HARI SREENIVASAN: Drug maker GlaxoSmithKline must now pay $3 billion, the largest penalty ever for a drug company. The Justice Department announced today that Glaxo admitted to promoting the antidepressants Paxil and Wellbutrin for unapproved uses. It also failed to disclose important safety information about Avandia, a diabetes drug.
We get more from Katie Thomas, who’s covering the story for The New York Times.
So, Katie, what’s the $3 billion fine for? It’s been called off-label marketing. What is that?
KATIE THOMAS, The New York Times: Well, what it is, is it’s considered illegal promoting of the drugs for types of uses that were not approved by the Food and Drug Administration.
So, in the example of Paxil, it was being marketed to children, people under 18. Wellbutrin was being marketed for sexual dysfunction and weight loss, instead of depression. And then Avandia is a slightly different allegation. That is that the company wasn’t accurately reporting the heart risks of the drug.
HARI SREENIVASAN: And there were other issues that GlaxoSmithKline decided to — quote — “resolve” in the eyes of the law. There were kickbacks to doctors. There were other issues as well?
KATIE THOMAS: Right, yes. The allegation was that they were paying doctors, you know, to go to conferences and meetings and kind of promote the uses of these drugs for these off-label uses.
HARI SREENIVASAN: OK.
And let’s put the $3 billion in perspective here. How much of a deal or how big is a deal is this to GlaxoSmithKline?
KATIE THOMAS: Well, it’s a lot of money; $3 billion is a lot of money to — even to a major drug company.
It’s the largest payout in the history of this particular law called the False Claims Act. At the same time, some people say that you have to really put this into perspective. I pulled some of the sales figures for the three biggest drugs in question. Avandia, for example, during the period of this settlement sold more than $10 billion — it was more than $10 billion in sales. Same thing for Paxil, more than $10 billion.
And then Wellbutrin was more than $6 billion. So, when you put it into that perspective, you see how much money they’re making on these drugs, $3 billion is still a lot of money, but some people say it’s not enough to actually deter future activity.
HARI SREENIVASAN: All right, Katie Thomas from The New York Times, thanks so much.
Apple has paid $60 million to settle a dispute in China over who owns the iPad name. A Chinese company had claimed it still owned the rights to the name within China. Apple insisted it bought the global rights back in 2009, but Chinese courts ruled differently. A Chinese court announced the settlement today. China is Apple’s second largest market after the U.S.
Unemployment in the Eurozone has passed the 11 percent mark. The European Union reported today the rate hit 11.1 percent in May, up a 10th from April. It’s also the highest rate since the euro currency was launched in 1999. All told, more than 17-and-a-half million people are out of work in the 17 Eurozone nations.
American manufacturing cut back in June for the first time in nearly three years. A trade group, the Institute for Supply Management, reported today that production and new orders were down. The news got Wall Street off to a slow start for the holiday week. The Dow Jones industrial average lost eight points to close at 12871. The Nasdaq rose 16 points to close at 2951.