The pharmaceutical giant GlaxoSmithKline has agreed to pay more than $35 million to Massachusetts’ Medicaid program as part of a $3 billion settlement with federal and state authorities, the largest health care fraud payment in US history.
The massive settlement, disclosed Monday by the Department of Justice, includes a guilty plea to three criminal charges by London-based GlaxoSmithKline, which has its US headquarters in Philadelphia.
The company, which bought the Cambridge biotechnology company Sirtris Pharmaceuticals Inc. in 2008, runs a molecular discovery research lab in Waltham.
GlaxoSmithKline has admitted to illegally promoting its antidepressant drugs Paxil and Wellbutrin between 1998 and 2003 for uses not approved by the Food and Drug Administration. Although doctors may prescribe drugs for off-label treatments, drug makers are required to confine their marketing to approved uses. The British company also acknowledged that it failed to report safety data from its Avandia diabetes drug to the FDA.
“These were drugs that are very well known,” said the attorney general of Massachusetts, Martha Coakley, whose office led a five-state delegation that teamed up with Justice Department prosecutors in the settlement negotiations with GlaxoSmithKline. “Widespread marketing, with misrepresentations about the safety and efficacy of these drugs, can give doctors a false sense of security. And this ultimately has an impact on consumer safety.”
Money from the settlements will reimburse Massachusetts and most other states for Medicaid payments made to GlaxoSmithKline, allowing the states to reduce their new outlays for Medicaid, the federally subsidized state health insurance program for low-income residents.
Under the US deal, Glaxo will plead guilty to two counts of introducing a pair of misbranded drugs, Paxil and Wellbutrin, into interstate commerce, and one count of failing to apprise FDA officials of safety data about vandia, a diabetes treatment.
GlaxoSmithKline will pay a total of $1 billion to resolve the criminal allegations, including a fine of $956.8 million and a forfeiture of $43.2 million.
The settlement still needs approval from a federal court.
Separately, the drug maker will pay $2 billion to resolve civil liabilities with the federal government and the states under the False Claims Act. The civil settlement resolves unlawful promotion and pricing fraud charges relating to Paxil, Wellbutrin, and Avandia.
“This action constitutes the largest health care fraud settlement in United States history,” Deputy US Attorney General James M. Cole said at a Washington, D.C., news conference.
The parties last year disclosed preliminary terms of the GlaxoSmithKline settlement, which tops the previous largest health care fraud payment of $2.3 billion by New York-based drug maker Pfizer Inc. in 2009.
In a statement, GlaxoSmithKline said it has set aside cash to fund the deal and taken steps to change its compliance and marketing procedures in the United States.
“Today brings to resolution difficult, long-standing matters,” GlaxoSmithKline’s chief executive, Andrew Witty, said in a company statement. “Whilst these originate in a different era for the company, they can not and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have [learned] from the mistakes that were made.”
The settlement grew out of an investigation by the Department of Health and Human Services’ Office of Inspector General, working with the FDA and the Federal Bureau of Investigation.
According to the settlement’s criminal plea agreement:
■ GlaxoSmithKline unlawfully marketed Paxil for treating depression in patients under 18, even though the FDA has never approved the drug for pediatric use. Among other things, the drug maker helped prepare a misleading medical journal article that wrongly said a clinical trial demonstrated the treatment was effective for combating depression in children, and did not make available data from two studies that found Paxil failed to demonstrate benefits for that group.
The company also sponsored dinner, lunch, and spa programs and other activities aimed at promoting the use of Paxil in children and adolescents, paying a speaker to talk to audiences at the programs.
■ GlaxoSmithKline promoted Wellbutrin, at the time approved only to treat depression, to combat weight loss, sexual dysfunction, substance addiction, and attention deficit hyperactivity disorder. The company paid millions of dollars to doctors to speak at and attend meetings, sometimes at resorts, at which such off-label uses were encouraged.
■ The drug maker failed to include safety data about the diabetes drug Avandia in reports designed to help FDA officials determine whether the treatment continued to be safe for its approved uses and to spot safety trends. Missing data included included cardiovascular studies undertaken in response to the concerns of European regulators.
“This case demonstrates our continuing commitment to ensuring that the messages provided by drug manufacturers to physicians and patients are true and accurate and that decisions as to what drugs are prescribed to sick patients are based on best medical judgments, not false and misleading claims or improper financial inducements,” said Carmen Ortiz, the US attorney for Massachusetts, whose office participated in the investigation.