For Immediate Release - July 02, 2012

GlaxoSmithKline to Pay $35 Million to Massachusetts Medicaid Program as Part of Nation's Largest Ever Healthcare Fraud Settlement

Total of $3 Billion Paid to Federal and State Authorities; AG Coakley’s Office Led State Negotiations Over Medicaid Fraud Allegations

BOSTON –  Major pharmaceutical company GlaxoSmithKline will pay more than $35 million to the Massachusetts Medicaid Program as part of the nation’s largest ever healthcare fraud settlement, Attorney General Martha Coakley announced today.   

The Massachusetts AG’s Office led the state negotiations as part of this $3 billion settlement with federal and state authorities to resolve allegations that the company engaged in various illegal schemes related to the marketing and pricing of a wide range of drugs that it manufactures. 

“Illegal drug marketing and sales practices impose enormous costs on Medicaid and taxpayers,” said AG Coakley. “This investigation demonstrates the importance of the government’s commitment to police the pharmaceutical industry and hold corporations accountable for their conduct.”

As part of the settlement, GlaxoSmithKline LLC (“GSK”) will pay $35,422,477 to the Massachusetts Medicaid Program, which provides funds for health care products and services to eligible low-income individuals, including people with disabilities, children and elder citizens. 

Under the terms of the settlement, GSK will pay participating states and the federal government as much as $2 billion in damages and civil penalties to compensate the healthcare programs for harm allegedly suffered as a result of the illegal conduct.  This includes approximately $1.04 billion to be returned to the Medicaid programs nationwide and approximately $956 million to be returned to other federally-funded health care programs.  In addition, GSK has agreed to plead guilty to federal criminal charges relating to drug labeling and FDA reporting and to pay a $1 billion fine in connection with the criminal component of the settlement.

The civil settlement resolves allegations that GSK engaged in a pattern of unlawfully marketing certain drugs for uses not approved by the Food and Drug Administration (FDA); making false representations regarding the safety and efficacy of certain drugs; offering kickbacks to medical professionals; and underpaying rebates owed to government programs for various drugs paid for by Medicaid and other federally-funded healthcare programs. 

Specifically, the government alleged that GSK engaged in the following activities:

  • Marketing the depression drug Paxil for off-label uses, such as use by children and adolescents; 
  • Marketing the depression drug Wellbutrin for off-label uses, such as for weight loss and treatment of sexual dysfunction, and at higher-than-approved dosages;
  • Marketing the asthma drug Advair for off-label uses, including first-line use for asthma;
  • Marketing the seizure medication Lamictal for off-label uses, including bipolar depression, neuropathic pain, and various other psychiatric conditions;
  • Marketing the nausea drug Zofran for off-label uses, including pregnancy-related nausea;
  • Making false representations regarding the safety and efficacy of Paxil, Wellbutrin, Advair, Lamictal, and Zofran;
  • Making false representations with respect to safety and efficacy of the diabetes drug Avandia, representing to physicians that Avandia had a positive effect on patients’ lipid profiles when it had no scientific information to support such claims;
  • Offering kickbacks, including entertainment, cash, travel, and meals, to healthcare professionals to induce them to promote and prescribe a variety of GSK products; and
  • Submitting incorrect pricing data for various drugs, thereby underpaying rebates owed to Medicaid and other government-funded healthcare programs. 

The criminal settlement resolves charges that GSK violated the federal Food, Drug, and Cosmetic Act (“FDCA”) by introducing Wellbutrin and Paxil into interstate commerce when the drugs were misbranded, meaning that the labels for these two products were not in accordance with their FDA approvals, and that GSK failed to report certain clinical data regarding Avandia to the FDA.

In recognition of AG Coakley’s efforts to combat fraud and recover money for taxpayers, the AG’s Medicaid Fraud Division was awarded the 2011 State Medicaid Fraud Control Unit Award by the Office of Inspector General (OIG) of the United States Department of Health and Human Services.  In Fiscal Year 2011, AG Coakley’s office recovered a record $69 million in Medicaid fraud.

The settlement is the result of investigations initiated by the U.S. Attorney’s Office for the District of Massachusetts and the Civil Frauds Division of the U.S. Department of Justice and conducted with the assistance of several state attorneys general.  Assistant Attorney General Robert Patten of AG Coakley’s Medicaid Fraud Division served as principal negotiator on behalf of the states in connection with the national settlement.  He was assisted by Assistant Attorney General Angela Neal and Data Analyst Anthony Megathlin, both of AG Coakley’s Medicaid Fraud Division, and by Assistant Attorneys General and data analysts from California, Colorado, New York, and Ohio. 

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