GlaxoSmithKline takes $750 million charge to settle with US DoJ regarding former Puerto Rico plant

27 October 2010

UK pharmaceutical giant GlaxoSmithKline (LSE: GSK) last night announced that it has finalized a previously reported agreement in principle with the US Attorney’s Office for the District of Massachusetts and the US Department of Justice with respect to the investigation of the company’s former manufacturing facility in Cidra, Puerto Rico.

GSK disclosed a $750 million charge to its second-quarter 2010 earnings on July 15 in connection with the agreement in principle. No additional charge to the company’s earnings will be recorded in connection with the settlement. The resolution includes a criminal fine and forfeiture totaling $150 million and a civil settlement under the False Claims Act and related state claims for $600 million.

A whistle-blower's law suit filed against GSK in 2004 in federal court in Boston alleged the company submitted false claims to government health programs because drugs manufactured at the Puerto Rico plant were not safe and effective, and thus should not have been covered by government programs.

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