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PHARMACUETICALS giant GlaxoSmithKline (GSK) has agreed to pay a record US$3bn settlement, after pleading guilty to the US’ largest healthcare fraud case.

The company faces US$1bn in criminal fines for marketing its Paxil and Wellbutrin drugs for uses not approved by the US Food and Drug Administration (FDA), including their suitability for treating conditions such obesity and addictions. They also admitted to failing to report important clinical data about its diabetes drug Avandia.

The remaining US$2bn will cover civil claims over illegal marketing and paying kickbacks to doctors using their products, as well as US$300m in unpaid rebates owed to the US Medicaid programme.

According to deputy attorney general James Cole of the US Department of Justice (DoJ), the multi-billion dollar settlement “is unprecedented in both size and scope.”

“Today’s resolution is significant not just because GSK’s conduct was egregious or because it is the largest health care fraud settlement in the department’s history,” adds acting assistant attorney general Stuart Delery. “Healthcare fraud is an epidemic that touches every aspect of our lives. And yet, for far too long, we have heard that the pharmaceutical industry views these settlements merely as the cost of doing business.”

As well as facing the fines, GSK will spend the next five years under close scrutiny from the DoJ, and will have to disclose any marketing or reporting problems. The entire US board will have to personally certify the company’s compliance with the law every year, and for every day that a report or certification is late, or a policy is deemed to be ignored, GSK will be charged US$20,000.

“The changes we are requiring of GSK and others may not end healthcare fraud, but they will go a long way to bringing about much-needed change in the way the pharmaceutical industry conducts business,” says Delery.

In a statement, GSK says it has been expecting the fines since at least November last year, and that it has “removed employees who have engaged in misconduct.” It claims to have “made fundamental changes to its procedures for compliance, marketing and selling in the US over the last few years,” and changed how it pays sales staff in a bid to remove the incentives behind mis-marketing.

“Today brings to resolution difficult, long-standing matters for GSK,” says CEO Andrew Witty. “Whilst these originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made. “