Wed, Jul 11, 2012 - Page 9 News List

Pharma tops league of misbehavior

GlaxoSmithKline’s US$3 billion fine for mis-selling drugs in the US is the biggest ever handed down, but analysts say it is a drop in the ocean compared with the profits made from medicines

By Terry Macalister  /  The Observer

Illustration: Mountain People

GlaxoSmithKline (GSK), Britain’s biggest pharmaceutical group, has been selling anti-depressant drugs in the US for unapproved uses on children, concealing critical evidence from US regulator, the Food and Drug Administration (FDA), relating to a diabetes product, and offering lavish entertainment to doctors willing to promote its medicines.

The problem came to light because of whistleblowers inside the company and adds to a string of other settlements with pharmaceutical firms that lead critics to claim problems are endemic in the sector.

Last month, Abbott Laboratories was forced to pay US$1.6 billion over its marketing of the anti-psychotic treatment Depakote, while the total cost of industry fines is over US$20 billion covering the past two decades.

However, the GSK case has shaken even the most hardened of industry observers, as prosecutors found the company had been allotting over half a million US dollars a year to its district sales representatives to offer doctors regular golf lessons, fishing trips, and basketball tickets while promoting the use of antidepressant drug Paxil in children.

The GSK sales campaign also involved helping to publish an article in a medical journal that misreported evidence from a clinical trial.

Meanwhile the company was also being accused of marketing the drug Wellbutrin for sexual dysfunction and weight loss, when it had only received official consent from the FDA to treat depression. Some of its drugs reps were reportedly describing Wellbutrin as “the happy, horny, skinny pill.”

In the case of a third treatment, Avandia, the company did not report to the FDA studies it had carried out that showed there were safety concerns concerning heart risks. Critics had been calling for the drug to be banned four years ago, yet it was only in 2010 that restrictions were finally slapped on its use.

GSK has agreed to pay a US$3 billion fine to settle criminal and civil charges with federal and state governments stemming from illegal activity over 10 years. This is the biggest-ever fine of its kind but there seem no plans at this stage to pursue executives or other individuals in positions of power at the time. Through some of the period covered by the fine, the firm was run by the highly-paid Frenchman Jean-Pierre Garnier, whose entitlement to a £22 million (US$34.1 million) “golden parachute” payoff, if he left the company, enraged shareholders and caused a historic investor revolt.

In response to last week’s announcement by regulators, the pharmaceuticals company said it had changed the way its sales staff is paid by eliminating individual sales targets.

Sir Andrew Witty, GSK’s chief executive, said the settlement brought a resolution to “difficult, long-standing matters for GSK,” adding: “I want to express our regret and reiterate that we have learned from the mistakes we made.”

Critics point out that other executives directly named as having been told of concerns continue in top jobs, albeit in different companies.

Whistleblower Greg Thorpe first alerted the company to the entertainment offered to doctors and the culture that allegedly put profits above ethics in 2001. He raised his concerns with David Stout, who was then head of the US business, and Bob Ingram, GSK’s chief operating officer. When he was forced out of the company, he took his case to the regulators, which spent almost 10 years investigating the issues.

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