Whistleblower Suit Leads to $750 Million Settlement from GlaxoSmithKline

On October 27, 2010, GlaxoSmithKline (“GSK”), the world’s fourth-largest pharmaceutical company by revenue, announced that it had finalized a settlement with the U.S. Government to resolve both civil False Claims Act allegations and criminal allegations related to GSK’s faulty manufacturing of prescription medications at the company’s former plant in Cidra, Puerto Rico. GSK’s Cidra facility, which was closed in 2009, was sent a warning by the Food and Drug Administration in 2002 for its lax manufacturing processes. In 2004, one of GSK’s former quality-assurance managers, Cheryl Eckard, filed a False Claims Act suit against the company. Ms. Eckard alleged that the company submitted various false claims to government health programs because the drugs manufactured at the Cidra plant were not safe and effective, and therefore should not have been covered by the programs. In 2005, the U.S. Marshals seized several lots of certain medications that had been manufactured at the Cidra plant, including the popular antidepressant Paxil. The U.S. Government proceeded to pursue both civil allegations against GSK (premised on Ms. Eckard’s original lawsuit) and criminal allegations. As a result of that investigation, GSK has now agreed to plead guilty to charges that medications made at the Cidra plant were mislabeled, mixed up in the wrong packaging, and mislabeled. The majority of the settlement – $600 million – will be provided to state and federal governments to resolve the false claims allegations against GSK. Ms. Eckard’s share of the settlement – $96 million – is the largest settlement attributable to a lone whistleblower in U.S. history. As Ms. Eckard’s attorney put it, however, the settlement is not just a victory for her, but will force drug manufacturers to improve their manufacturing processes, or risk suits by employee whistleblowers.

For more information see:  http://www.msnbc.msn.com/id/39852323/ns/health-health_care/ or http://online.wsj.com/article/SB10001424052702303341904575576463900844480.html?mod=googlenews_wsj