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.