Glaxo settles record whistleblower case for $3 billion – Medicare fraud alleged

WASHINGTON, DC – Two whistleblowers represented by Phillips & Cohen LLP provided the government with overwhelming evidence that was at the heart of the government’s case against GlaxoSmithKline — whose global headquarters are in London, UK — and the record-setting $3 billion settlement announced today.

Glaxo’s settlement is the largest Medicare fraud and Medicaid fraud settlement ever made and the largest settlement of a whistleblower qui tam case.

The whistleblowers – Thomas Gerahty, a former senior marketing development manager for Glaxo, and Matthew Burke, a former regional vice president for Glaxo — provided invaluable insider information that the London-based pharmaceutical company was engaging in corrupt nationwide schemes to push sales of Advair, Wellbutrin, Imitrex and other popular prescription drugs for “off-label” (unapproved) uses, that it used improper financial inducements to market its drugs, and that it misrepresented the safety and efficacy of those drugs. Glaxo’s illegal practices caused Medicare, Tricare – the healthcare program for the military — and Medicaid to incur huge losses.

The civil settlement of Gerahty and Burke’s whistleblower case against Glaxo and a separate whistleblower lawsuit filed in Colorado totaled $1.017 billion out of the $3 billion settlement. (Two other whistleblower lawsuits that alleged another improper practice concerning Advair marketing settled for $25 million, for a total of $1.042 billion paid under the settlement agreement for the four whistleblower cases.)

In addition, one of the government’s criminal charges against Glaxo was based on information provided by Phillips & Cohen’s qui tam lawsuit about the marketing of Wellbutrin. Glaxo paid $554.4 million to settle that criminal charge plus an additional $455 million to settle two other criminal charges.

Gerahty, Burke and Phillips & Cohen worked closely with the U.S. Attorney’s Office in Boston and the Justice Department since they filed their “qui tam” (whistleblower) case in early 2003 in Boston’s federal district court.

Gerahty and Burke gave the government new and detailed information about Glaxo’s nationwide improper marketing practices, including the use of financial inducements to doctors to prescribe Glaxo’s drugs and the promotion of Advair, Wellbutrin, Imitrex, Lamictal, Zofran and Valtrex for off-label, unapproved uses. Unapproved use of prescription drugs can create significant risks to patients, and drug manufacturers are prohibited by federal law from promoting their drugs for unapproved treatments.

As the government investigation progressed, the whistleblowers and their attorneys made a significant difference in particular in the government’s case against Glaxo for its off-label marketing of Advair for mild asthma. Gerahty, Burke and Phillips & Cohen devoted substantial effort and time preparing the legal case that helped demonstrate Glaxo improperly marketed Advair as a first-line asthma treatment and for asthma patients previously treated with only a short-acting inhaler.

As a result, Glaxo paid $686 million out of the total settlement to resolve claims involving the off-label marketing of Advair to treat mild asthma – by far the largest amount Glaxo paid to settle any of the civil charges. (See the settlement agreement.)

Erika A. Kelton, a whistleblower attorney with Phillips & Cohen, was the lead attorney on the firm’s Glaxo case and also represented the whistleblower whose qui tam lawsuit against Pfizer alleging the off-label marketing of the prescription painkiller, Bextra, helped the government recover $1.8 billion as part of Pfizer’s record-setting $2.3 billion settlement in 2009.

“The gravity of Glaxo’s conduct cannot be overstated,” Kelton said. “The company’s improper marketing practices extended across a wide range of its prescription drug portfolio. Given what we saw with Glaxo, Pfizer and other pharma companies, it’s fair to conclude there has been almost no limit to what pharma companies have done to sell their products.”

Phillips & Cohen’s case was consolidated with the Colorado qui tam lawsuit at the request of the U.S. Attorney’s Office in Boston since the Colorado lawsuit alleged certain off-label practices involving some of the same drugs named in the Massachusetts whistleblowers’ case.

In their qui tam lawsuit, Gerahty and Burke provided detailed allegations about numerous off-label treatments pushed by Glaxo across the country for six of its most popular drugs, along with concrete evidence to support those allegations. Because of the depth and breadth of the information and evidence in Gerahty and Burke’s lawsuit, the government launched a massive investigation into Glaxo’s marketing practices, with the U.S Attorney’s Office in Boston taking the lead in the case.

“We filed our qui tam case because we thought what Glaxo was doing was wrong and might be causing injury to patients who were taking certain prescription drugs based on misleading information,” said Burke. “The more I thought about it, the more I felt that Glaxo was trying to skirt its responsibilities under the law.”

Gerahty said he felt the same way.

“I also felt that other employees had been scapegoated along the way for the very practices Glaxo encouraged,” Gerahty said. “That bothered me. We were worried that blowing the whistle would hurt our careers but felt that it was the right thing to do.”

Attorney Kelton said Glaxo’s Advair marketing practices were a major concern from the start. Gerahty and Burke provided evidence that Glaxo’s off-label marketing efforts for Advair began when the drug was launched and continued into 2010, even while the Justice Department’s investigation was ongoing.

“Glaxo practices were particularly troubling when it came to promoting Advair off-label, according to our complaint,” Kelton said. “Glaxo allegedly manipulated and misinterpreted data in scientific studies it sponsored, paid off doctors in various ways, urged them to prescribe Advair first line, and trained its sales staff to provide misleading information to doctors who had medical concerns about using Advair for their mild asthma patients.”

Both Gerahty and Burke expressed relief that a settlement was reached.

“We thought when we first filed our case that it would be resolved in a few years,” said Gerahty. “Instead, it took over nine years and was quite a roller-coaster ride. But the end result is good. We’re very glad that our case has had an impact on Glaxo’s sales practices, and that along with other whistleblower cases it may help change the way Glaxo and other pharma companies do business.”

Under the False Claims Act, whistleblowers who file qui tam lawsuits are entitled to 15 percent to 30 percent of the amount the government recovers in a civil settlement as a result of their cases. The reward in this case hasn’t yet been determined.

Attorney Kelton, Gerahty and Burke expressed thanks to Assistant U.S. Attorneys Sara Bloom and Edwin Winstead, Justice Department attorney Andy Mao, Robert Patten with the Massachusetts Attorney General’s Office, John Guthrie of the Ohio Attorney General’s Office and all the attorneys, agents, investigators, paralegals and other federal and state personnel who helped bring about this historic result.

Key Documents

For more information about Phillips & Cohen’s record, see P&C’s Successful Whistleblower Cases.


Phillips & Cohen is the most successful law firm representing whistleblowers, with recoveries from our cases totaling billions. We have been recognized for our work by numerous national awards. Our attorneys and cases have been in The New York TimesThe Wall Street Journal, the Financial Times and other news media. Three of our cases were featured in the CBS series, “Whistleblower.” Phillips & Cohen’s roster includes former federal prosecutors, the first head of the SEC Office of the Whistleblower, a former deputy administrator of the Centers for Medicare and Medicaid Services, the author of a leading treatise on the False Claims Act and attorneys with decades of experience representing whistleblowers.

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