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$750M Whistleblower Lawsuit Settlement Reached--Glaxo Pays for Drug Manufacturing Violations

November 18, 2010

In recent news, that our Santa Ana, California employment attorneys have been following, the research-based pharmaceutical and healthcare company GlaxoSmithKline (GSK) has agreed to pay the U.S. government $750 million in a whistleblower lawsuit settlement, after being hit with civil and criminal charges in a 2004 lawsuit for allegedly selling adulterated drugs to Medicaid and other government health plans.

The case reportedly holds the drug makers accountable for violating government manufacturing standards by the use of whistleblower law. The lawsuit was filed on behalf of former Quality Assurance Manager for GSK, Cheryl Eckard, under the False Claims Act, a law that encourages people who have knowledge about fraud against the government to sue the company and share in the monetary recoveries.

According to the lawsuit, in 2002, Eckard was instructed to lead a group of global scientists and professionals at the Cidra, Puerto Rico facility to remedy violations in manufacturing cited by the FDA. At the time, Cidra was reportedly GSK's top manufacturing facility in the world, creating more than twenty products that brought the pharmaceutical company around $5.5 billion every year.

At the facility, Eckard reportedly discovered manufacturing and quality testing issues that surpassed the FDA violations, including mixed up drug products, products contaminated with microorganisms, injectable drugs that were unsterile, and drugs used to treat diabetes that were reportedly found to be superpotent and subpotent, among others. The lawsuit claimed that this led Eckard to determine that GSK could not prove that they produced contamination-free products made in accordance with the FDA registered drug formulas.

Eckard reportedly advised the managers at GSK to close the plant, and presented a detailed report to the GSK's compliance department, who deemed that her report was unsubstantiated. Eckard then reported GSK's drug manufacturing fraud to the FDA, who seized all of the company's stocks of Paxil CR and Avandamet--work around $2 billion. Eckard's employment was terminated in 2003, and she filed the whistleblower lawsuit in February of 2004.

The civil portion of the settlement, $600 million, resolves the charges that GSK released adulterated drug products, posing risks to the health and safety of consumers. GSK also paid $150 million in criminal fines. The Wall Street Journal reports that Cheryl Eckard is entitled to receive at least $96 million of the settlement--the highest amount ever paid to a single whistleblower as part of a government false-claims settlement, according to Taxpayers Against Fraud.

According to Eckard's attorneys, this whistleblower lawsuit settlement will change the way drug manufacturing factories will run, as it helps support employees in the future who encounter manufacturing issues and have evidence that companies are placing profits before patient safety, to stop the factories from releasing adulterated products to consumers.

Howard Law, PC protects worker's rights in whistleblower claims and other labor and employment issues in Orange County, California. Contact our Anaheim-based labor & employment attorneys to find the best solution for you today.

GlaxoSmithKline Pays $750 Million for Fraud on Medicaid: Getnick & Getnick LLP Announces First Whistleblower Recovery for Pharmaceutical Manufacturing Violations, Market Watch Press Release, October 26, 2010

GSK Completes Previously Reported Settlement with U.S. Department of Justice Regarding Former Manufacturing Plant, GlaxoSmithKline Press Release, October 26, 2010

Blowing the Whistle on Glaxo Means Record Payout for Former Employee, The Wall Street Journal, October 27, 2010

Related Web Resources:

U.S. Department of Justice, DOJ