Saturday, July 7, 2012

Pharmaceutical company fined $3 billion after fraud

We rely on pharmaceutical companies, and, in lesser extent, academics, to get new drugs onto the market. They fulfil an important role in society, because their efforts can save lives by curing diseases. However, much can be said about the conduct of such companies, as they need to invest a lot of money in development, meaning they want to earn as much as possible when bringing a drug to the market. There is a thin line between securing much-needed profits and unethical conduct, which sadly sometimes leads to companies crossing the line of what is deemed fair and reasonable. GlaxoSmithKline, one of the biggest pharmaceutical companies in the world, was ordered to pay 3 billion dollars after the company was found to be guilty of fraudulent conduct.

The charges
Several accusations were laid down by the FBI and the US Department of Justice, leading up to the $3 billion fine. One of the complaints was based on the unlawful promotion of an antidepressant called Paxil for patients below the age of 18; the company did not have the required approval from the FDA. GSK also promoted the use of a drug called Welbutrin, approved for the use in depression and other conditions. In this case, the drug was promoted for uses other than what it was approved for. Lastly, GSK failed to submit safety data to the FDA regarding a drug called Avandia, which was shown to be causing heart problems.

For these three charges combined, GSK agreed to pay a total sum of 3 billion dollars, after the case had been investigated by the FBI. Additionally, the pharmaceutical company had to commit to certain 'non-monetary compliance commitments and certifications', which were not further elaborated upon. In a statement given to New Scientist, GSK CEO Andrew Witty said that the company's conduct in the aforementioned cases was a mistake, and is no longer tolerated.

The 3 billion dollar fine is likely one of the biggest settlements ever. Nevertheless, GSK is quite able to pay, as they made a profit of around 12,4 billion dollar last year. Pharmaceutical companies do need a lot of money in order to be able to invest in the development of new products, meaning a 3 billion dollar fine will likely, at least to some extent, hurt their business.

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