treatments and hunting trips aimed at inducing off-label prescribing practices. 

Critics pointed out that even these enormous fines are "merely the cost of doing business" when drug sale profits are so enormous, and that illegal practices will not be curbed until individual executives are charged and convicted for criminal acts.


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