GlaxoSmithKline finalizes $3 billion deal with US government over marketing practices

UK pharma giant GlaxoSmithKline (LSE: GSK) said yesterday that it has reached an agreement in principle with the US government to finalize a number of ongoing Federal investigations. The final settlement totals $3 billion and is due to be paid in 2012. This is covered by existing provisions and will be funded through existing cash resources, as GSK announced with its fourth-quarter 2010 results that it was making provisions for a record-breaking £2.2 billion ($3.5 billion) relating to the US investigations (The Pharma Letter January 18).

The investigation into GSK’s sales and marketing practices begun by the US Attorney’s office of Colorado in 2004 and later taken over by the US Attorney’s Office of Massachusetts; the US Department of Justice’s investigation of possible inappropriate use of the nominal price exception under the Medicaid Rebate Program; and the Department of Justice’s investigation of the development and marketing of its diabetes drug Avandia (rosiglitazone).

The final settlement, which is expected to address civil and criminal liabilities, remains subject to negotiation of specific terms and is expected to be finalised in 2012. The settlement of $3 billion is covered by existing provisions and GSK expects to make payments under the final agreement in 2012. These payments will be funded through existing cash resources.