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Is Glaxo Under Investigation Because the VA Wants Its Avandia Money Back?

Although the news that GlaxoSmithKline (GSK) is at the center of a massive, companywide federal probe came as a surprise, perhaps it should not have. We knew in August of last year that the FDA had asked for a criminal investigation of the company over whether it made false statements to the agency regarding its diabetes drug, Avandia. The feds have a particular, easily documented financial beef over Avandia: 8 percent of all Avandia sales were to the Veterans Administration, and veterans were the subject of two Avandia studies by GSK.

Scott Barnes, a retired veteran who is now a plaintiff in the multi-district Avandia litigation, tells BNET that the VA now wants its money back.

Former GSK vp/associate general counsel Lauren Stevens admitted recently that GSK was the focus of "a sweeping investigation of the company as a whole" looking at "other individuals, other drugs, and other time periods" at GSK. Stevens was indicted for allegedly making false statements to the FDA about Wellbutrin, an antidepressant. Her case is not (yet) linked to the Avandia scandal, in which the diabetes drug was all but withdrawn from the market after it emerged that it caused more heart attacks than similar drugs. The VA's concerns over Avandia first surfaced in 2007, when it suddenly ordered all its patients to stop taking the drug:

The agency, which treated more than five million veterans last year, issued 1,389,497 Avandia prescriptions to more than 161,000 individuals from September 2006 to August 2007.
The next year, GSK released the results of two studies of Avandia use in vets which found that Avandia was not associated with increased heart attacks or deaths.

Nonetheless, in 2010 the FDA hobbled the drug with multiple new warnings after becoming convinced that in fact the drug was more risky.

Since then, GSK has set aside more than $5.8 billion in legal charges for Avandia (and other issues). But it has only actually settled 5,500 cases for $250 million.

Barnes, a former Army civil rights investigator between 1973 and 2003, says he had two strokes while on Avandia. His lawyers have been contacted by governments all over the world, all of whom are interested in the extent of GSK's liability for the drug, he says. The litigation -- and therefore the investigation -- won't be settled until the VA gets satisfaction, he believes.

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