GlaxoSmithKline was socked with $3 billion in fines by US authorities Monday over charges it marketed drugs for unauthorized uses, held back safety data, and cheated the government's Medicaid program.
In a longstanding case that officials said bared the ugly underside of the US pharmaceutical industry, GSK was also accused of paying kickbacks to doctors, paying for expensive trips and other benefits, to gain their support for the drugs the company was pushing.
GSK, one of the world's largest health care and pharmaceuticals companies, pleaded guilty on three counts and agreed to the fines in what the department called the largest health care fraud settlement in US history.
The British drugmaker admitted to charges that it had promoted antidepressants Paxil and Wellbutrin for uses not approved for by US regulators, including treatment of children and adolescents.
The company also conceded charges that it held back data and made unsupported safety claims over its diabetes drug Avandia.
Altogether it will pay $1 billion in criminal fines and forfeitures over charges relating to the three drugs.
In addition, the company will pay $1.7 billion in civil fines for illegal promotion of those drugs as well as others; paying kickbacks in their marketing; and making unsubstantiated claims about Avandia's safety and efficacy.
And separately, GSK is being fined $300 million to settle charges it underpaid rebates it owed to the US Medicaid program.
"Today's resolution is significant not just because GSK's conduct was egregious or because it is the largest health care fraud settlement in the Department's history," said acting assistant attorney general Stuart Delery.
"For far too long, we have heard that the pharmaceutical industry views these settlements merely as the cost of doing business. That is why this administration is committed to using every available tool to defeat health care fraud."
The charges said that from 1998 to 2003 GSK promoted Paxil to use in treating depression in patients under 18 without approval from the US Food and Drug Administration.
Likewise, in 1999-2003 the company illegally promoted Wellbutrin for things like weight loss, sexual dysfunction treatment, and other uses.
The company also "spent millions of dollars" to doctors to promote off-label uses of the drug.
Carmen Ortiz, the US Attorney for Massachusetts, which took part in the case, said physicians were given vacations in Hawaii, pheasant hunts in Europe, and tickets to concerts as inducements to support GSK drugs.
For Wellbutrin, the effort was to generate "a buzz about getting skinny and having more sex," Ortiz said.
The alleged kickbacks also involved the drugs Zofran, Imitrex, Lotronex, Flovent, and Valtrex, the Justice Department said.
The case involved several industry insider informants, or whistleblowers, who first reported the wrongdoings 10 years ago and who are able to share in the financial settlement in the case, according to lawyers.
GSK chairman Sir Andrew Witty said in a statement that the problems originated in a "different era" and that the company has now "fundamentally" changed its procedures for compliance, marketing and selling its products, and has removed employees involved in misconduct.
"On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made."
"We have a vital role to play in bringing innovative medicines to patients and we understand how important it is that our medicines are appropriately promoted to healthcare professionals and that we adhere to the standards rightly expected by the US government."
Investors shrugged off the record settlement, which had been in the works for months. US-traded GSK shares were up 1.6 percent in afternoon trade on the New York Stock Exchange.