On Tuesday, the US Department of Justice announced that GlaxoSmithKline, the British pharmaceutical giant, as well as its subsidiary SB Pharmco Puerto Rico Inc., have agreed to plead guilty to civil and criminal fraud charges. These charges, relating to the manufacture and distribution of adulterated drugs, stem from a false-claims lawsuit originally filed in 2004. The pharmaceutical company has agreed to pay $600 million in a civil fine and a $150 million criminal fine for pleading guilty. 

The amount of the settlement is the fourth largest health care fraud settlement in US history, the record setting settlement being Pfizers $2.3 billion payout. In Pfizer’s record setting settlement, $1 billion was a civil penalty to resolve alleged violations of the Federal False Claims Act that they illegally promoted their drugs Bextra, Geodon, Zyvox and Lyrica, and paid kickbacks to healthcare providers. 

The charges were initially filed by Cheryl Eckard, the company’s former quality assurance manager, after her visit to the now-closed manufacturing facility in Cidra, Puerto Rico.  According to the complaint filed there was “chronic, serious deficiencies in the quality assurance function at the Cidra plant and the defendant’s ongoing serious violations of the laws and regulations designed to ensure the fitness of drug products for use.”

 A study conducted by the Taxpayers Against Fraud Education Fund showed that healthcare cases accounted for 80% of the $3.1 billion recovered last year by the Department of Justice under the Federal False Claims Act.