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GlaxoSmithKline – Big Pharma and the $3 Billion Big Fine

Defective Drugs

It used to be that the arms industry was the bad boy of all industries. Move over! Big Pharma has now topped the gun trade with a $3 billion fine imposed on GlaxoSmithKline (GSK). Britain’s largest pharmaceutical company, GSK, was just busted for offering lavish incentives to doctors to promote GSK drugs and for concealing critical evidence from regulators while selling antidepressants off-label to children.

It took whistleblowers from inside the company to bring these allegations to light.

Imagine you are a doctor who is being courted by a GSK sales rep. Prosecutors have uncovered the company spending about $500,000 a year on fishing trips, Hawaiian vacations, Madonna and basketball tickets, spa treatments, and golf lessons, among other perks,  to doctors who were sold on using the antidepressant, Paxil, on children. Paxil has been linked to suicides in children and adolescents and it was finally banned for those under the age of 18 in 2008.

Doctors were assured that the drug was safe when GSK misreported evidence from a clinical trial in a published article. Sales representatives did not stop there.

Wellbutrin was marketed for weight loss and sexual dysfunction when the FDA had only approved it to treat depression. GSK was also behind the controversial drug, Avandia, when it withheld studies that showed an early safety concern about cardiovascular risks years before a 2010 restriction was finally slapped on Avandia use by regulators.

This sort of criminal and civil illegal activity went on over a decade and the fine is a record one. What will happen next? Will individual executive be held accountable? Will they go to prison?

One executive in charge during part of this period was supposed to receive a golden parachute until stockholders revolted.

If this news sounds familiar there is a reason. Eight years ago, the Guardian in the UK writes, New York’s attorney general Eliot Spitzer sued GSK over similar allegations involving Paxil which apparently did nothing to deter the behavior.

When we do the math, the behavior is understandable if money is the only game in town. A $3 billion fine is dwarfed by Avandia sales at $10.4 billion, Paxil sales of $11.6 billion and Wellbutrin sales at $5.9 billion.

The Guardian points out that despite all of the complaints about the U.S. Food and Drug Administration, Britain’s equivalent, the Medicines and Healthcare products Regulatory Agency (MHRA) has never successfully prosecuted a company in its short 10 year history. In the U.S., the fine against GSK makes this a record year for monies recovered by the federal government under a whistleblower law which awards a portion of the recovery to the whistleblower.

Unfortunately, the FDA is underfunded and must often rely on the honesty of drug companies to provide the necessary research and safety assurances before a drug is approved.

As a result of this ten year investigation, it is painfully obvious that not all drug companies can be trusted to do the right thing. However, holding chief executive officers and highly placed company officials accountable and charging them criminally would send a loud and clear message. Until then, it’s clear that crime pays.

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