GlaxoSmithKline has agreed to pay out $750 million in order to settle the numerous criminal and civil complaints claiming that the drug giant has knowingly sold contaminated baby ointment and an ineffective anti-depressant.
Out of the many GSK products produced there were 20 questionable drugs that were made in a Puerto Rican plant that was rife with contamination for many years.
The whistle blower lawsuit was filed by the company’s former quality manager Cheryl D. Eckard who was fired after warning Glaxo of the problems. No patients were known to have become sick from the products but among those included in the list were Paxil, Bactroban ointment, Avandia diabetic medication, Coreg heart medication, and acid reflux drug Tagamet.
Ms. Eckard had been sent to Cidra, Puerto Rico with a team of 100 quality experts in August of 2002 to repair problems that had been cited in a FDA warning letter the month before. While there Ms. Eckard found that the quality control at the plant was in sad shape. Contaminated water, cross contamination between products due to the air system, overcrowded warehouse and the inability to ensure sterility. She also discovered that many times pills of different strengths ended up in the same bottle.
Ms. Eckard complained repeatedly to her senior managers, and recommended recalls of the defective products from that plant, yet the recalls were not authorized. In May of 2003 Ms. Eckerd was terminated by GlaxoSmithKline as a “redundancy”.
Ms. Eckard had tried to handle the issue properly within the company and when her warnings were ignored, and she was terminated, she called the FDA and she sued. The FDA began a criminal investigation and used armed federal marshals in 2005 to seize almost $2 billion worth of medication and other products at the plant. GSK closed the plant completely in 2009.
This huge whistle blower lawsuit will provide the wronged former quality manager with $96 million from the federal government and additional millions from individual states.
“This record-breaking settlement should send alarm bells into every pharmaceutical corporate office in America. Employees who witness industry misconduct are increasingly less likely to stand idly by while the companies in which they work rip off the public, making billions for themselves through their fraudulent conduct. Fear of retaliation is becoming less of a deterrent as a result of whistleblower protections and, as evidenced by this latest settlement, there are strong incentives in exposing corporate fraud.” Says Baum Hedlund whistleblower attorney, Bijan Esfandiari.
How about that redundancy now GSK? Out of the $3.1 billion recovered under the false claims act last year 80 percent of those dollars were health care cases.
With numbers like these when GSK announced in July that it was setting aside $2.4billion for legal costs and to pay for the investigation into the Puerto Rico plant, no one was shocked at the large number. However this case could lead to many drug companies taking on more responsibilities, when it comes to regulating and monitoring their factories.
It is clear to see that the pharmaceutical industry has become a successful legal target because the occurrence of fraud in health care is so common and because the government now buys more pills than bullets. Most of the money from whistleblower lawsuits is returned to the programs where the false claims were filed, such as Medicaid and Medicare.