GlaxoSmithKline Pays $3 Billion Fine

http://www.sciencebasedmedicine.org/index.php/gsk-pays-3-billion-fine/

by tokenadult • 14 years ago

38 12 14 years ago

poundy• 14 years ago

I am very curious to know how GSK actually pay $3 billion. Does the CEO and/or board members walk into their bank and request for a transfer? What are the typical security restrictions in place?

fpp• 14 years ago

If they would be a bank the answer would be rather simple - they don't.

They would be fined e.g. 100M for such behavior and then receive 10B in "failure" support from one of the tax payer backed pots.

With that fresh inflow of funds they would then just carry on doing the same (but with 9.9B more on their books)

Crazy world we're living in.

btian• 14 years ago

they said it would be from their cash reserve, so I guess there'll be a few signatures on a $3 billion cheque, or they can get the CFO to ask their bank to wire the money

Danieru• 14 years ago

An interesting point. Do they happen to have a bank account with billions? Think of all the methods money arrives into a large corporation. There must be thousands of accounts.

Imagine the accounting department going through hundreds of accounts pulling a few million from here and there. At the end of a rush week the CFO logs into their bank's website and sets up a bill payment for $3,000,000,000.00.

Now on the government side, does the government have a massive bank account? They need to collect taxes so there must be something that can handle super massive payments.

On the one hand it is silly to think of governments' and corporations' accounts being run like a scaled up family. Yet I also cannot imagine that everything is done with massive IOUs.

refurb2• 14 years ago

Take a look at any large corporation's balance sheet. They usually have short-term cash (basically bank accounts) and short-term cash equivalents (very liquid assets like gov't bonds).

So basically you are correct. The CFO devises a plan to pay that fine by pulling cash from a number of different sources.

I also assume that the gov't is paid with either a single payment or a couple payments. I can't remember the context in which I saw it, but there was a copy of a check posted on a website for several billion dollars. Looked like any other corporate check (with a few more signatures on it).

pasbesoin• 14 years ago

What concerns me is that they "pay" it by further leveraging other, government-granted monopolies (patented drugs, techniques, and devices).

So, essentially, their customers "pay" it (including the government itself -- Medicare, for example).

My opinion is that people need to go to jail. And corporations need to have monopoly rights stripped or curtailed. THEN, problems such as these may lessen.

politician• 14 years ago

The charges being settled are:

1. for promoting off-label use of Paxil and Wellbutrin,

2. holding back data and making unsupported claims regarding its diabetes drug Avandia, and

3. that their sales force used inappropriate tactics to get doctors to prescribe their drugs, including various forms of “high-priced entertainment” and large speaking fees.

Alex3917• 14 years ago

I love how lying about the safety and efficacy becomes "holding back data and making unsupported claims" when filtered through the 'science-based medicine' blog. And how paying tens of millions of dollars worth of bribes, including over 275k to Dr. Drew alone to have him secretly promote the product on TV, becomes 'high-priced entertainment and large speaking fees'.

If you want to know what they were actually doing you can read about it directly from the DOJ with all the big pharma apologism:

http://www.justice.gov/opa/documents/gsk/us-complaint.pdf

vladd• 14 years ago

- http://www.google.com/finance?q=NYSE%3AGSK

refurb2• 14 years ago

These off-label settlements are always interesting to me because they arise out of how the drug approval system works.

When a drug is approved by the FDA, it is approved for a specific indication (disease or condition). Based on the clinical trials that were run, the FDA and the drug company go through a series of negotiations to determine what the label on the drug will say (yes, it's literally the label on the bottle or the package insert). The reason why they negotiate over the label contents is because it limits how the drug can be promoted.

If your drug gets approved for the treatment of schizophrenia in patients who failed a prior therapy and that is what the label says, you can't promote it for anything else. Your sales rep goes in and says "Hi Doctor, we have a new drug for schizophrenia" you just did an off-label promotion. You rep needs to say "Hi Doctor, we have a new drug for schizophrenics who have already failed a therapy". Now you're legal.

Where the complication comes in is that doctors are allowed to prescribe off-label. If you promote your new schizophrenia drug and the physician chooses to use it in patients who haven't failed a prior therapy, he's completely within his rights to do that.

So what the drug companies do is walk a tight-rope. They avoid "promoting" or "marketing" their drug for off-label uses, but they are allow to drop off journal articles that show the drug is useful in conditions outside of the label. Also, if a doctor uses the drug off-label and it works, he's allow to tell other physicians about it, in essence promoting it off-label. That's completely fine as long as the drug company didn't encourage the physician through compensation of some sort.

Why is off-label prescribing such an issue? Well, if you can have your drug used in a disease you never had to run clinical trials for, or get FDA approval for, you've just expanded your market without spending a dime to get it approved.

I'm not defending the drug companies at all. Off-label promotion is illegal and they (GSK in this case) obviously broke the law.

However, one has to wonder how much the gov't cares to stop it. Pfizer had a massive ($2.3B) settlement a few years ago related to off-label promotion. Normally, any company that is convicted of off-label promotion is banned from doing business with Medicare, which would bankrupt a lot of companies. So in this case, Pfizer created a shell corporation out of one of their subsidiaries, which pleaded guilty and was banned from doing business with Medicare, while Pfizer was left unpunished, all with the gov'ts blessing. These settlements seems more like tobacco taxes, the gov't wants it to stop, but also want the revenue.

rmorrison• 14 years ago

Our startup, http://www.comprehend.com, makes software to help get new drugs on the market quicker and cheaper. One of the most appealing things about starting an enterprise startup are the size of the problems: the fine GSK is paying ($3bn) is almost as large as all AppStore revenue last year ($3.4bn). Another datapoint: Oracle's 2011 revenue was over $35bn.

If you're going to devote several years of your life to a startup, you owe it to yourself to make sure you are attacking a huge problem.

GlaxoSmithKline Pays $3 Billion Fine

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