GlaxoSmithKline settles healthcare fraud case for $3 billion

WASHINGTON, Mon Jul 2, 2012 – GlaxoSmithKline Plc has agreed to plead guilty to misdemeanor criminal charges and pay $3 billion to settle the largest case of healthcare fraud in U.S. history.

The settlement includes $1 billion in criminal fines and $2 billion in civil fines in connection with the sale of the drug company’s Paxil, Wellbutrin and Avandia products, according to filings in federal court on Monday.

Deputy U.S. Attorney General James Cole said at a news conference in Washington that the settlement “is unprecedented in both size and scope.”

As part of the settlement, GlaxoSmithKline agreed to strict oversight of its sales force by the U.S. government to prevent the use of kickbacks or other prohibited practices.

GSK said in a statement it would pay the fines through existing cash resources. The company announced a $3 billion charge in November related to legal claims.

CEO Andrew Witty said GSK’s U.S. unit has “fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct.”

Court denies request to curb Human Genome takeover defense

ROCKVILLE, Md., Fri Jun 1, 2012 – A Maryland judge denied a request to temporarily restrain Human Genome Sciences from taking measures to fend off GlaxoSmithKline’s hostile $2.6 billion takeover bid, according to a court notification.

Duane Howell, a Human Genome shareholder, had filed a lawsuit against the U.S. biotechnology company’s board and requested that the court invalidate Human Genome’s “poison pill” stockholder rights plan designed to ward off GlaxoSmithKline.

Howell’s lawyers argued in the court papers that the poison pill holds the “company’s shareholders hostage to the board and prohibit GSK and other potential acquirers from taking offers to purchase the company.”

The term “poison pill” usually refers to a company’s move to ward off any unwanted or hostile takeover attempts.

After a hearing on Thursday, Montgomery County Circuit Court Judge Michael Mason denied Howell’s request, saying only one shareholder had sued the company, according to a report by Bloomberg News.

“This is not a case where a number of disgruntled shareholders have come to court up in arms,” the judge said in court, according to the report.

On May 30, Reuters reported that GlaxoSmithKline plans to launch a campaign to replace the entire board of Human Genome Sciences with its own nominees, stepping up its hostile bid for the U.S. biotech company.

U.S., GlaxoSmithKline settle case for $3 billion

NEW YORK ― The British drug company GlaxoSmithKline said Thursday that it had agreed to pay $3 billion to settle United States government civil and criminal investigations into its sales practices for numerous drugs.

The settlement would be the largest yet in a wave of federal cases against pharmaceutical companies accused of illegal marketing, surpassing the previous record of $2.3 billion paid by Pfizer in 2009. In recent years, drug companies have been prime targets of federal fraud investigations, which have recovered tens of billions of dollars for Medicaid and Medicare.

The cases against GlaxoSmithKline include illegal marketing of Avandia, a diabetes drug that was severely restricted last year after it was linked to heart risks. Company whistle-blowers and federal prosecutors said the company had paid doctors and manipulated medical research to promote the drug.

GlaxoSmithKline had already set aside cash for the settlement, which analysts said would remove legal uncertainty. The company’s stock rose 2.96 percent Thursday, to $44.55, near its 52-week high, amid a broader market advance of about 2 percent.

“This is a significant step toward resolving difficult, long-standing matters which do not reflect the company that we are today,” Andrew Witty, CEO of GlaxoSmithKline, said in a statement. “In recent years, we have fundamentally changed our procedures for compliance, marketing and selling in the U.S. to ensure that we operate with high standards of integrity and that we conduct our business openly and transparently.”

The agreement to settle its biggest federal cases should be completed next year, the company added in the statement. It said $3 billion would settle not only the Avandia case, but also a Justice Department investigation of its Medicaid pricing practices and a nationwide investigation led by the United States attorneys in Colorado and Massachusetts into the sales and marketing of nine of its drugs from 1997 to 2004.

GlaxoSmithKline did not specify how much money would resolve each case, nor the possibility of criminal findings and fines, saying the final settlement remained under negotiation. A Justice Department spokesman declined to comment.

GlaxoSmithKline, with a market value of more than $110 billion, had net profit of about $5 billion on sales of $43 billion in the year ending Sept. 30.