Bloomberg reports that Jean-Pierre Garnier, Glaxo’s former CEO, and Chris Viehbacher,  Glaxo’s ex-president of U.S. Pharmaceuticals, are now Chairman of Swiss company Actelion Ltd. and CEO of Paris-based Sanofi, respectively.

Although the former employees and other high ranking Glaxo executives were implicated in the company’s illegal off-label marketing of drugs in a complaint filed by Glaxo whistleblowers in Massachusetts, no charges were brought against individual employees.

The settlement does include a corporate integrity agreement, however, with the intent of holding executives accountable for their misconduct.  As part of the agreement, a clawback provision stipulates that Glaxo executives lose their bonuses if they or their subordinates are found guilty of malpractice.

This provision garnered praise from attorney Erika Kelton, who represented two of the key whistleblowers involved in the case.

“This is a really important move on the part of the federal government. Bringing it down to the individual executives who are responsible for overseeing marketing and making their pocketbooks feel it if they engage in further wrongdoing is really valuable,” said Kelton.

For more discussion of the need to hold individuals accountable for fraud, see “Fraud shouldn’t be so rewarding.”

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The Wall Street Journal reports that:

 “The government’s case against Glaxo was based partly on a lawsuit filed by former Glaxo employees in federal court in Boston in 2003. Thomas Gerahty, a former senior marketing development manager, and Matthew Burke, a former regional vice president, filed a so-called qui tam suit against Glaxo on the government’s behalf under the Federal False Claims Act, which prohibits people or businesses from defrauding the government, and provides incentives for those who suspect wrongdoing to come forward.”

“. . . According to their lawyer, Erika Kelton [a partner at Phillips & Cohen LLP], Messrs. Gerahty and Burke provided information to the government about Glaxo’s marketing practices, including the use of off-label promotion and financial inducements to doctors to prescribe Glaxo’s drugs.”

The story notes that whistleblowers are entitled to a reward of 15 percent to 25 percent of what the government recovers as a result of their case, but that the exact amount hasn’t been determined in the Glaxo case.

The whistleblower case brought by Phillips & Cohen and a separate whistleblower lawsuit settled as part of the total settlement for $1.017 billion, the largest settlement of a “qui tam” (whistleblower) case ever.

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The government took a step in that direction in its corporate integrity ageement (CIA) with Glaxo. The agreement emphasizes the role of individual company leaders in illegal activity and punishes their involvement. Part of this agreement is an “executive financial recoupment” program that calls for the withdrawal of bonuses and other financial incentives when executive and/or their employees engage in or supervise illegal behavior.

Phillips & Cohen attorney Erika Kelton, who represented two key whistleblowers in the Glaxo qui tam  case, says this agreement as a step in the right direction. Kelton told the New York Times that this “creates pressure and it creates an element of responsibility.”

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