Source: Bloomberg BusinessWeek
Glaxo Executives Cited in Case Now Lead Sanofi, Actelion
Two senior executives at GlaxoSmithKline Plc (GSK) singled out by the U.S. Justice Department for pushing the Advair asthma drug for unapproved uses have moved on to some of Europe’s top pharmaceutical companies.
Jean-Pierre Garnier, chief executive officer from 2000 to 2008, is chairman of Swiss drugmaker Actelion Ltd. (ATLN), while Chris Viehbacher, Glaxo’s former president of U.S. pharmaceuticals, is CEO of Sanofi, Europe’s third-biggest drug company. The department cited the men, along with Stanley Hull, a former senior vice president for U.S. pharmaceuticals, in a lawsuit July 2.
“High-level GSK executives implemented the off-label promotion of Advair,” the Justice Department said in the complaint filed in Boston federal court.
Prosecutors didn’t file charges or sue the former executives. London-based Glaxo agreed to pay $3 billion to settle allegations that it illegally promoted prescription drugs and failed to report safety data, the government said July 2. The settlement is the largest ever in a health-care fraud case.
Jean-Marc Podvin, a spokesman for Paris-based Sanofi, said Viehbacher wasn’t immediately available for comment. Roland Haefeli, a spokesman for Allschwil, Switzerland-based Actelion, said Garnier didn’t have an immediate comment. Phone and e-mail messages left for Hull with a New Jersey company where he serves on the board weren’t immediately returned.
“I want to express our regret and reiterate that we have learnt from the mistakes that were made,” Glaxo CEO Andrew Witty said in a statement July 2. While the matters in the settlement “originate in a different era for the company, they cannot and will not be ignored,” he said.
Glaxo promoted Advair from 2001 through at least 2010 for all asthma patients, even though the Food and Drug Administration approved the drug for use in only severe cases, according to the complaint.
The agency added a so-called black-box warning to Advair’s label in 2003 that data showed “a small but significant increase in asthma-related deaths” in patients receiving long- acting beta agonists, a type of drug found in Advair.
“The direction to target mild and newly diagnosed patients for first-line Advair use came from the highest level of the company and was reiterated by the company’s senior management,” according to the Justice Department complaint, which cited statements by Hull in 2002 and 2004, by Viehbacher in 2004, and by Garnier in 2006.
“The real opportunity for us with Advair is that we can now convince physicians that there is no such thing as mild or severe asthma: you have asthma,” Viehbacher said at a presentation to investors in London in 2004, according to the filing. He quit Glaxo in September 2008 to join Sanofi (SAN) after losing out to Witty in the race to replace Garnier as CEO.
In January 2006, Garnier told investors that the FDA’s warning on Advair’s safety shouldn’t affect Glaxo’s stock price because it is “not meaningful and it is not going to have a big effect. I think products such as Advair are phenomenal for the treatment of asthma, and they should be used for mild to moderate and severe asthmatics. Physicians are not going to listen to the FDA.”
Garnier retired as Glaxo CEO in May 2008 and was named chairman of Actelion last year. Hull’s profile on LinkedIn.com lists him as an independent pharmaceuticals professional in North Carolina. He serves on the board of Palatin Technologies Inc. (PTN) (PTN), a drug company in Cranbury, New Jersey, according to the company’s website.
Glaxo didn’t admit liability or wrongdoing in the selling and marketing of Advair and seven other products included in the investigation.
Glaxo will plead guilty to three misdemeanor charges -- marketing the anti-depressants Paxil and Wellbutrin for uses not approved by the FDA, and for failing to report clinical data on the Avandia diabetes treatment. The company marketed Paxil to doctors as a treatment for people under the age of 18 while knowing that the drug hadn’t proved effective for these patients, according to government documents.
Glaxo withheld clinical data from studies of Paxil completed in 1998 and 2001 and falsified results from a third study for publication, according to a document filed by prosecutors in Boston federal court. In 2004, the U.S. required makers of Paxil and other antidepressants to carry a black-box warning on their labels, advising that the medicines could increase the risk of suicidal thoughts and behavior in patients under the age of 18.
The company promoted Paxil for unapproved uses by paying psychiatrists to attend meetings at “lavish resorts” in Puerto Rico, Hawaii and Palm Springs, California, according to the federal filing. Entertainment at the meetings included dinners, sailing, snorkeling, a rum distillery tour, deep sea fishing and balloon rides, it said.
Gregory Thorpe and Blair Hamrick, two former sales representatives for Glaxo in the U.S., were among whistleblowers who provided the government with evidence of the so-called off- label marketing by Glaxo, according to a settlement agreement released by the Justice Department.
Thorpe said he reported his concerns to Glaxo executives beginning in 2001. “In the end, I was told that my concerns were not valid,” he said in a statement released by Kenney & McCafferty, PC, the law firm that represented him and Hamrick. “I was put on leave and given a choice -- either take a severance package or go back to work for the same people, doing the same things I had reported to management.”
The government’s investigation and negotiations with Glaxo took nine years, during which time he was refused job interviews by 23 pharmaceutical companies, Thorpe said.
Last year, Glaxo changed incentive compensation programs for U.S. sales representatives. The company has eliminated the link between sales goals and bonuses, which are now based on selling competency, customer evaluations and overall performance of the representative’s business unit.
“In the U.S., we have taken action at all levels in the company,” Witty said. “We have fundamentally changed our procedures for compliance, marketing and selling.”
The settlement includes a corporate integrity agreement with the U.S. Department of Health and Human Services that includes a “clawback provision” where executives are subject to having their bonuses forfeited for their own or their subordinates’ improper conduct.
“This is a really important move on the part of the federal government,” said Erika Kelton, a lawyer at Phillips & Cohen LLP who represented two other whistleblowers. “Bringing it down to the individual executives who are responsible for overseeing marketing and making their pocketbooks feel it if they engage in further wrongdoing is really valuable.”
At least 41 whistleblower complaints against pharmaceutical companies have been filed in U.S. federal fraud cases that contained allegations of improper marketing between 1996 and 2010, leading to $7.9 billion in settlements, according to Aaron Kesselheim of the Harvard School of Public Health.
Other settlements include the $2.3 billion Pfizer Inc. paid in 2009 over the marketing of its Bextra painkiller and other drugs and the $1.4 billion Eli Lilly & Co. paid the same year over sales of its Zyprexa anti-psychotic medicine.
“For pharma, are these billion dollar settlements just speed bumps or parking tickets?” said Kevin Outterson, a professor of health law at Boston University and editor-in-chief of the Journal of Law, Medicine & Ethics. “Given the history, they’re still not big enough to deter the companies” from engaging in improper marketing.
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