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The Chief Officers' Network - your business advantage / Industries / Health, Care & Pharma / Pharmaceuticals / Health: GSK pays USD750 million fine and penalties in USA

GSK disclosed a USD750 million (£500 million) charge to its second-quarter 2010 earnings on 15 July in connection with the agreement in principle reached with the U.S. Attorney’s Office for the District of Massachusetts and the U.S. Department of Justice . No additional charge to the company’s earnings will be recorded in connection with the settlement.

“This settlement resolves a significant and long-standing legal issue facing the company,” said PD Villarreal, GSK’s Senior Vice President and Head of Global Litigation. "We regret that we operated the Cidra facility in a manner that was inconsistent with current Good Manufacturing Practice (cGMP) requirements and with GSK's commitment to manufacturing quality. GSK worked hard to resolve fully the manufacturing issues at the Cidra facility prior to its closure in 2009 and we are committed to continuous improvement in our manufacturing processes. Our commitment to compliance with cGMP is demonstrated by the fact that we have not received an FDA warning letter at any plant since the Cidra facility was cited in July 2002.”

The company says that the problems arose more than five years ago.

The combined criminal and civil action settlement is "the fourth larged amount ever paid by a pharmaceutical company to the United States," says Assistant Attorney General Tony West.

GSK did not manage the common "without admitting or denying the charges" which are a feature of buying off actions by US authorities. Instead, it has pleaded guilty to "charges relating to the manufacturing and distribution of certain adulterated drugs."

According to the DoJ "The criminal information filed today alleges that SB Pharmco’s manufacturing operations failed to ensure that Kytril and Bactroban finished products were free of contamination from microorganisms. It is further alleged that SB Pharmco’s manufacturing process caused Paxil CR two-layer tablets to split. The splitting, which the company itself called a “critical defect,” caused the potential distribution of tablets that did not have any therapeutic effect and tablets that did not contain any controlled release mechanism. According to the information, Avandamet tablets manufactured by SB Pharmco did not always have the FDA-approved mix of active ingredients, and, as a result, potentially contained too much or too little of the ingredient with the therapeutic effect. Finally, it is alleged in the criminal information that SB Pharmco’s Cidra facility suffered from longstanding problems of product mix-ups, which caused tablets of one drug type and strength to be commingled with tablets of another drug type and/or strength in the same bottle."

But the sacked informant, Cheryl Eckard, will not go home empty handed - and it's not compensation for unlawful termination of her employment that will make her rich.

"The civil settlement resolves one lawsuit filed in federal court in the District of Massachusetts under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of today’s resolution, the whistleblower, Cheryl Eckard, will receive approximately USD96 million from the federal share of the settlement amount," says the DoJ.

The settlement has not yet been approved by the Court: this tortuous process began when GSK announced the agreement in July. But the criminal case was not filed until yesterday, along with a full plea agreement and a heavyweight press conference at which prosecutors made grand statements. However, it remains open to the Court to reject or vary the deal.

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