A New Era For Corporate Integrity?

The recent announcement that GlaxoSmithKline will pay a record $3 billion in civil and criminal penalties marks the largest settlement ever incurred by a drug company, and underscores a trend in larger and larger penalties imposed by the Justice Department for off-label drug promotions and violations of the False Claims Act. Earlier this year, Abbott paid $1.6 billion to settle allegations related to a single drug, Depakote, and in 2009 Pfizer paid around $2.3 billion, including $1.3 billion in criminal penalties, for off-label promotion of Bextra. Along with the large monetary penalties, each of these companies signed a corporate integrity agreement, to assure that the companies address their behaviors and prevent them from recurring.

These megasettlements are being levied against actions that occurred as much as a decade ago, and the question remains as to whether the era of block-buster settlements will fade together with the era of block-buster drugs. In a press release issued in response to the announced settlement, GSK’s CEO, Sir Andrew Witty, says, “Today brings to resolution difficult, long-standing matters for GSK. 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 learnt from the mistakes that were made. “ He continues, “In the US, we have taken action at all levels in the company. We have fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct. In the last two years, we have reformed the basis on which we pay our sales representatives and we have enhanced our ability to ‘claw back’ remuneration of our senior management.“

Sir Witty’s tone is contrite, but time will tell whether GSK and the other members of Big Pharma who have been caught by the government have really put these behaviors behind them.