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GlaxoSmithKline dishes out $3 billion in product liability case

British drugmaker GlaxoSmithKline pleaded guilty in court recently to charges stemming from accusations that the company did not report safety concerns about a diabetes medication, improperly marketed drugs and promoted an antidepressant drug for uses that are unapproved. The drugs Avandia, Paxil and Wellbutrin were among those listed in the case.

Even after a $3 billion settlement for GlaxoSmithKline, some critics believe there is not enough of a penalty to stop pharmaceutical companies from committing unlawful behavior. That includes the promotion of potentially dangerous products.

The settlement by the drugmaker, which is the largest to date by a pharmaceutical company, is due in part to a whistle-blower law known as the False Claims Act, which was created in 1863. According to court documents, a number of GlaxoSmithKline employees reported the illegal activity, including one who has been informing the government for a number of years.

Though the company was charged, none of the executives at GlaxoSmithKline was prosecuted, which critics say would be a good way to help prevent unlawful behavior by drugmakers in the future. Former New York Attorney General Eliot Spitzer said he has seen proof that fines are not enough to cease crimes. Instead, he said he believes company officials should be inflicted with a form of criminal punishment, including being forced to resign from their positions.

Only a small number of cases charging company executives have taken place, resulting in relatively minor criminal penalties. Rarely have these cases involved pharmaceutical companies. In addition, because $3 billion is only a small amount of the more than $22 billion that GlaxoSmithKline made from the three major drugs alone, Spitzer said the company can look at it as simply the cost of doing business.

GlaxoSmithKline's CEO stated the company has learned from its mistakes and regrets the decisions it made prior to the court case. But is there anything to effectively prevent similar conduct in the future? It's a fairly safe bet that this settlement won't be the last by a pharmaceutical company. Those who have suffered the effects of a dangerous or improperly marketed drug may be able to obtain compensation with the help of an attorney who handles cases of product liability.

Source: The New York Times, "Glaxo Agrees To Pay $3 Billion in Fraud Settlement," Katie Thomas and Michael S. Schmidt, July 2, 2012

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