GlaxoSmithKline Fined $750 Million

Published by: Kelly Curtis on 27th Oct 2010 | View all blogs by Kelly Curtis

GlaxoSmithKline Fined $750 Million

Federal regulators announced on Wednesday that they had fined GlaxoSmithKline after its subsidiary, SB Pharmaco, pleaded guilty to charges it sold “adulterated” drugs made at a now-closed plant in Puerto Rico.

Glaxo will reportedly pony up a criminal fine of $150 million plus civil penalties totaling $600 million. SB Pharmaco reportedly made and distributed drugs that failed to conform to current standards, prosecutors said. Under US federal law, drugmakers are required to meet certain standards which are designed to ensure the safety and purity of drugs sold to American consumers.

The drugs in question were made at the now-closed facility in Cidra, Puerto Rice between 2001 and 2005. They include Kytril, Bactroban, PaxilCR, and Avandamet. The drugs are prescribed to treat infection, naudea, depression, and Type II diabetes symptoms.

Prosecutors also claimed that Glaxo knowingly made false statements regarding the medications to federal health care programs like Medicaid and Medicare. Glaxo, in its second-quarter earnings report, claimed a $750 million charge after coming to an agreement with federal regulators. The company said it does not expect to incur any additional financial impact from the penalties.

Prosecutors applauded the decision, saying that it sends a message to the entire pharmaceutical industry that these kinds of lapses in quality control will not be tolerated. Cheryl Eckard, the woman initially responsible for filing the civil case, will reportedly receive about $96 million of the fines levied against Glaxo.

Shares of the stock fell 0.4 percent to $40.16 in early trading on the New York Stock Exchange.

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