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• GlaxoSmithKline

In one of the largest False Claims Act cases to date, a subsidiary of the pharmaceutical giant GlaxoSmithKline will plead guilty to charges related to the manufacture and distribution of contaminated drugs at a plant in Puerto Rico and pay $750 million in civil and criminal penalties, the Department of Justice announced on Tuesday in Boston.

The subsidiary, SB Pharmco of Puerto Rico Inc., made the drugs between 2001 and 2005 at a now closed plant in Cidra, P.R., the DOJ said. It identified the drugs as Kytril, used to treat nausea;  Bactroban, an ointment for treating skin infections; Paxil CR, the controlled-release version of the popular anti-depressent Paxil; and Avandamet, a drug for treating Type II diabetes.

The settlement 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, the DOJ said. The civil settlement resolves a federal court suit filed in Massachusetts under the whistleblower provisions of the False Claims Act and will enable the whistleblower, Cheryl Eckard, to receive about $96 million, the DOJ said.

The DOJ said SB Pharmco failed to ensure that Kytril and Bactroban were free of contamination from micro-organisms and that the manufacturing process caused Paxil CR tablets to split, raising the possibility that some tablets were useless as therapy. The Avandamet tablets did not always have the mix of ingredients approved by the Food and Drug Administration, according to the DOJ, and the Cidra plant was plagued by production problems that sometimes caused different kinds of tablets to be packages in the same bottles.

SB Pharmco will plead guilty to a felony for violating the Food, Drug and Cosmetic Act, the DOJ said.

“Adulterated drugs undermine the integrity of the FDA’s approval process, can introduce substandard or ineffective drugs on market and, in the worst cases, can potentially put patients’ health at rise,” Tony West, Assistant Attorney General for the DOJ’s Civil Division, said at a Boston news conference.  “We will continue to work with our law enforcement partners to hold pharmaceutical companies accountable for this type of conduct and protect taxpayers from fraud, waste and abuse.”

Massachusetts U.S. Attorney Carmen Ortiz said her office “will not tolerate corporate attempts to profit at the expense of the ill and needy in our society — or those who cut corners that result in potentially dangerous consequences to consumers.”

GlaxcoSmithKline issued a statement of regret and a promise to do better.

“This settlement resolves a significant and long-standing legal issue facing the company,” said P.D. Villarreal, senior vice president and head of global litigation. “We regret that we operated the Cidra facility in a manner that was inconsistent with current Good Manufacturing Practice requirements and with GSK’s commitment to manufacturing quality.  GSK worked hard to resolve fully the manufacturing issues at the Cidra facility prior to its closure in 2009 and we are committed to continuous improvement in our manufacturing processes.”