GSK plc settles US federal investigations for $3 billion

GlaxoSmithKline plc is settling multiple federal investigations with the U.S. government, numerous states, and the District of Columbia for a total of $3 billion. The agreement, first agreed upon in principle in November 2011, resolves criminal and civil liabilities related to the company's sales and marketing practices for nine products, the use of discount exceptions in the Medicaid Rebate Program, and the marketing and regulatory submissions for the drug Avandia.

The settlement requires GSK to plead guilty to misdemeanor violations of the Federal Food, Drug, and Cosmetic Act concerning the marketing of Paxil and Wellbutrin, and for failing to report certain study information about Avandia to the FDA. GSK has also entered into a Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services. This CIA will oversee aspects of the company's manufacturing operations.

GSK stated that the $3 billion settlement is covered by existing legal provisions announced in November 2011 and will be funded through existing cash resources. The company has implemented significant changes to its compliance, marketing, and selling procedures in the U.S. in recent years. These changes include a new incentive compensation system for sales representatives that eliminates individual sales targets and bases bonuses on the quality of service provided to customers.

CEO Sir Andrew Witty expressed regret for past actions, stating the company has learned from mistakes and is committed to a culture of patient focus, transparency, and integrity. He noted that the company has reformed its sales practices and strengthened its ability to claw back remuneration from senior management when misconduct occurs. The company asserts that the civil settlement does not constitute an admission of liability regarding the sale of several other specified products.