Pharmaceutical giant GlaxoSmithKline (GSK) has agreed to pay a whopping $750 million to settle criminal and civil claims alleging the company engaged in faulty manufacturing practices. GSK will also plead guilty to a criminal charge for manufacturing contaminated pills at its Puerto Rico plant and distributing them to the public. The plant has since been shut down. The government’s probe found that some of the adulterated medications made at the plant, such as the antidepressant Paxil and diabetes medication Avandia, posed safety risks to patients.
A federal investigation was instigated when Cheryl D. Eckard, a former employee of GSK, filed a whistleblower suit against GSK in 2004. According to the New York Times, Cheryl Eckard discovered a myriad of problems when she was sent to GSK’s manufacturing facility in Puerto Rico to lead a team of quality experts back in 2002. She had been sent there to fix problems cited in an FDA warning letter. When Eckard arrived at the plant, she realized that quality control was a disaster and the FDA inspectors had actually missed most of the problems. Ms. Eckard’s lawsuit alleged that the water and air systems at the facility were contaminated, some intravenous cancer medications were not sterile, and pills of differing concentrated medicine were being mixed in the same bottles.
Ms. Eckard claimed she directly alerted company officials about the deficiencies and even suggested specific recalls, but was fired for doing so in 2003. She finally called the FDA and sued, the New York Times said. In 2005, the Puerto Rico plant was seized by federal marshals who collected nearly $2 billion worth of products. It was the largest seizure of its kind in history.
Ms. Eckard is entitled to at least $96 million of the settlement amount, one of the highest whistleblower awards obtained in a qui tam case. $150 million will go to settle the criminal charge and $600 million goes toward civil penalties.
“This record-breaking settlement should send alarm bells into every pharmaceutical corporate office in America,” stated Baum Hedlund whistleblower attorney, Bijan Esfandiari. “Employees who witness industry misconduct are increasingly less likely to stand idly by while the companies in which they work rip off the public, making billions for themselves through their fraudulent conduct. Fear of retaliation is becoming less of a deterrent as a result of whistleblower protections and, as evidenced by this latest settlement, there are strong incentives in exposing corporate fraud.”
According to the Taxpayers Against Fraud Education Fund, the Justice Department recovered $3.1 billion under the false claims act in 2010. At least 80 percent of those recoveries were health care cases brought by whistleblowers, making the false claims act a crucial tool in the war against pharmaceutical fraud.
Some officials, however, fear that these monetary settlements could not be enough to stop fraud. The FDA, along with the Inspector General of the Health and Human Services Department, announced a plan to prosecute pharma executives personally if their companies engaged in fraudulent activities.
Still, the $750 settlement may leave a lasting impact on the drug industry. This is the first successful fraud case to allege that a drug manufacturer knowingly sold contaminated products, leading many to believe that it will spark a change in the manufacturing of future medications. Many officials hope that other drug companies will take notice.
