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Introduction
GlaxoSmithKline LLC (GSK), a London-based multinational pharmaceutical company, was involved in a whistleblower case in 2011. The two whistleblowers, Thomas Gerahty and Matthew Burke, who formerly worked for the company, provided the United States government with valuable information about various corrupt malpractices of GSK. According to these witnesses, GSK operated a nationwide scheme to push the sales of prescription drugs, including Imitrex, Wellbutrin, and Advair, among others, for off-label uses. The pharmaceutical firm, through the use of financial inducements, marketed the said drugs for unapproved uses thus misrepresenting the efficacy and safety of the drugs. The malpractice caused huge losses for American institutions such as Medicaid, Medicare, and Tricare. However, the government of the US continued its contract with the pharmaceutical company. Upon Investigation, GSK was found guilty of unethical, criminal, and civil rights charges resulting to various categories of settlements.
Ethical Issues
GSK practiced several unethical issues based on the marketing and sales of the drugs for unapproved uses. The first issue is that the pharmacy was selling legal drugs for the wrong purposes. Six drugs of the firms popular drugs, namely Imitrex, Wellbutrin, Zofran, Lamictal, Paxil, and Advair, are approved by FDA for their respective uses ( Glaxo settles record, 2021). However, the company was pushing the sale of these medicines by prescribing them for other additional uses. For example, GSK sold Wellbutrin for unapproved uses, including weight loss, treatment of sexual dysfunction, and obesity when combined with other drugs. Another example is the sale of Advair, which, other than for its legal uses, was recommended for treating all or mild asthma in addition to previous use of inhalers for the disease ( Glaxo settles record, 2021). GSK provided misleading information about the drug wherein it provided that Advairs elements were superior to inhaled corticosteroid alone, previously used to treat patients of short-acting inhalers alone.
Another unethical practice was corrupt means used to promote or market the six medicines. According to the insider information provided by whistleblowers, GSK paid and offered illegal payments to healthcare workers to induce them to promote the drugs ( Glaxo settles record, 2021). A major problem involved the sale of Advair as it involved more corrupt efforts. GSK altered and misinterpreted scientific data regarding the drug and other research it sponsored. Doctors were paid and convinced to prescribe the medicine first line ( Glaxo settles record, 2021). Furthermore, the UK pharmaceutical trained its staff to avail misleading information to the physicians who might have concerns about using Advair in patients with mild asthma.
The expanded uses of Advair made Medicare, Medicaid, and Tricare increase their budgetary purchases. Tricare is a military healthcare program and, alongside the two government programs, heavily relied on the purchases of drugs from GSK. Within the years of malpractice, from 1998 to 2011, GSK knowingly provided fraudulent and false claims that pushed the healthcare units to purchase more drugs ( Glaxo settles record, 2021). Between 1999 and 2004, GSK paid compensations for journal clubs, speaker programs, mastery training, preceptorships, mentorships, and advisory boards to allow the promotions of the six drugs ( GlaxoSmithKline to plead guilty, 2015). In addition, the organization offered gifts in the form of cash, meals, and travels to various healthcare providers to participate in the prescription and promotion of drugs such as Imitrex, Valtrex, Lotronex, and Flovent ( GlaxoSmithKline to plead guilty, 2015). GSK, in return, benefited through increased revenues from the sales of these drugs.
Legal Issues
Federal Anti-Kickback Statute
Anti-kickback Statute (AKS) is a criminal law that prohibits an offer to exchange or the exchange of things of value with the intent to reward or induce a referral of organizational reimbursement by federal healthcare plans. The statute seeks to prevent referrals from benefiting from corrupt sales plans and prohibits the exercise of such (Darrow et al., 2020). Government programs, including Medicare and Medicaid, state that kick-back practices have led to increased costs and overutilization of health services in the past. Kickbacks also have led to corruption in the decision-making process, non-competitive service delivery, and direct patients away from the right services. As provided by the law, possible sanctions for violating the AKS are fines of up to $25 000, exclusion from Medicaid and Medicare programs, and a jail sentence of up to five years (Darrow et al., 2020). GSK pharmaceutical was found guilty of the kickback charges for paying referrals of promotion and prescription of various drugs.
Defective Product Liability
People who suffer injuries resulting from the use of defective or unsafe products may be eligible for compensation. The product liability regulations provide that manufacturers, distributors, and retailers are held liable should a sold product cause damage to the user (Miller, 2021). The law of product liability extends the coverage of injury to the act of selling a defective product. In this case, the drugs sold by GSK were defective because they posed a probable danger to the users. The drugs were sold for unlabeled uses, meaning that they were taken to treat the wrong diseases and would worsen the patients conditions.
Food and Drugs Administration Laws
KefauverHarris Drug Amendments of 1962 is one of the Foods and Drugs Administration laws of the United States. The amendments require the drug manufacturer to show that the drugs produced are safe for use (Darrow et al., 2020). The act, together with the Nutrition Labeling and Education Act of 1990, ensures that the manufacturer makes and sells safe drugs for the right use (Darrow et al., 2020). The acts prohibit the prescription of unsafe and wrong labeling of drugs, respectively. In the case of GSK, it violated both laws by selling drugs for the wrong uses. The unapproved use of these drugs could be unsafe for the users.
The Federal Trade Commission Act
The Federal Trade Commission Act of 1914 is a law seeking to protect businesses from unhealthy competition and unfair practices. Among other provisions, the Act prohibits deceptive or unfair practices and unfair methods of competition in commerce (Miller, 2021). The law seeks relief or redress of injuries that might result from such unprofessional practices. The act establishes and defines the measures to take against the businesses involved in malpractice. Finally, the law is applied in the process of such and related investigation (Miller, 2021). GSK conducted deceptive and unfair methods of competition. Thus, the federal trade commission act deems the organization wrong and is legally punishable by given sanctions.
Industry-related Issues
Unhealthy Business Competition
GSK by labeling their drugs for wrong uses, practiced unhealthy business competition. The pharmaceutical company owners are aware of other drug-related competitors in the industry. By extending the uses of their drugs, GSK was unfairly competing with other drugs selling businesses (Simbolon, 2019). For example, there are manufacturers of drugs for mild asthma who are also approved by the FDA. These businesses compete with other related businesses by providing legit products for the right uses. Thus, when GSK claims that Advair can also treat mild asthma, it replaces the use of inhaler-only treatment. Furthermore, it reduces the need for inhalers and the sales of such products. The practice also means that GSK, through false information posed business competition that reduces sales of other legit drug sellers.
Unprofessional and Dishonest Behaviors
The multinational pharmaceutical firm also practices unprofessional and dishonest behaviors that are unacceptable in the industry. It was unprofessional for GSK to ask the employees to lie about the use of drugs. Effective organizations are required to practice honesty as part of their culture (Simbolon, 2019). Business management should encourage honesty and professionalism in all aspects of their operations. Honesty encourages employees to be trustworthy with the trade secrets of the business (Paais & Pattiruhu, 2020). GSK, instead of impacting truthfulness and professionalism, encouraged employees to lie. The company also would scapegoat its employees for dishonest practices. During the representation and manipulation of research data to include other drug uses, GSK would blame its employees for non-existing mistakes to justify their claims. Such actions intimidate the workers and make them feel less valued and unwanted. The scapegoating and dishonest practices also strain the relationship between the employees and the employer. In such an unconducive environment, the workers cannot find job satisfaction.
Case Resolution
The case of malpractices resulted in GSK paying $3 billion in a total settlement. The whistleblower case that attracted other charges by the government tainted the reputation of GSK. In the hearing of the case, GSK pleaded guilty to criminal and civil rights charges imposed by various parties. In the settlement, the whistleblowers, Gerahty and Burke, and other whistleblowing case charges amounted to $1.042 billion. Incorporated in the resolution and settlement of this case are charges of price reporting ( GlaxoSmithKline to plead guilty, 2015). Between 1994 and 2003, GSK and its partners provided false drug prices, leading to underpaying rebates held by a Medicaid drug-related program ( GlaxoSmithKline to plead guilty, 2015). GSK is said to have reported bundle prices that included huge sales discounts that they never gave to consumers.
The additional malpractices were added to the settlement cost. In these allegations, the firm agreed to pay $300 million, which would compensate the federal government, the states, and other healthcare facilities that incurred inflated prices ( GlaxoSmithKline to plead guilty, 2015). Other than monetary resolution, GSK executed a five-year corporate integrity agreement with the department of human services and health. The agreement also requires GSK to ensure transparency in its research practices and to strictly follow the provision of various policies with healthcare firms.
From a personal perspective, the American government should have discontinued its trade with GSK. A firm that has broken several laws, industrial practices, and moral norms are not to be trusted. By continuing to trade with the company, the US government places the health of US citizens at stake. Indeed, since the federal government does not hold the mandate to stop the firms professional practices, it should have cut its relations by ending its contracts. According to the case report, GSK has been involved in health malpractice since 1994 ( GlaxoSmithKline to plead guilty, 2015). The timeframe is long enough to expect the company to change its ways immediately and start being honest.
Conclusion
GSK pleaded guilty to various charges and incurred at least $3 billion in a settlement. The sales malpractices revealed the moral decay in the GSK organizational culture. A culture that has been corrupt for more than 10 years was finally unveiled by whistleblowers. The various US government programs that incurred losses due to the malpractices continue to work with GSK. Healthcare institutions expect GSK to change its culture by becoming transparent in its sales and research practices.
References
Darrow, J. J., Avorn, J., & Kesselheim, A. S. (2020). FDA approval and regulation of pharmaceuticals, 1983-2018. Jama, 323(2), 164-176. Web.
Glaxo settles record whistleblower case for $3 billion Medicare fraud alleged. (2021). Phillips & Cohen. Web.
GlaxoSmithKline to plead guilty and pay $3 billion to resolve fraud allegations and failure to report safety data. (2015). U.S. Department of Justice. Web.
Miller, R. L. (2021). Business law today is comprehensive. Cengage Learning.
Paais, M., & Pattiruhu, J. R. (2020). Effect of motivation, leadership, and organizational culture on satisfaction and employee performance. The Journal of Asian Finance, Economics, and Business, 7(8), 577-588. Web.
Simbolon, A. (2019). Prevention of monopolistic practices and unfair business competition through business competition supervision. Journal of Legal, Ethical and Regulatory Issues, 22(1), 1-7. Web.
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