GlaxoSmithKline PLC has agreed to pay $750 million and plead guilty to a criminal charge to settle a U.S. government investigation of manufacturing deficiencies at its former plant in Puerto Rico. The probe was sparked by a whistle-blower suit filed by a former employee. Glaxo agreed to settle a U.S. investigation of manufacturing problems. Glaxo previously disclosed in July that an agreement in principle had been reached to settle the probe. The government had been looking into the manufacture of defective pills including the Paxil antidepressant at Glaxo’s plant in Cidra, Puerto Rico, between 2001 and 2005. They found that some tablets could split apart or had inappropriate amounts of active ingredient, posing safety risks. Glaxo has since closed the facility.
U.S. Attorney Carmen Ortiz in Boston announced the final settlement, saying that although there was no evidence of patient harm, it was critical to pressure companies to follow the rules. Tony West, assistant attorney general for the Civil Division of the Department of Justice, said in a Justice Department press release:
Adulterated drugs undermine the integrity of the FDA’s approval process, can introduce substandard or ineffective drugs onto the market and, in the worst cases, can potentially put patients’ health at risk.
This was the fourth-largest amount a drug company has ever paid to resolve a government probe. Last year, Pfizer Inc. paid a record $2.3 billion to settle allegations it had improperly promoted drugs for unauthorized uses. In 2004, a former quality-assurance manager at Glaxo, Cheryl Eckard, filed a lawsuit against the company in federal court in Boston, alleging that the company submitted false claims to government health programs because drugs manufactured at the Puerto Rico plant weren’t safe and effective, and thus shouldn’t have been covered by government programs. The suit had been filed on behalf of the U.S. under the federal law that was designed to encourage people with knowledge of suspected wrongdoing to notify the government. Ms. Eckard raised the concerns internally before being terminated by Glaxo in mid-2003. The government hopes that this lawsuit and resulting settlement will force drug makers to improve their manufacturing processes.
Taxpayers Against Fraud spokesman Patrick Burns said the case signals that the Justice Department is willing to pursue manufacturing violations. Big-ticket health-care fraud settlements in recent years have largely centered on allegations that drug makers have promoted drugs for unapproved uses and paid kickbacks to health-care providers. The U.S. Attorney’s Office in Boston subpoenaed Glaxo for documents related to Cidra in 2005. Some $600 million of the settlement amount will go to the federal government and participating states to resolve the civil false-claims allegations.
Source: Wall Street Journal
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