GlaxoSmithKline fined $3 billion by FDA for improper marketing and unethical behavior

Recently, the US Department of Justice ordered the pharmaceutical giant, GlaxoSmithKline (GSK), to pay $3 billion in criminal and civil liabilities in the largest healthcare fraud settlement in US history. Basically, GSK was caught promoting several drugs for unapproved uses, failing to report safety data, paying kickbacks to physicians, and price reporting. Let’s look at the fraud charges one by one.

Unapproved uses (or off-label uses). By law, pharmaceutical companies are only allowed to market drugs according to what is stated in their package labeling which is approved by the FDA. Off-label uses are the practice of prescribing pharmaceuticals for an unapproved indication or in an unapproved age group, unapproved dose or unapproved form of administration. Physicians are legally allowed to prescribe drugs off-label (as long as it is not contraindicated), but the pharmaceutical company cannot directly or indirectly influence off-label use. In most cases, off-label use isn’t dangerous, nor is it particularly unethical.

GSK was accused of unlawfully promoting Paxil, an antidepressant, for treating patients under the age of 18, even though it lacked FDA approval for pediatric use. GSK participated in “preparing, publishing and distributing a misleading medical journal article that misreported a clinical trial of Paxil that demonstrated efficacy in the treatment of depression in patients under age 18, when the study failed to demonstrate efficacy.” What was most troubling was that GSK did not balance its study with data from two other studies in which Paxil failed to demonstrate efficacy in treating depression in patients under 18. Typical of this type of marketing, GSK sponsored dinners, lunches, spas, and similar types of programs to promote the off-label use of Paxil in children. It’s also important to note that Paxil includes a “black box warning“, the strongest FDA warning for a pharmaceutical product, that states that antidepressants make increase suicidal ideation and behavior in patients under 18.

GSK also unlawfully promoted Wellbutrin, approved at that time only for Major Depressive Disorder, for weight loss, the treatment of sexual dysfunction, substance addictions and attention deficit hyperactivity disorder, among other off-label uses. Similar to its strategies with Paxil, GSK “paid millions of dollars to doctors to speak at and attend meetings, sometimes at lavish resorts, at which the off-label uses of Wellbutrin were routinely promoted and also used sales representatives, sham advisory boards, and supposedly independent Continuing Medical Education (CME) programs to promote Wellbutrin for these unapproved uses.”

GSK also promoted its asthma drug, Advair, for first-line therapy for mild asthma patients, even though it was not approved or medically appropriate. GSK also promoted Advair for chronic obstructive pulmonary disease with misleading claims as to the relevant treatment guidelines. GSK also promoted Lamictal, an anti-epileptic medication, for off-label, non-covered psychiatric uses, neuropathic pain and pain management. GSK also marketed certain forms of Zofran, approved only for post-operative nausea, for the treatment of morning sickness in pregnant women.

Although there is some evidence that would support the off-label use for these drugs, GSK lacked this evidence, and, in the case of Paxil actually had evidence that it might not work or might be dangerous in the off-label application. 

Off-label use of drugs are a way for pharmaceutical companies to increase sales of drugs that have plateaued in revenues. The more ethical, but time-consuming manner, would be to perform clinical trials, apply to the FDA for additional indications, change the labeling, then market the drugs with the new indications. Many company sales reps, with a wink and a nod, will describe clinical trials in sometimes low level journals, that describe off-label applications of drugs. Physicians may attempt to use those drugs in those new applications. Apparently, GSK didn’t even use the wink and nod, and overtly marketed the drugs off label.

Pharmaceutical companies invest a lot of money to bring each drug to market. They need to communicate to physicians that there is a new drug or device available to them. But there needs to be a code of conduct on how to market to physicians. There cannot be gifts of any type. There cannot be lavish meetings with spa trips and golf outings. There could have been a way to create a balanced and scientific meeting to present evidence that could be discussed in an open environment, but that has been so contaminated by the pharmaceutical industry, I don’t think that there is any way to resurrect that out of the ashes into a way that removes the stench of what GSK and other companies have done.

The pharmaceutical industry has to rethink how it interacts with physicians. The sales rep model is becoming less cost effective, and, since there is obviously a negative cost involved with the lack of regulatory control of these reps, it may not sense any more. With the reduction of the physician’s time and willingness to meet with reps, their value has become reduced to dropping off donuts, samples, and brochures. I am oversimplifying the system by quite a bit, but if I were a CEO of a Big Pharma, I’d be extremely concerned about how my sales team was interacting with physicians. Was it ethical? Were they actually meeting physicians? Are they influencing prescribing patterns? Are we going to be hit by a huge fine?

Failing to report safety data. GSK failed to report safety data about Avandia, a diabetes drug, to the FDA that are meant to allow the FDA to determine the continued safety of a drug. The intentionally missing information included data regarding certain post-marketing studies and data regarding cardiovascular safety. Since 2007, the FDA has added two “black box warnings” to the Avandia label to alert physicians about the potential increased risk of (1) congestive heart failure, and (2) myocardial infarction (heart attack).   

Kickbacks. GSK paid kickbacks to health care professionals to induce them to promote and prescribe the drugs used as off-label, as well as Imitrex, Lotronex, Flovent and Valtrex. Apparently, this conduct caused false claims to be submitted to federal health care programs.

Price Reporting:  By law, GSK was required to report the lowest, or “best” price that it charged its customers and to pay quarterly rebates to the states based on those reported prices. When drugs are sold to purchasers in contingent arrangements known as “bundles,” the discounts offered for the bundled drugs must be reallocated across all products in the bundle proportionate to the dollar value of the units sold. The United States alleges that GSK had bundled sales arrangements that included steep discounts known as “nominal” pricing and yet failed to take such contingent arrangements into account when calculating and reporting its best prices to the Department of Health and Human Services. Had it done so, the effective prices on certain drugs would have been different, and, in some instances, triggered a new, lower best price than what GSK reported. As a result, GSK underpaid rebates due to Medicaid and overcharged certain Public Health Service entities for its drugs. In an environment where health care costs are increasing faster than incomes, and those without access to proper health care are being squeezed by difficult choices made by public health services, it is unconscionable, if not immoral, for a pharmaceutical company, especially one that made over $7 billion in net income last year, to avoid a few hundred million dollars in costs illegally. I defend Big Pharma all the time–this I cannot. 

The failure to report clinical data, especially data that a drug might have increased medical risks, paying kickbacks to physicians (and let’s not even go down the path of what to think about those physicians who accept that kickback), and failure to report proper pricing are all indicators of a depth of unethical behavior that may prove that a wholesale change is required before GSK can be trusted with the health of their customers. Their behavior is so abysmal as to make me wonder why criminal charges weren’t issued against the management of GSK.

Despite how disgusting I found this story, there is a huge silver lining. I’ll even consider it a gold lining. The system works. The FDA found the fraud. The US Department of Justice prosecuted the company that perpetrated the fraud. And GSK paid a huge price (short of jail time for its executives) for its criminal and civil liabilities.

Steven Novella, in Science-Based Medicine, “GSK Pays $3 Billion Fine“, puts it much more succinctly and harshly,

The GSK settlement, in my opinion, is just the most recent evidence that industry cannot be left to their own devices without proper monitoring and regulation. There is a certain efficiency and motivation for innovation in the private sector approach to drug development. That seems worth preserving. But companies are chiefly motivated by profit, and when billions of dollars are at stake there is a huge motivation to bend the rules. We take for granted that companies are going to distort information when marketing their products to the public. Experienced and savvy consumers view all commercial and marketing activity with a skeptical eye and we do need to take some personal responsibility for protecting ourselves (let the buyer beware).

At the same time the public largely expects that with health care issues the government will play some role in protecting the public from fraud, misinformation, unsafe and ineffective products and services. The stakes are just too high to make every consumer fend for themselves in a completely unregulated wild west of health care. In addition the science behind health care products and services is complex, and it is not reasonable to expect the average citizen to be able to sift through complex technical medical research. That is essentially the reason for the existence of the FDA.

I think that with careful, thoughtful, and evidence-based regulations we can have the best of both worlds. We can have a dynamic and innovative pharmaceutical industry that is also regulated to protect the public from misinformation and fraud and to ensure a minimum standard of scientific evidence for safety and effectiveness.

What this recent settlement indicates, in my opinion, is that companies will bend the rules to maximize their own profits, and that effective regulation can bring them into line and protect the public. I also think this settlement is a significant piece of evidence against the typical “Big Pharma” conspiracy theory that government is in the hands of industry. It’s hard to dismiss $3 billion dollars as a slap on the wrist. This was a clear statement.

I still think a clearer statement would have been a few years of prison time for the CEO and every executive, director and manager who decided that it would be a good idea to lie to the government, to push off-label uses of drugs, and to fail to provide safety data to the FDA. But $3 billion will work.

The Original Skeptical Raptor
Chief Executive Officer at SkepticalRaptor
Lifetime lover of science, especially biomedical research. Spent years in academics, business development, research, and traveling the world shilling for Big Pharma. I love sports, mostly college basketball and football, hockey, and baseball. I enjoy great food and intelligent conversation. And a delicious morning coffee!