GlaxoSmithKline has reached a $3 billion agreement with the US government to settle investigations begun into the drug major's sales and marketing practices, most notably of the controversial diabetes drug Avandia.
The settlement will cover both civil and criminal liabilities and is expected to be finalised in 2012. It covers a number of treatments, plus the US Department of Justice’s investigation of the development and marketing of Avandia (rosiglitazone), which has been linked to heart risks and is now heavily restricted in the USA.
GSK had already made provisions of £1.57 billion and £2.17 billion to cover any settlement last year. The payments will be funded through "existing cash resources", the company added.
Chief executive Andrew Witty said the settlement is "a significant step toward resolving difficult, long-standing matters which do not reflect the company that we are today". He added that "in recent years, we have fundamentally changed our procedures for compliance, marketing and selling in the USA to ensure that we operate with high standards of integrity and that we conduct our business openly and transparently".
Since 2008, GSK says it has established a new framework for compliance in the USA, including an incentive compensation system for its reps which "eliminates individual sales targets as a basis for bonuses".