GlaxoSmithKline, Britain's largest drug maker, tricked and bribed doctors into prescribing dangerous antidepressants to children.
The company will pay US$3 billion ($3.7 billion) to settle a slew of charges in the United States after admitting a multi-year criminal scheme to hide unhelpful scientific evidence, manipulate articles in medical journals and lavish gifts on sympathetic doctors.
The drug at the centre of the scheme, Paxil, which is branded Seroxat in Britain, has since been banned for use by children because it can make them suicidal.
Company managers, all the way up to GSK's chief executive, Sir Andrew Witty, will have their pay and bonuses clawed back if there is any further wrongdoing, under the terms of a wide-ranging settlement with the Department of Justice.
GSK admitted illegally marketing several of its drugs for uses that had not been approved by safety regulators, and documents released by the Justice Department detailed the luxurious conferences in exotic climes where paid-for scientific speakers hyped up the conclusions of dubious academic papers. GSK held eight "Paxil forum" events in Puerto Rico, Hawaii and California, where hundreds of doctors were treated to snorkelling, horse-riding, sailing, deep-sea fishing, balloon rides and spa treatments, and given an "honorarium" of US$750 in cash.
The company knew it was worth paying for these kinds of boondoggles; it monitored the doctors who attended and found they significantly increased prescriptions of Paxil in the months after the event.
Paxil, once GSK's best-selling drug, was never approved for use by children but because doctors were free to use their discretion, the company had a strong incentive to steer the medical profession to scientific studies that suggested it might be helpful to under-18s diagnosed with depression. Those studies were paid for by GSK itself. Sales reps for Paxil even called on paediatricians to highlight the studies.
The company pleaded guilty to criminal charges related to the marketing of Paxil for use by children between 1999 and 2003, when it:
Failed to reveal the existence of two scientific studies that showed the drug was ineffective in treating childhood depression.
Cut out important caveats to the conclusion of a third study which suggested it might improve a small number of symptoms in children.
Over-hyped the conclusions of that study, after it was published, in marketing materials at conferences and distributed to doctors.
GSK also illegally promoted Wellbutrin, another antidepressant, for the treatment of adult impotence, obesity and attention deficit, according to its guilty plea yesterday.
James Cole, US Deputy Attorney-General, said: "We are determined to stop practices that jeopardise patients' health, harm taxpayers and violate the public trust - and this historic action is a clear warning to any company that chooses to break the law."
The settlement - US$1 billion in criminal fines, US$2 billion in civil penalties - also resolved claims that GSK billed government-run healthcare plans too much for many drugs.
GSK had already set aside more than US$3 billion to cover the e settlement, and its shares rose 1.75 per cent yesterday, more than the overall market, to reflect the end of a period of uncertainty. It will submit to a "corporate integrity agreement" with the US Government that involves a shake-up of its remuneration plan for top managers and executives.
Two patients who took their own lives
Sara Carlin, 18
She was a talented student who dreamed of becoming a doctor, only for her to take her own life in 2007, a little over a year after being prescribed antidepressants. She was found dead in the basement of her family home in Oakville, Canada. The country's health authorities put out warnings in 2003 and 2004 that prescribing newer antidepressants such as Paxil to teenagers could lead to behavioural changes and self-harm, but Sara brushed off her mother's attempts to warn her off such drugs, saying her doctor had said they would lift her mood.
Colin Whitfield, 56
He died just two weeks after he began taking the antidepressant drug Seroxat. The retired Welsh teacher was found dead in the garden shed of the family home in 2002. At the inquest the coroner said he had "grave concerns that this is a dangerous drug that should be withdrawn until detailed national studies are undertaken". Kathryn, Colin's wife of more than 30 years, said she had noticed a profound change in her husband's behaviour once he started taking Seroxat, and the drug might have contributed to his unexpected suicide. "It didn't fit the picture of who he was and we have no doubt that it was the drug that caused him to do it. He was a very caring, very protective father."
Reminder of why we badly need scrupulous regulators
A decade ago, before everyone hated the banks, it was the pharmaceutical industry that was Public Enemy No 1 - and the details revealed in GlaxoSmithKline's US$3 billion ($3.7 billion) legal settlement are a reminder of why.
Safety regulators are scrupulous about approving drugs to treat particular diseases for particular groups of people, and drug companies are banned from marketing the drugs for anything else and to anyone else, but time and again companies have found a way round the regulations.
Doctors are free to prescribe any drug for any condition if they believe it will help their patient, and with some blockbuster drugs "off-label" use can account for one-quarter of all prescriptions or more. For patients who get prescribed a new drug early, before regulators get round to sealing their approval, off-label use can be a huge boon. But cases like GSK's, where Paxil was later discovered to increase suicidal thoughts in children, are a reminder why we have regulators.
When drug companies break the rules, the potential consequences might be more frightening even than anything unleashed by the banks.