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Glaxo Pleads Guilty, Fined $1 Billion in Drug-Marketing Case

July 5 (Bloomberg) -- GlaxoSmithKline Plc pleaded guilty to illegal promotion of two drugs and failure to provide clinical data on another as part of a $3 billion settlement announced earlier with the U.S., the Justice Department said.

U.S. District Judge Rya A. Zobel in Boston orderd Glaxo to pay a criminal fine of $956.8 million and forfeit $43 million, the DOJ said today. Glaxo and the U.S. reported July 2 that the company had agreed to plead guilty and pay $1 billion in a criminal fine and forfeiture.

The $3 billion settlement, the largest-ever in a health-care fraud case in the U.S., includes $2 billion in civil payments to the U.S. and the states. The settlement also requires Glaxo to abolish incentive compensation for its sales force and publish all GSK human research studies, not just those with positive outcomes for the company’s drugs, the DOJ said.

“With these groundbreaking changes, GSK has committed to putting patients before profits; science before sales,” Carmen Ortiz, U.S. attorney for the District of Massachusetts, said in a statement today. “We hope the rest of the pharmaceutical industry follows suit.”

GSK pleaded guilty to marketing the depression medications Paxil and Wellbutrin for uses not approved by the U.S. Food and Drug Administration and for failing to report clinical data on Avandia, a diabetes drug, federal prosecutors said.

Unapproved Uses

Under federal law, while doctors are allowed to prescribe medications for unapproved uses, drug companies are barred from promoting such sales. Promotion by a manufacturer for off-label uses renders the product misbranded, the U.S. said July 2. GSK pleaded guilty to misbranding Paxil and Wellbutrin, the U.S. said.

The $3 billion total settlement surpasses the previous record, a $2.3 billion accord that Pfizer Inc. entered in 2009 over marketing of the painkiller Bextra and other drugs.

Glaxo, the U.K.’s largest drugmaker, last year set aside 2.2 billion pounds ($3.4 billion) to cover the cost of the settlement, which resolves a seven-year investigation of the company’s marketing practices for the three drugs. The reserve brought to $6.4 billion the amount the drugmaker has set aside for legal costs tied to Avandia and the other medicines.

Federal prosecutors began an investigation in Colorado in 2004, later taken over by the U.S. attorney in Massachusetts, into whether Glaxo promoted drugs for unapproved uses and into ways Glaxo potentially influenced doctors. The probe concerned nine of the company’s best-selling products from 1997 to 2004, including the Advair lung treatment, Glaxo said in its annual report.

The case is U.S. v. GlaxoSmithKline LLC, 12-10206, U.S. District Court, District of Massachusetts (Boston).

To contact the reporter on this story: Margaret Cronin Fisk in Southfield, Michigan, at

To contact the editor responsible for this story: Michael Hytha at

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