$3 billion settlement in GlaxoSmithKline case
largest health care fraud settlement in US history
Eric LaMont Gregory
While America contemplates the direction our health care system ought to take, one thing on which most can agree is that the wellbeing of the patient, when pervention fails, is the single most important ingedient in the health care system. A breach of that basic principle is, should be, intolerable. The out of court settlement in this case shrouds the intricacies of the fraud committed by GlaxoSmithKline in Crimean mystery.
In a case that illustrates glaringly the problem with joint administration of the Medicaid program between the federal government and the states, GlaxoSmithKline has pled guilty to the largest health care fraud case in US history. The implications that the facts in this case have brought to light are far reaching, and frankly troubling.
It is obvious that patient health and safety was compromised by a runaway corporate compensation system, fueled by the willingness of doctors to accept payment and perscribe medications for non-approved uses. And, GlaxoSmithKline profited greatly by perpetuating this fraud, and the 3 billion negotiated settlement, although the largest in US history, represents is a very small fraction of the revenue this massive breach generated for GlaxoSmithKline.
The US Justice Department has reached a settlement in which GlaxoSmithKline will pay $3 billion to resolve investigations of the company’s sales, marketing, pricing, and Medicaid reimbursement practices.
The agreement involves not only the US government, but several states and the District of Columbia, as well.
GlaxoSmithKline admitted guilt to Justice Department negotiated misdemeanor violations related to aspects of the marketing of Paxil for pediatric use, and Wellbutrin for non-approved uses, and for failure to properly inform users about the status of certain Avandia studies concerning its efficacy.
The Justice Department document states that GlaxoSmithKline is required to pay a fine of $2 billion to settle civil allegations that it submitted false claims to federal health care programs for those drugs and others as a result of the company’s illegal promotional practices and payments to physicians.
The settlement also resolves a civil investigation of the company’s alleged underpayment of rebates that were required under the Medicaid Drug Rebate Program, a practice that is thought to be widespread and is the
object of on-going inquiries.
GlaxoSmithKline has voluntarily entered into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. GlaxoSmithKline released a statement that it has made - fundamental changes - in its compliance procedures for marketing and selling drugs.
The company states that it has put in place a new incentive compensation schedule for its sales representatives, especially those who work directly with health care professionals. The new compensation regime is designed to eliminate individual sales targets as a basis for bonuses, and one of the factors that lead to the Justice Department investigation.
In place of the bonuses linked to sales targets scheme, compensation will be based on the quality of the service the representative delivers to customers to support improved patient health, according to a written statement by Andrew Witty the CEO GlaxoSmithKline. There is no mention of the system of payments to doctors which one of the more troubling findings in this case.