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GlaxoSmithKline to Pay $750 Million Dollars to Settle Allegations of Selling Adulterated Drugs


MADISON — Attorney General J.B. Van Hollen announced that Wisconsin will join with other states, the federal government and pharmaceutical manufacturer GlaxoSmithKline (GSK) to settle allegations that GSK introduced adulterated drugs into interstate commerce. As a result, the company will pay the states and the federal government $600 million in civil damages and penalties for Medicaid and other federally-funded health care programs.  Additionally, a GSK subsidiary, SB Pharmaco of Puerto Rico, where the drugs were manufactured, has agreed to plead guilty to a felony violation of the U.S. Food, Drug, and Cosmetic Act, and has agreed to pay $150 million in criminal fines and forfeitures.


Van Hollen explained that the agreement means that GSK will pay to Wisconsin over $2.1 million as the state recovery share.  Medicaid is a program jointly funded by the state and federal governments, and the agreement calls for a total of over $5.3 million attributable to Wisconsin Medicaid.  The federal government had earlier announced the agreement in principle, and the state has determined that the settlement terms warrant Wisconsin’s participation in the agreement.


“The $2.1 million will be returned to Wisconsin Medicaid so that the program can continue to provide necessary medical assistance to our neediest citizens.  This settlement sends a message to providers that we expect to get the quality we’re paying for, and won’t settle for substandard medications or services,” said Van Hollen.  


The national federal and state civil settlement, totaling $600 million dollars, resolves allegations of poor manufacturing practices in the GSK facility located in Cidra, Puerto Rico.  The investigation grew out of a false claims action filed in 2004 in U.S. District Court in Massachusetts.   The whistleblower’s complaint alleged that GSK knowingly manufactured, distributed and sold four products – Paxil CR, Avandamet, Kytril and Bactroban – whose strength, purity and/or quality fell below the standards required by the FDA:


Paxil CR: A controlled-release antidepressant that included split tablets, causing recipients to receive either product with no active ingredient and/or product with only the active ingredient layer and no controlled release mechanism;


Avandamet: A diabetes medication with tablets containing higher or lower amounts of the active ingredient than specified;


Kytril: An anti-nausea drug labeled as sterile but with some vials containing impurities;


Bactroban: Antibiotic ointments and creams that, in some packages, were contaminated with microorganisms.


This settlement agreement reimburses the federal government and the participating states for the amounts paid by the Medicaid program as a result of GSK’s conduct.  Additionally, GSK has agreed to the terms of a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of the Inspector General, which will require scrutiny of GSK’s future manufacturing practices.


            A team from the National Association of Medicaid Fraud Control Units represented the interests of the states during negotiations with GSK.