October 16, 2006 Evelyn Pringle
It would be difficult to find a better career than employment as a GlaxoSmithKline attorney, especially if job security is a top priority. Not a year goes by when the company is not doling out millions of dollars to defend against charges involving corporate misconduct of one kind or another.
A limited review of the company’s involvement in the legal system over just the last five years reveals a clear pattern of habitual corruption. However, although Glaxo has paid billions of dollars in accumulated fines, penalties and awards to plaintiffs in civil cases, not one company official has been arrested and charged with a crime.
Glaxo’s latest escapade was revealed on October 5, 2006, when Bloomberg News reported that Glaxo conducted a recall of Paxil CR, a selective serotonin reuptake inhibitor antidepressant, last month because some of the pills may lack an active ingredient, but that the company did not warn patients who may be taking the useless pills.
Doctors told Bloomberg that patients who either abruptly stop taking Paxil or get inactive pills, can face the risk of suicidal thoughts, shooting pains and flu like symptoms.
The Paxil CR pills are the highest dose sold, and can cause severe withdrawal symptoms, according to Dr Stephen Ellen, a psychiatrist from the University of Massachusetts Medical School in Worcester. “If it is true that patients might have gotten dummy pills without knowing it, it is outrageous,” he said.
According to Glaxo, the FDA knew about the problem and approved the limited recall plan, but FDA spokeswoman, Susan Cruzan, told Bloomberg that she did not know the details of the September Paxil CR recall.
This incident is even more outrageous because back on March 4, 2005, the government cited Glaxo for the exact same wrongdoing when the FDA and the Department of Justice initiated the seizure of Paxil CR tablets after Glaxo failed to meet the standards laid out by the FDA to ensure product safety, strength, quality and purity.
Among the violations noted then by the FDA, was the finding that the tablets could split apart and patients could receive a portion of the tablets that lacks any active ingredient, or alternatively a portion that contains active ingredient and does not have the intended controlled-release effect.
The seizures followed warrants issued by the U.S. District Courts for the District of Puerto Rico and the Eastern District of Tennessee and were executed by the U.S. Marshals Service at Glaxo’s Cidra, Puerto Rico manufacturing facility, its Knoxville, Tennessee distribution facility, and a Puerto Rico distribution center.
The FDA said that Glaxo had voluntarily recalled some of the affected lots of Paxil CR but had failed to recall all of the affected lots and that failure resulted in the seizures by federal authorities.
“FDA and the Department of Justice will not allow drug manufacturers to ignore our high public health standards for drug manufacturing,” said John Taylor, FDA Associate Commissioner for Regulatory Affairs in a statement released by the agency at the time.
“Once we discover a company is not following the standards, which were created to ensure safety and quality, we expect them to correct the deficiencies in an expedited manner,” Mr Taylor stated.
“American consumers,” he said, “deserve the best health care products on the market today, and companies that are not adhering to these standards cannot assure FDA and American consumers of the quality of their products.”
A month and a half later, on April 28, 2005, the FDA announced that Glaxo had signed a consent decree to correct the manufacturing deficiencies at its Cidra, Puerto Rico facility.
However, the consent decree required Glaxo to post a penal bond of $650,000,000 contingent upon either successfully reconditioning the drugs seized in March 2005, or destroying them and paying the costs to the government.
To resolve the matter, Glaxo supposedly recalled all of the lots of Paxil CR made before November 2004, and agreed to an independent quality review of the manufacturing.
But now here we are in October 2005, with Glaxo still putting patients at risk due to the exact same wrongdoing.
When it comes to civil lawsuits against Glaxo, a steady stream of cases have been filed as a result of Glaxo’s concealment of the known dangers associated with Paxil, including an increased risk of suicide, birth defects, violence and withdrawal syndrome.
But the company’s most egregious conduct, many critics say, in light of all the serious adverse effects now linked to Paxil, was the concealment of the fact that with many patients, and especially children and adolescents, Paxil does not even work.
Glaxo has clearly put profits over patients when marketing Paxil. While concealing clinical trials that showed Paxil was ineffective and could cause children to commit suicide, according to New York state Attorney General, Elliott Spitzer, Glaxo raked in $55 million by selling Paxil to adolescents and children in 2002 alone, when more than two million prescriptions were written for pediatric patients.
The Los Angeles based Baum Hedlund law firm is handling lawsuits involving Paxil related child suicides. On March 23, 2006, the firm filed a national class action lawsuit against Glaxo on behalf of the mother of Trevor Blain, an 11-year old Kansas boy who committed suicide after being prescribed Paxil, and Tonya Brooks from Texas who attempted suicide while taking Paxil.
Trevor Blain was prescribed Paxil for “separation anxiety disorder” in October 2000 and he immediately began having angry outbursts and sleeping problems. However being the side effects of Paxil were not discussed with his parents, they did not realize that the troubling behavior could be linked to the drug.
Trevor continued to take Paxil until early November 2000, when he hanged himself in the family laundry room using his dog’s leash. After the suicide attempt, Trevor remained in a coma until he died on December 7, 2000.
Plaintiff Tonya Brooks, age 17, was prescribed Paxil in 2004 after being diagnosed with social anxiety disorder. She too became agitated, aggressive and had sleep problems but was unaware that she might be experiencing the adverse effects from Paxil.
Tonya first attempted suicide by taking an overdose of Paxil and Ambien, a sleeping medication, and when that attempt was unsuccessful, she took a pair of scissors and gouged a hole in her leg two days later and was hospitalized for several days.
The two named plaintiffs in the case seek to represent all individuals under the age of 18 in the US who attempted suicide while taking Paxil, or the families of individuals who killed themselves while taking the drug.
The lawsuit’s claims against Glaxo include fraud, negligence, strict liability and breach of warranty.
The Baum Hedlund firm has been handling SSRI lawsuits since 1990, and served on the Plaintiffs’ Steering Committee in the first suicide related case involving Prozac, the first SSRI approved by the FDA.
Baum Hedlund partner, Karen Barth Menzies leads the firm’s SSRI Department and was Lead Counsel for the Plaintiffs’ Steering Committee in Paxil Products Liability Litigation.
Ms Menzies’ advocacy efforts on behalf of SSRI suicide victims have not been limited to the legal arena. She has also testified on the matter before the California State Assembly and the FDA’s psychopharmacologic Drugs Advisory Committee and has met with members of Congress from both the House of Representatives and the Senate regarding the risk of SSRI induced suicidality.
The firm is also now handling Paxil birth defect litigation. On July 28, 2006, Baum Hedlund filed a lawsuit on behalf of the parents of Adrian Vasquez, who was born with life-threatening birth defects on April 19, 2004, as a result of his mother unwittingly taking Paxil during pregnancy.
Adrian was born with congenital heart defects and since eight days old, he has undergone three open heart surgeries in an attempt to repair the heart defects. He will also likely have to undergo more surgeries in the future and possibly a heart transplant at some point.
The lawsuit alleges that Glaxo, “by directly and indirectly advertising, marketing, and promoting Paxil for the treatment of women during pregnancy and by placing this drug in the stream of commerce knowing that Paxil would be prescribed to pregnant women in reliance upon the representations … that Paxil was safe and effective for the treatment of women during pregnancy and without significant risk to the fetus.”
The complaint also alleges that Glaxo “did not timely warn the medical community and consumers generally that taking Paxil during pregnancy is associated with a significant increased risk of birth defects and abnormal development of the unborn child.”
In reviewing Glaxo’s entanglements in the legal system over the last five years, the first guilty verdict in a Paxil-related suicide case was issued on July 7, 2001, when a jury in Cheyenne, Wyoming, ordered SmithKline Beecham (now GlaxoSmithKline) to pay $6.4 million to the relatives of Donald Schell, who after taking Paxil for only 2 days, shot and killed his wife, daughter, and granddaughter before killing himself.
At trial, the jury heard the expert testimony of British psychiatrist and SSRI researcher, Dr. David Healy, who told the panel that all SSRIs could trigger suicidal and violent behavior in some patients. On the stand, Dr Healy described his own studies that showed that SSRIs could even cause one in four “healthy volunteers” to become agitated, and in some cases suicidal.
“Healthy volunteers” means the subjects were not mentally ill to begin with.
Dr. Healy further revealed internal SmithKline documents from clinical trials conducted by the company to support his findings. He presented a summary of a study involving more than 2,000 healthy volunteers, taking either a placebo or Paxil, that found that hundreds of healthy volunteers on Paxil had experienced adverse reactions, ranging from insomnia or anxiety to attempted suicide, that doctors in the study coded as “possibly,” “probably” or “definitely” caused by Paxil.
Glaxo’s defense team told the jury that taking 2 Paxil pills could not have caused Mr. Schell’s violent and suicidal behaviors. However, the summary of the company’s own study showed that some healthy volunteers experienced anxiety, nightmares, hallucinations and other side effects coded as “definitely” caused by Paxil within two days.
In as early as four days, another volunteer experienced akathisia, a severe form of agitation that experts believe increases the risk of violence and suicide, and 2 other volunteers attempted suicide after taking Paxil for 11 and 18 days.
In the end, after considering all the evidence, the jury placed 80% of the blame for the tragedy on Glaxo.
Glaxo is notorious for concealing negative information from Paxil and legal experts say civil litigation has played a major role in exposing the dangers kept hidden for so long. According to Attorney Menzies, “Civil lawsuits uncover internal company documents to which not even the FDA has access.”
“Through our Paxil litigation,” she notes, “we’ve obtained documents that show a seriously troubling mentality of profit over safety and a callous disregard for the welfare of children.”
“That’s about as reprehensible as you can get,” Ms Menzies says.
There is certainly enough available evidence to back up that assertion. For instance, on July 15, 2003, after meeting with the Canadian regulatory agency, Health Canada, Glaxo issued a public advisory in Canada alerting pediatric patients, their parents or guardians, and healthcare professionals that until further information was available that Paxil should not be given to pediatric patients, due to concerns of a possible increased risk of suicidal thinking, suicidal attempts or self-harm.
The advisory also said, “Paxil must not be used in pediatric patients with major depressive disorder due to the additional fact that studies have failed to show that Paxil was effective in this patient population.”
In addition, Glaxo distributed letters to physicians in Canada and the UK, informing them that studies had failed to demonstrate the efficacy of Paxil in the pediatric population and that there was a doubling of the rate of adverse events, including emotional lability. However, Glaxo did not provide American physicians with this information.
Instead, it sent Medical Information Letters only to those physicians who specifically requested information concerning Paxil as a treatment for children and adolescents.
Glaxo also took steps to actively conceal the negative information about Paxil from the American public. In a June 10, 2003 press release in UK, Glaxo disclosed the suicidal thinking or attempts in children, and particularly in adolescents. But the company’s American press release on June 19, 2003, stated that “there is no evidence that Paxil is associated with an increased risk of suicidal thinking or acts in adults” and that “not a single person committed suicide.”
The American press release also provided no safety or efficacy information about Paxil regarding its use in the treatment of pediatric patients.
The five-year litigation history of Glaxo involves many different types of cases. For instance, in April 2003, Glaxo paid $88 million and signed one in a slew of corporate “integrity agreements,” to settle charges that the company overcharged the Medicaid programs for Paxil and the nasal-allergy spray, Flonase, using a complex scheme that involved the re-labeling of products sold to an HMO at deeply discounted prices, to avoid the obligation to pay millions of dollars in rebates to the Medicaid program.
The Medicaid Rebate program requires Glaxo to give Medicaid the same discounts it gives to commercial customers like HMOs, hospitals and drug store chains. Drug companies have to report their lowest discount price for each Medicaid covered drug on a quarterly basis, and then pay a rebate based on that price.
To resolve another shady deal, in a February 6, 2004 press release, Glaxo announced that it had agreed to pay $175 million to settle an antitrust class action lawsuit involving the anti-inflammatory drug Relafen filed on behalf of direct purchasers, including pharmaceutical wholesalers.
This lawsuit alleged that Glaxo used “sham” patent litigation to block generic versions of Relafen from reaching the market. Glaxo filed the patent infringement lawsuits against two generic drug makers in 1997, which triggered an automatic 30-month stay of the FDA’s authority to grant approval of the generic drug applications.
However, Glaxo lost the patent litigation when U.S. District Judge ruled after a trial that Glaxo had obtained the Relafen patent through fraudulent misrepresentations to the U.S. Patent and Trademark Office.
The two generic companies, Teva Pharmaceuticals USA and Eon Labs Manufacturing Inc., later filed antitrust suits alleging that Glaxo’s patent lawsuits were “sham” litigation filed for the purpose of maintaining a monopoly.
In regard to these lawsuits, Glaxo’s Februay 6, 2004 press release said, “Similar actions from other plaintiffs in the Relafen antitrust matter, including claims made by Teva, chain drug stores and Eon Labs have also been settled, resulting in further payments from GSK.”
And of course the press release contained the standard claim that Glaxo “continues to believe that its actions were appropriate in obtaining and enforcing its patent for Relafen.”
Five months after the announcement of the settlement in the patent case, on June 2, 2004, New York State Attorney General, Eliot Spitzer, issued a press release to report the filing of a lawsuit against Glaxo for concealing information about the safety and efficacy of Paxil in treating children and adolescents.
The complaint alleged that, starting in 1998, Glaxo engaged in a concerted effort to withhold negative information concerning Paxil and misrepresented data concerning the drug’s safety and efficacy when prescribed for depression in children and adolescents and pointed out that Paxil “has not been approved for any condition or illness in children or adolescents.”
Specifically, it said, Glaxo conducted at least five studies on the use of Paxil in children and only published and disseminated one, which showed mixed results on efficacy.
According to the lawsuit’s complaint, because its studies failed to demonstrate efficacy and suggested a possible increased risk of suicidal thinking and acts for these youth:
“GSK sought to limit physicians’ access to only the most favorable aspects of the data from these studies. To accomplish this, GSK embarked on a campaign both to suppress and, conceal negative information concerning the drug and to misrepresent the data it did reveal concerning the drug’s efficacy and safety.”
The complaint also alleges that Glaxo failed to disclose this information in “Medical Information Letters” that the company sent to physicians.
“By concealing critically important scientific studies on Paxil,” Mr Spitzer said in the press release, “GSK impaired doctors’ ability to make the appropriate prescribing decision for their patients and may have jeopardized their health and safety.”
Mr Spitzer noted that an internal Glaxo document from 1998 showed that Glaxo intended to “manage the dissemination of data in order to minimize any potential negative commercial impact.”
The lawsuit also alleges that Glaxo misrepresented the results of its research to sales representatives who promoted Paxil to doctors and portrayed the drug as having “remarkable efficacy and safety in the treatment of adolescent depression.”
According to the lawsuit, Glaxo’s studies did not demonstrate efficacy and in fact in one study, the children in the placebo group actually out performed the children in the Paxil group.
This impression was reinforced, the lawsuit said, by the mischaracterization of much of the information that Glaxo did disclose, and its Paxil-related targeting of psychiatrists who treated only pediatric patients.
In a statement responding to the allegations in the lawsuit, Barry Perlman, M.D., President of the New York State Psychiatric Association, said:
“The relationship between a doctor and a patient must be based on a sense of trust. In order to hold true to that principle, physicians must have access to all relevant medical information regarding treatment. Any obstacle placed in the way of full and complete communication with our patients undermines the trust upon which the doctor-patient relationship is based and prevents us from providing the best care we can to our patients.”
Other members of the medical profession expressed similar views. Arthur Levin, Executive Director, for the Center for Medical Consumers, stated: “The ability of drug companies to pick and choose the research they provide doctors in support of their product is an outrageous conflict of interest and puts us all in harm’s way.”
Less than 3 months after the filing of the lawsuit, in an August 26, 2004, press release, Attorney General Spitzer reported that Glaxo would pay $2.5 million in disgorgement and costs to the State of New York as part of the agreement to resolve the charges that Glaxo concealed information about the safety and effectiveness of Paxil.
In addition, the press release said, Glaxo will establish an online “Clinical Trials Register” that will contain summaries of results for all GSK-sponsored clinical studies of drugs conducted after December 27, 2000 and any earlier studies that may be relevant.
“Each clinical study summary posted,” Mr Spitzer advised, “will contain over 20 categories of information including information regarding the effectiveness of the drug tested, the type and severity of adverse side effects the study participants experienced, whether the goals or other components of the study were changed mid-stream, and whether the study was terminated early before full completion and why.”
“This settlement holds GSK to a new standard of disclosure about studies concerning its drugs,” Mr Spitzer said, “a standard that helps to ensure that doctors and patients have access to all scientifically sound information so doctors can prescribe appropriate medication for their patients.”
As part of the settlement, Glaxo also agreed to ensure that all Medical Information Letters provided to doctors concerning off-label use of Paxil and other drugs “will fairly and accurately reflect the safety and efficacy data from clinical studies concerning off-label use.”
Shortly after the settlement was announced, Mr Spitzer said that he would continue to watch Glaxo despite the settlement, because the company and its CEO, J.P. Garnier, appeared “unrepentant” with regard to changing behavior related to the disclosure of adverse clinical trials.
He referred to the “arrogance” of the Glaxo official as “offensive and problematic” and said, “We are going to be watching them with a hawk’s eye to see that they have abided by the terms of the settlement.”
In addition to Paxil suicide related litigation, for the past few years, Baum Hedlund has also been engaged consumer fraud litigation against Glaxo. The firm filed a class action similar to that of Mr. Sptizer’s, likewise alleging that Glaxo suppressed evidence of Paxil’s failed efficacy and increased risk of suicidality in children and adolescents, on behalf of residents of California, Florida, Massachusetts, Nevada, New Jersey, Pennsylvania, Texas and Washington under the title, Smith v. GSK, Case No. 04CC00590, Superior Court of the State of California, County of Orange. According to Baum Hedlund, these particular states were selected because they have similar consumer protection laws.
The firm filed another similar class action in Minnesota on behalf of residents of Minnesota, Illinois, Missouri, North Dakota and Ohio, titled, Engh v. GSK, Court File No. PI 04-012879, State of Minnesota, County of Hennepin, District Court, Fourth Judicial District.
Although discovery is on-going in these cases, hundreds of thousands of documents have been amassed and reviewed, with key documents selected, organized and categorized to prove up the various causes of action in these cases. Depositions of key Glaxo employees have been taken and are continuing, as well as depositions from academic “thought leaders” hired by Glaxo to tout the benefits and safety of Paxil.
A little more than a month after Mr Spitzer charged the company with fraud in New York, on July 8 2004, Glaxo announced an agreement to settle anti-trust litigation involving the antibiotic drug, Augmentin, by paying $92 million to settle a class action brought on behalf of direct purchasers, including pharmaceutical wholesalers, and indirect purchasers such as consumers and third party payers.
The press release said the settlements were being submitted for review to the U.S. District Court for the Eastern District of Virginia, where the cases have been pending since 2002.
In an all too familiar refrain, Glaxo once again said that it continued to believe that its actions were appropriate in obtaining and enforcing its patents for Augmentin.
That said, on November 18, 2004, in a press release, the self-proclaimed not-guilty Glaxo said it had agreed to pay $29 million to settle a class action lawsuit brought by the New York State United Teachers Union and other plaintiffs on behalf of consumers forced to pay more for Augmentin.
NYSUT joined the class action in 2002 and other major plaintiffs included the Welfare Fund of the United Federation of Teachers, NYSUT’s affiliate in New York City schools.
The suit alleged that Glaxo illegally maintained a monopoly over Augmentin, and without a generic equivalent, consumers were forced to pay more for the drug, according to a press release issued by the Teacher’s Union.
“This should send a loud and clear message to the prescription drug industry,” said the union’s President Tom Hobart in hailing the settlement.
On November 18, 2004 Paxil was back in the spotlight when a press release announced a notification program ordered by the US District Court for the Eastern District of Pennsylvania, to alert consumers, insurers, and employee welfare benefit plans who paid for Paxil, or its generic equivalent, paroxetine, to a proposed $65 million settlement of the case against Glaxo.
This lawsuit claims that Glaxo broke antitrust and consumer protection laws by keeping lower cost generic versions of Paxil off the market and included a class of people who paid for Paxil or a generic paroxetine, from January 1, 1998 through September 30, 2004 and included consumers who paid any portion of the cost of Paxil or a generic paroxetine, as well as insurers and Employee Welfare Benefit Plans that paid on behalf of patients and insureds.
In a similar case, on December 1, 2004, the drug Relafen was back in the news again when Glaxo announced in a press release that the company would pay $75 million to settle a lawsuit with a class of consumers and third-part payors who purchased Relafen.
The Prescription Access Litigation (PAL) project had previously announced on May 24, 2004, that its attorneys had settled a suit against Glaxo alleging that it used illegal tactics to maintain its patent on Relafen, and to keep a generic, cheaper version off the market.
“This settlement agreement is a significant victory for consumers who struggle each day with the enormous cost of prescription drugs,” PAL Project Director Alex Sugerman-Brozan said.
“Cases such as this,” he stated, “put the drug industry on notice that consumers are fed up with the manipulation of drug prices: When drug companies use the courts to illegally extend their patents and keep drug prices artificially high, consumers will not hesitate to turn the tables and fight back through the courts.”
The plaintiffs in this case also alleged that Glaxo fraudulently obtained a patent to cover Relafen when internal company documents showed that Glaxo knew that a patent should not be issued.
The settlement involved many Federal cases that had been consolidated in a US District Court in Massachusetts, that claimed that the monopoly had resulted in consumers and payors paying exorbitant prices for Relafen.
“Once approved by the court,” PAL said in a statement, “the settlement will result in the creation of a $25 million consumer pool through which individuals may seek reimbursement for Relafen overcharges, and a $50 million pool for third party payors.”
The court issued its final order approving the settlement on October 13, 2005.
In a completely different type of litigation, on January 21, 2005, the New York Daily Record reported that 1,300 Glaxo workers who were improperly classified as temporary employees were awarded a $5.2 million settlement.
With such classifications, the Record said, workers were not able to take advantage of the drug maker’s employee benefit plans.
Six months later, in a September 20, 2005 press release, the US Department of Justice announced a $150 million settlement with Glaxo to resolve charges that the company engaged in a scheme “to set and maintain fraudulent and inflated prices” for two drugs, knowing that federal healthcare programs established reimbursement rates based on those prices.
According to the DOJ, the difference between the reimbursement rate and the actual price paid by healthcare providers is commonly known as the “spread,” and the larger the spread the larger the profit or return on investment.
The drugs involved are typically administered in doctors’ offices or hospitals to counter nausea brought on by chemotherapy and radiation. The DOJ said that Glaxo purposely overcharged government programs and then charged health care providers less than the reimbursement rate, to make it more profitable for those providers to sell Glaxo drugs.
The government also alleged that Glaxo engaged in a “double dipping” billing scheme by encouraging health care providers to pool leftover vials of one drug to create an extra dose, which then would be administered to a patient and rebilled to health care programs.
“Because reimbursement from federal programs was based on the fraudulent, inflated prices,” the DOJ charged, “GlaxoSmithKline caused false and fraudulent claims to be submitted to federal healthcare programs.”
The investigation in this case was massive and involved the Civil Division of the DOJ, the US Attorney’s Offices for the Districts of Massachusetts and the Southern District of Florida, the Office of Inspector General for the Department of Health and Human Services, the Office of Program Integrity of TRICARE Management Activity, and the National Association of Medicaid Fraud Control Units.
The investigation began after the filing of a whistleblower lawsuit by a small, home-infusion company, Ven-A-Care of the Florida Keys under the False Claims Act which allows private persons to file whistleblower suits to provide the government with information about wrongdoing.
When persons submit false claims, under the FCA, the government is entitled to recover treble damages and $5,500 to $11,000 for each claim. In lawsuits in which the government is successful in litigating the case, the whistleblower can receive between 15-25% of the amount recovered. As part of the settlement in this particular case, the DOJ said the whistleblowers received approximately $26 million.
In addition, as a condition for doing future business with the Medicare and Medicaid programs, Glaxo signed an addendum to an existing Corporate Integrity Agreement requiring the company to report accurate average sales prices and average manufacturer’s prices for its drugs covered by Medicare and other federal healthcare programs.
“This agreement marks another in a series of cases in which a pharmaceutical manufacturer has settled claims that its fraudulent drug pricing cost federal healthcare programs and taxpayers millions of dollars,” said Assistant Attorney General Peter Keisler of the DOJ’s Civil Division in the press release.
“The Justice Department will continue to pursue these types of fraud schemes vigorously,” he said, “to make clear that we will not tolerate fraudulent pricing practices designed to reap profits for drug companies and doctors at the expense of healthcare programs for the poor and the elderly.”
“Any pharmaceutical company that intentionally inflates the cost of prescription drugs with elaborate pricing schemes robs states and beneficiaries nationwide of millions of Medicare and Medicaid dollars,” said Daniel Levinson, HHS Inspector General.
“We will not tolerate any company abusing programs intended to benefit our most vulnerable citizens,” he stated
About six months later in March 2006, in a new case involving the same old behavior, Paxil was back in the news when Glaxo paid $14 million to settle another lawsuit brought by New York Attorney General Spitzer on behalf of 49 states, alleging the company fraudulently tried to delay competitors from marketing a generic version of Paxil by filing frivolous patent infringement lawsuits.
In a statement, another state Attorney General involved in the case, Jay Nixon from Missouri said: “GSK used the courts to hold onto a monopoly for a popular drug and the end result was that consumers – including Medicaid – paid more than they should have.”
The settlement reportedly covered the cost of Paxil purchased by state and federally funded Medicaid programs but as usual Glaxo denied any guilt. “We made the decision that settling was appropriate,” it said, “to avoid the expense and distraction of protracted litigation.”
The next month, on April 17, 2006, the Sun Herald announced that a $3.5 million multistate antitrust settlement had been reached with Glaxo concerning the drug Augmentin, once again to settle charges that Glaxo fraudulently delayed generic competition.
In another case a few months later, in August 2006, Glaxo agreed to pay more than $70 million to settle a number of lawsuits alleging that the company over charged patients, health care plans and insurers for pharmaceuticals for more than a decade.
This litigation involved more lawsuits filed by New York Attorney General Spitzer and other state attorneys general claiming that Glaxo overcharged customers by hundreds of millions of dollars and accused the company of consumer fraud, commercial bribery, and false statements to government health plans.
Mary Anne Rhyne, spokeswoman for Glaxo, said the settlement would cover a class action filed by individual consumers, health-care plans, and insurers, according to Bloomberg News on August 11, 2006.
She said the company had also settled overpricing litigation or investigations by the attorneys general of New York, California, Connecticut, Montana, Nevada and Arizona and potential claims from 34 other states, including New Jersey, Delaware, and the District of Columbia, she said.
“Our lawsuit helped stop a long-standing practice that inflated the cost of drugs for people suffering from cancer and cheated the Medicaid system,” Mr Spitzer said in the Bloomberg article. “Today’s settlement provides significant restitution for consumers and the Medicaid program.”
It is worth noting that this settlement with state governments came less than a year after Glaxo agreed to pay the $150 to settle the same charges in the lawsuit filed under the False Claims Act by Federal health care programs.
But last month, the government hit the jackpot with Glaxo. On September 12, 2006, the Huffington Post reported that Glaxo had agreed to pay more than $3 billion to settle charges by the IRS that the company under-reported profits to avoid paying US taxes.
However, here too, in true Glaxo form, the company denied any guilt and said it only paid the $3 billion to settle the case to avoid protracted litigation.