

GlaxoSmithKline Pays $3 Billion Fine - tokenadult
http://www.sciencebasedmedicine.org/index.php/gsk-pays-3-billion-fine/

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refurb
These off-label settlements are always interesting to me because they arise
out of how the drug approval system works.

When a drug is approved by the FDA, it is approved for a specific indication
(disease or condition). Based on the clinical trials that were run, the FDA
and the drug company go through a series of negotiations to determine what the
label on the drug will say (yes, it's literally the label on the bottle or the
package insert). The reason why they negotiate over the label contents is
because it limits how the drug can be promoted.

If your drug gets approved for the treatment of schizophrenia in patients who
failed a prior therapy and that is what the label says, you can't promote it
for anything else. Your sales rep goes in and says "Hi Doctor, we have a new
drug for schizophrenia" you just did an off-label promotion. You rep needs to
say "Hi Doctor, we have a new drug for schizophrenics who have already failed
a therapy". Now you're legal.

Where the complication comes in is that doctors are allowed to prescribe off-
label. If you promote your new schizophrenia drug and the physician chooses to
use it in patients who haven't failed a prior therapy, he's completely within
his rights to do that.

So what the drug companies do is walk a tight-rope. They avoid "promoting" or
"marketing" their drug for off-label uses, but they are allow to drop off
journal articles that show the drug is useful in conditions outside of the
label. Also, if a doctor uses the drug off-label and it works, he's allow to
tell other physicians about it, in essence promoting it off-label. That's
completely fine as long as the drug company didn't encourage the physician
through compensation of some sort.

Why is off-label prescribing such an issue? Well, if you can have your drug
used in a disease you never had to run clinical trials for, or get FDA
approval for, you've just expanded your market without spending a dime to get
it approved.

I'm not defending the drug companies at all. Off-label promotion is illegal
and they (GSK in this case) obviously broke the law.

However, one has to wonder how much the gov't cares to stop it. Pfizer had a
massive ($2.3B) settlement a few years ago related to off-label promotion.
Normally, any company that is convicted of off-label promotion is banned from
doing business with Medicare, which would bankrupt a lot of companies. So in
this case, Pfizer created a shell corporation out of one of their
subsidiaries, which pleaded guilty and was banned from doing business with
Medicare, while Pfizer was left unpunished, all with the gov'ts blessing.
These settlements seems more like tobacco taxes, the gov't wants it to stop,
but also want the revenue.

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politician
The charges being settled are:

1\. for promoting off-label use of Paxil and Wellbutrin,

2\. holding back data and making unsupported claims regarding its diabetes
drug Avandia, and

3\. that their sales force used inappropriate tactics to get doctors to
prescribe their drugs, including various forms of “high-priced entertainment”
and large speaking fees.

~~~
Alex3917
I love how lying about the safety and efficacy becomes "holding back data and
making unsupported claims" when filtered through the 'science-based medicine'
blog. And how paying tens of millions of dollars worth of bribes, including
over 275k to Dr. Drew alone to have him secretly promote the product on TV,
becomes 'high-priced entertainment and large speaking fees'.

If you want to know what they were actually doing you can read about it
directly from the DOJ with all the big pharma apologism:

<http://www.justice.gov/opa/documents/gsk/us-complaint.pdf>

------
rmorrison
Our startup, <http://www.comprehend.com>, makes software to help get new drugs
on the market quicker and cheaper. One of the most appealing things about
starting an enterprise startup are the size of the problems: the fine GSK is
paying ($3bn) is almost as large as _all_ AppStore revenue last year ($3.4bn).
Another datapoint: Oracle's 2011 revenue was over $35bn.

If you're going to devote several years of your life to a startup, you owe it
to yourself to make sure you are attacking a huge problem.

------
poundy
I am very curious to know how GSK actually pay $3 billion. Does the CEO and/or
board members walk into their bank and request for a transfer? What are the
typical security restrictions in place?

~~~
Danieru
An interesting point. Do they happen to have a bank account with billions?
Think of all the methods money arrives into a large corporation. There must be
thousands of accounts.

Imagine the accounting department going through hundreds of accounts pulling a
few million from here and there. At the end of a rush week the CFO logs into
their bank's website and sets up a bill payment for $3,000,000,000.00.

Now on the government side, does the government have a massive bank account?
They need to collect taxes so there must be something that can handle super
massive payments.

On the one hand it is silly to think of governments' and corporations'
accounts being run like a scaled up family. Yet I also cannot imagine that
everything is done with massive IOUs.

~~~
refurb
Take a look at any large corporation's balance sheet. They usually have short-
term cash (basically bank accounts) and short-term cash equivalents (very
liquid assets like gov't bonds).

So basically you are correct. The CFO devises a plan to pay that fine by
pulling cash from a number of different sources.

I also assume that the gov't is paid with either a single payment or a couple
payments. I can't remember the context in which I saw it, but there was a copy
of a check posted on a website for several billion dollars. Looked like any
other corporate check (with a few more signatures on it).

~~~
toemetoch
The Mitsubishi check?

<http://www.gizmodo.com.au/2011/06/12-money-shots/>

Since this kind of money can disturb a bank (a bank lends a multiple of what
it has floating) wouldn't it be "cleaner" if the government just opened an
account at the same bank and had the money transferred there?

------
vladd
Related links:

\- <http://en.wikipedia.org/wiki/Rosiglitazone>

\- <http://www.google.com/finance?q=NYSE%3AGSK>

