With its July 2 agreement to pay $3 billion to resolve criminal and civil charges related to off-label marketing, GlaxoSmithKline (GSK) became the latest pharmaceutical company to settle such charges.
The payment is the highest ever by a drug company and represents the largest health care fraud settlement in U.S. history, breaking the record set in 2009 by Pfizer’s $2.3 billion off-label marketing settlement. The GSK settlement comes after an investigation by the Department of Health and Human Services’ (HHS) Office of the Inspector General (OIG), the Food and Drug Administration (FDA) and the Federal Bureau of Investigation. (For a complete breakdown of the settlement, see “The Allegations.”)
One unprecedented game-changer in the CIA is the requirement that GSK overhaul some of its compensation practices, including, in some cases, the exclusion of incentive-based compensation for sales representatives, a measure aimed at removing the motivation for improper promotion and sales. Historically, drug sales has been a volume business, and the compensation has reflected this. The GSK CIA severs that tie.
The CIA also reaches into the boardroom to impose compliance supervisory requirements on the board of directors—a new arrangement that began surfacing in CIAs in the past few years. The GSK CIA requires the board to meet at least quarterly to review and oversee the company’s compliance program and personnel. Each member of the board must then sign a resolution certifying that the compliance program is effective.