GSK pays $3 billion to settle US marketing probe
pharmafile | November 3, 2011 | News story | Sales and Marketing | GSK, compliance, federal investigation
GlaxoSmithKline has agreed to pay $3 billion to settle US government investigations into the sales and marketing of diabetes drug Avandia.
The huge settlement exceeds the £2.3 billion Pfizer paid when it pleaded guilty to charges of marketing violations of its painkiller Bextra. The GSK deal means the US government will drop all charges, but the size of the payment reflects the seriousness of the charges.
The deal covers three separate probes into company practices – one launched by the US Attorney’s office of Colorado in 2004 and later taken on by the US Attorney’s office of Massachusetts; a US Department of Justice’s investigation of possible inappropriate use of pricing in the Medicaid Rebate Program; and the Department of Justice’s investigation of the development and marketing of Avandia.
The deal is yet to be finalised, but is expected to see the US government drop civil and criminal charges against the company.
GSK has already written off the costs, and expects to make the payments in 2012 through existing cash resources. The GSK Board and management team say the deal is in the best long-term interests of shareholders.
GlaxoSmithKline chief executive Andrew Witty said the deal would help resolve “difficult, long-standing matters which do not reflect the company that we are today”.
He added that the company had ‘fundamentally changed’ its US compliance, marketing and selling procedures in the US to ensure no further transgressions occurred.
GSK introduced a new framework for compliance in the US in 2008, tightening up its sales and marketing practices. The company says it now employs a larger number of employees in its compliance division, and has strengthened training programmes that require certification by employees.
Other initiatives to change commercial procedures have also been introduced, including a new incentive system for sales representatives working in the field, which eliminates individual sales targets as a basis for bonuses, and instead bases incentive compensation on the quality of the service these representatives deliver to customers to support improved patient health.
The company says its US Commercial Practices Policies now meet or exceed the US PhRMA Code governing interactions with healthcare professionals.
Andrew McConaghie
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