08192017Headline:

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Greg Webb
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British Firm GlaxoSmithKline to Pay U.S. $3 Billion Due to Sales Practices

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Certainly, one contribution to solving the federal debt crisis would be to reduce fraud, abuse and waste in government. During the past ten years, drug companies based both at home and abroad have been stringently scrutinized by the U.S. government for any possibility of defrauding the Medicare/Medicaid systems run by the Social Security Administration.

Consumers may recall that Pfizer, one of the oldest the U.S. drug companies founded in 1849 by Charles Pfizer and Charles Erhart, paid the U.S. government $2.3 billion—$1.3 billion in criminal penalties and $1.0 billion in civil fines related to aggressive sales practices related to the promotion of the medicine Bextra– in 2009. At that time, consumer advocates said that illegal marketing practices were rife in the pharmaceutical industry and Pfizer execs were advised to sign an integrity agreement "requiring senior company executives to annually certify legal compliance and mandates that Pfizer post on its Web site many of its payments to doctors."

The outcome of the Pfizer case encouraged consumer patients to ask their doctors whether drugs prescribed for them were indeed approved by the Food and Drug Administration (FDA) for use as medicine related to their conditions. Bextra had not been approved for use as a heavy-duty, post-surgery pain reliever, but was being marketed as such.

In a November 3, 2011, article which appeared in the on-line version of The New York Times, Duff Wilson notes that Glaxo was penalized for illegally marketing Avandia (among other drugs), the diabetes drug "which had been severely restricted after it was linked to heart risks." Federal prosecutors maintained that GlaxoSmithKline (GSK) had paid doctors and manipulated medical research in order to promote Avandia. In addition, there were also investigations of Glaxo’s Medicaid pricing practices and its marketing and sales of nine other GSK’s drugs.

Wilson quotes Boston University law professor, Frances H. Miller, implying this settlement was merely a painful shot in the arm to the mega-pharmaceutical company that resulted from the merger of British GlaxoWellcome and SmithKline Beecham. "Although $3 billion is a very big number in terms of drug industry settlements, it’s not a very big number in relation to almost $50 billion in annual revenue for the world’s fourth-largest pharmaceutical company." $3.4 billion, an amount set aside to pay for one settlement, was GSK’s approximate 4th Quarter profit last year. So, although sales practices may be judged "illegal" and "critics called for stiffer penalties", it seems no one is going directly to jail. And a $3.4 billion fine is little more than an inconvenience for GSK.