Worse Than You Think: 10 Things You Don't Know About Glaxo's $750M Paxil Settlement

Last Updated Oct 27, 2010 5:07 PM EDT

GlaxoSmithKline (GSK)'s $750 million settlement with the Department of Justice -- which includes a $96 million whistleblowing prize for former GSK quality assurance chief Cheryl D. Eckard -- is so much worse than you think it is. GSK's factory in Cidra, Puerto Rico, which made the antidepressant Paxil and the diabetes treatment Avandamet, is a story of mismanagement at every level.

It begins with an attempt to nickel-and-dime drug production by scraping medicine off the inside of a tank, when it was usually thrown away, and ends with the shuttering of the facility, a criminal conviction, and a spectacularly large cash payment. Here are 10 things you didn't know about yesterday's deal:
  1. The FDA began investigating GSK in Puerto Rico in 2001, issuing a warning letter. The company thus had nine years to get its act together -- but didn't.
  2. Staff at Cidra were running a black market drug operation out of GSK's factory, according to Eckard's complaint: "persons at the Cidra plant were skimming product during manufacture, including reject product, and diverting the product to Latin America. ... rejected batches of drug product, including Avandamet, were sent from Cidra to [MOVA Pharmaceuticals], (which is located near Cidra) for "black market" packaging and distribution ...
  3. GSK is not pleading guilty to a felony conviction. Nor is any GSK executive, despite promises from federal prosecutors to start nailing individuals for pharma company corruption. Rather, a legal unit of GSK, "SB Pharmco" will take the hit. The DOJ actually declined to prosecute GSK in favor of SB Pharmco -- "SB" is almost certainly a reference to SmithKline Beecham, the former name of GSK -- thus allowing GSK to continue doing business with the government as if nothing had happened. Companies that are convicted of felonies are banned from federal business.
  4. Workers at Cidra were so lousy at their jobs that they managed to contaminate a drug called Bactroban with bacteria even though it's an antibiotic. They did this because the site director order them to hand-scrape the insides of the Bactroban tanks to squeeze slightly more drug product out of them. The effort saved GSK $128,074 ... before the feds showed up.
  5. Executives started resigning from Cidra in 2003 due to the "lack of leadership skills and poor management style" of a new site director. The director was ordering internal reports to be written in Spanish in order to conceal what was going on at Cidra from higher-ups in GSK.
  6. After meeting with Cidra staff in 2002, Eckard allegedly "recommended that GSK stop shipping all product from the Cidra plant, stop manufacturing product for two weeks in order to investigate and resolve the issues raised and the impact on released batches, and notify the FDA about the product mix-ups." If the company didn't do this then GSK would be "headed for a consent decree," Eckard said. Instead, GSK fired Eckard. GSK was later put under a consent decree by the FDA, just as she predicted.
  7. When Eckard discovered that the Cidra management team was lying about its progress in responding to the FDA's concerns in 2003, she told her bosses she would not particpate in a "cover-up." Here's what happened next, according to her suit: "In early May 2003 Eckard received a phone call from the GSK Human Resources Department advising her that she was being offered a redundancy package. Eckard stated that she was not interested in a package and was told that she had no choice. ... the Human Resources Department asked her to attend a meeting at [GSK's HQ], at which the Vice President of Human Resources for Global Operations formally presented the redundancy package to her, took her security badge, and escorted her from the premises.
  8. The Cidra workers who were skimming damaged or contaminated product and sending it to MOVA were also causing GSK pills to get mixed up in their bottles. Bottles were found with different strengths of the same medicine inside them, and different types of medicines in the same bottle.
  9. Here's how the site director responded to pill mixups, per the suit: "the Cidra Site Director collected rogue tablets from the manufacturing areas and packaging lines, kept them in a gowning hat in her office [emphasis added], and failed to alert site and above-site quality personnel." (I believe that's a gowning hat, pictured at right.)
  10. The DOJ has deliberately concealed the name of the "site director" responsible for the disaster in Cidra in its criminal information filing. We know that person was hired in April 2003 as the site director and removed from that job in October 2004. In Eckard's complaint, three people, listed on pages 7-9, fit that description.
Related: Image by Flickr users ~! and miguelphotobooth, CC.