Glaxosmithkline $3 bn Settlement

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Case Details:

Case Code : BECG126
Case Length : 21 Pages
Period : 1998-2012
Organization : GlaxoSmithKline
Pub Date : 2013
Teaching Note :Available
Countries : US
Industry : Pharmaceutical Industry

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...


GSK's criminal plea agreement with the United States Government also included the drug Avandia (Rosiglitazone maleate), an oral diabetes medicine for Type-2 (non-insulin) diabetes. The drug was approved by the FDA in May 1999 for treatment of Type 2 diabetes. The US Justice Department alleged that between 2001 and 2007, GSK had lied to doctors about the drug’s safety data and sponsored trips for physicians who prescribed Avandia and promoted Avandia despite it containing a black label regarding cardiovascular risks...

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Other Drugs

The lawsuit filed by the US government and the whistleblowers also included drugs like Advair, Lamictal, Imitrex, Lotronex, Flovent, Valtrex, and Zofran. Advair was approved by the FDA in August 2000 in dosages of 100/50, 250/50 and 500/50 for treatment of moderate to severe asthma in patients of 12 years and older . However, the whistleblowers and US government alleged that during the period January 2000 through June 2010, the drug had been prescribed for the treatment of mild intermittent and mild persistent asthma, though the drug had not got approval from the FDA...

The Settlement

On July 2, 2010, GSK pleaded guilty and entered into an agreement with the US government through the United States Department of Justice to resolve criminal and civil liability. Under the criminal resolution, GSK pleaded guilty on three counts of violation of the Food, Drug and Cosmetic Act for three of its drugs, Paxil, Wellbutrin and Avandia. In the case of Paxil and Wellbutrin, GSK pleaded guilty to misbranding and false and misleading labeling. Also, it pleaded guilty to failure to report safety data about the drug Avandia. GSK agreed to pay $ 1 billion in criminal penalties and $2 billion toward a civil settlement...

Toward Becoming More Responsible

After the settlement agreement with the US government through the US Justice Department, Witty, in a press note expressed regret over the issue and said that the company had learnt from the mistakes in the past. In the same breath, he sought to portray GSK’s crimes and violate actions as having been committed in another era and as echoes of the past which had originated many years ago. He also said that those practices had changed radically since he had taken over as the CEO...


Exhibit I: Pharma's Top 11 Marketing Settlements in US
Exhibit II: GSK Pharmaceutical Turnover
Exhibit III: GSK Vaccines Turnover
Exhibit IV: GSK Consumer Healthcare Turnover
Exhibit V: A part of Greg Thorpe's Email to Arjun Rajaratnam
Exhibit VI: Cheryl Eckard's Cidra Nine High-risk Compliance Categories
Exhibit VII: Paxil Black Box Warning
Exhibit VIII: Antidepressant Market Share by Revenue 2008
Exhibit IX: Antipsychotics Market Share by Revenue 2008
Exhibit X: Avandia Black Box Warning
Exhibit XI: Pharmaceutical Drug Turnover (in millions)
Exhibit XII: GSK's Fine Settlement with US Government


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