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FDA Extends False Claims Act to GMP Violations in $750 Million GSK Settlement

Nov 1st, 2010

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The Department of Justice (DoJ) announced in late October that SB Pharmco Puerto Rico (PR) – a subsidiary of GlaxoSmithKline (GSK) – has agreed to plead guilty to charges relating to the manufacture and distribution of adulterated drugs produced between 2001 and 2005 at its now-closed Cidra, PR facility.

The penalties include a criminal fine and forfeiture of $150 million and a civil settlement under the whistleblower (qui tam) provisions of the False Claims Act (FCA) totaling $600 million.  The guilty plea and sentence for the criminal portion of the case is not final until accepted by the U.S. District Court in Boston.

The FCA whistleblower provisions allow private citizens to bring civil actions on behalf of the United States and share in any recovery.   The whistleblower in the GSK suit was Cheryl Eckard, a former GSK quality manager, who will receive approximately $96 million from the federal share of the settlement amount.

In 2009, the FCA was strengthened substantially, including new provisions protecting whistleblowers.  The GSK settlement represents the first application of the revised act in the GMP arena.

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Settlements under the revised act have been awarded against a number of major pharma companies for promoting products for indications that are not FDA-approved (see box at right).  When physicians prescribe drugs for these off-label indications for Medicare and Medicaid patients, FDA is then able to bring suit under the FCA.

Pfizer has faced the largest penalty to date for making unapproved claims under the new provisions – settling with the court in the fall of 2009 for $2.3 billion.

The extension of the FCA into GMPs in the GSK case represents an expansion of FDA’s GMP enforcement arsenal, and the case will have significant repercussions for agency and industry compliance programs as its full import unfolds.

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[The implications of the GSK case, the GMP problems and drug diversion issues that led up it, and whistleblower Eckert’s interactions with company management about them are covered in detail for subscribers beginning on page 2.  Also included are links to relevant documents.  The full 6-page story may be purchased by non-subscribers for $95 by contacting Wayne Rhodes ([email protected]).  To subscribe to IPQ, click here.]

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