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Physician Marketing, Sales, & Education Topics related to pharma's communications with physicians, including marketing, sales, and support of symposia and continuing medical eduaction (CME)

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Old 3rd July 2012, 05:56 AM
Pharma Newshound Pharma Newshound is offline
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Default GSK Guilty of Off-Label Marketing from 1999 to 2010: Will Pay $3 Billion Settlement

Source: WSJ

Glaxo in $3 Billion Settlement

[See complaint attached; pdf]

Drug maker GlaxoSmithKline PLC agreed to plead guilty to criminal charges of illegally marketing drugs and withholding safety data from U.S. regulators, and to pay $3 billion to the government in what the Justice Department called the largest health-care fraud settlement in U.S. history.

Under the deal, which requires court approval, Glaxo will plead guilty to criminal charges involving three drugs—the antidepressants Paxil and Wellbutrin and the diabetes drug Avandia. The settlement includes $1 billion in criminal fines and $2 billion to resolve civil liabilities owed to the federal government and the states, the Justice Department said. Glaxo had announced the settlement's size in November.

The guilty plea covers a range of behavior by the U.K.-based company, including illegally promoting the antidepressants in the U.S. for uses that weren't approved by the Food and Drug Administration, a practice known as off-label marketing, and withholding important safety data about Avandia from the U.S. regulator.

The settlement was Glaxo's fourth with the U.S. government in the past several years but is by far its costliest and most far-reaching. Over a period of more than a decade, the government's latest investigation found, the company plied doctors with perks such as free spa treatments, Colorado ski trips, pheasant-hunting jaunts to Europe and Madonna concert tickets, Justice Department officials said.

Meanwhile, it encouraged those doctors to write prescriptions for the two antidepressants that went beyond their sanctioned uses. U.S. law bars companies from marketing a drug for uses not approved by the Food and Drug Administration, though doctors may prescribe approved drugs as they see fit.

At a news conference Monday and in documents posted online, the government said Glaxo spent six years—1998 to 2003—unlawfully promoting Paxil for patients under 18 when the drug wasn't approved by the FDA for non-adults. It said Glaxo helped prepare an article published in a medical journal in 2001 that falsely reported Paxil had proven effective at treating depression in children in a clinical trial, when the trial showed no such thing.

Glaxo sales representatives then used the article to promote the drug's use in depressed adolescents, the government said. The clinical trial, called Study 329, has been widely criticized by the medical community in the years since its publication.

The government said Glaxo paid an outside medical-publications company to ghost-write the article about Study 329. The article became a centerpiece of Senate investigations into drug companies' practice of hiring ghost-writers to draw up articles tlater published under the names of academic authors.

The government also said Glaxo illegally promoted Wellbutrin—approved solely to treat depression—for a number of other purposes, including weight loss, treatment of sexual dysfunction, substance addiction and attention deficit hyperactivity disorder.

According to the government, "Glaxo sales representatives sometimes referred to Wellbutrin as 'the happy, horny, skinny pill' as a way to remind doctors of the unapproved uses."

The Justice Department also said that between 2001 and 2007, Glaxo failed to report certain safety data to the FDA about Avandia, formerly one of the top-selling diabetes treatments in the world. The missing data included two studies that examined the cardiovascular safety of Avandia. Avandia now carries black-box warnings about heart risk. The FDA put tight curbs on its use in 2010, while European regulators ordered it withdrawn from the market.

Much of the misconduct alleged by the government occurred in the 1990s and early 2000s, a period of booming drug sales and widespread illegal marketing among big drug makers, many of whom have since paid large sums to the government to settle criminal and civil investigations stemming from those practices. With many companies promoting drugs of similar effectiveness, as was true with antidepressants and other mass-market pills,aggressive marketing became the key to driving sales.

Glaxo was one of the industry's biggest marketing machines, with a thousands-strong sales force paid according to the number of prescriptions they could persuade doctors to write. As part of the deal, Glaxo agreed to change the way its sales representatives are compensated and remove sales goals for specific territories. Prosecutors said that compensation system was a driving force behind much of the misconduct in the case.

"Today brings to resolution difficult, long-standing matters for GSK," Andrew Witty, Glaxo's chief executive since 2008, said in a statement. "Whilst these originate in a different era for the company, they cannot 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 civil portion of the settlement relates to conduct the government alleges led taxpayer-funded health programs, including Medicaid, to overpay for Glaxo drugs. Among other things, the government alleges Glaxo promoted five drugs off-label and paid kickbacks to doctors to prescribe nine different drugs. Glaxo has agreed to pay $2 billion to settle these civil allegations without admitting to wrongdoing, as it is with the criminal charges.

Glaxo said in November that the $3 billion settlement was covered by provisions the company had taken in recent yearsn as it worked to settle the long-running criminal and civil investigations, some of which began nine years ago in the U.S. attorney's office in Colorado. The U.S. attorney's office in Massachusetts later took the lead.

"Today's multibillion-dollar settlement is unprecedented in both size and scope," Deputy Attorney General James Cole said at Monday's news conference. "We are determined to stop practices that jeopardize patients' health, harm taxpayers, and violate the public trust."

Glaxo's settlement eclipses those signed by other big drug companies in recent years. In 2009, Pfizer Inc. agreed to pay $2.3 billion to settle a federal investigation into whether it promoted the painkiller Bextra off-label. Eli Lilly & Co. agreed to pay $1.4 billion to settle similar charges involving its antipsychotic medicine Zyprexa.

As part of its deal, Glaxo has entered into a five-year "corporate integrity agreement'' with the government in which it pledges to adhere to specific behavior. Corporate-integrity agreements are common in such settlements, but this one includes new features, including an "executive financial recoupment program," which requires Glaxo to change its executive-compensation policies to permit the company to recoup annual bonuses and long-term incentives from certain executives if they, or their subordinates, engage in significant misconduct. Glaxo may claw back up to three years of annual performance pay from executives who are current employees and from those who have left the company.

Prosecutors said they didn't know how much the company made through its off-label promotions of its drugs, so it is possible the revenue generated by the practice exceeded the $3 billion penalty.

The government's case against Glaxo was based partly on a lawsuit filed by former Glaxo employees in federal court in Boston in 2003. Thomas Gerahty, a former senior marketing development manager, and Matthew Burke, a former regional vice president, filed a so-called qui tam suit against Glaxo on the government's behalf under the Federal False Claims Act, which prohibits people or businesses from defrauding the government, and provides incentives for those who suspect wrongdoing to come forward.

According to their lawyer, Erika Kelton, Messrs. Gerahty and Burke provided information to the government about Glaxo's marketing practices, including the use of off-label promotion and financial inducements to doctors to prescribe Glaxo's drugs. Others, including former Glaxo sales manager Lois Graydon, also filed lawsuits against the company, according to Ms. Graydon's lawyers.

The whistle-blowers collectively stand to receive millions of dollars as a share of the government's settlement, under the terms of the False Claims Act. Ms. Kelton said the exact amount hasn't been determined yet, but plaintiffs generally are entitled to receive 15% to 30% of government recoveries in civil cases.

Write to Peter Landers at and Jeanne Whalen at
Attached Files
File Type: pdf gskcomplaint0702.pdf (1.08 MB, 186 views)
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Old 5th July 2012, 08:08 AM
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Default Former GSK Execs Who Implemented Off-Label Practices Now CEOs

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.

Black-Box Warning
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.

‘Phenomenal’ Drug
“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 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.

Pleading Guilty
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.

Whistleblowers’ Roles
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.

Incentive Pay
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.

‘Speed Bumps’
“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.

To contact the reporter on this story: Makiko Kitamura in London at

To contact the editor responsible for this story: Phil Serafino at
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