GlaxoSmithKline Plc has agreed to plead guilty to misdemeanor criminal charges and pay $3 billion to settle the largest case of healthcare fraud in U.S. history.

Under the national settlement, GlaxoSmithKline will plead guilty to two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about the diabetes drug Avandia to the Food and Drug Administration.

Prosecutors say GSK encouraged use of Paxil for children although it was not approved for anyone under 18.

GlaxoSmithKline to pay $3billion fine after pleading guilty to healthcare fraud - the biggest in U.S. history

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11:14 EST, 2 July 2012 | UPDATED:16:08 EST, 2 July 2012

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GlaxoSmithKline Plc has agreed to plead guilty to misdemeanor criminal charges and pay $3 billion to settle the largest case of healthcare fraud in U.S. history.

Under the national settlement, GlaxoSmithKline will plead guilty to two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about the diabetes drug Avandia to the Food and Drug Administration.

Prosecutors say GSK encouraged use of Paxil for children although it was not approved for anyone under 18.

Landmark: GlaxoSmithKline Plc has agreed to plead guilty to criminal charges and pay $3billion to settle the largest case of healthcare fraud in U.S. history

Landmark: GlaxoSmithKline Plc has agreed to plead guilty to criminal charges and pay $3billion to settle the largest case of healthcare fraud in U.S. history

The company also promoted Wellbutrin for uses besides major depressive disorder, its only approved use.

THE DRUGS IN QUESTION

PAXIL: Prosecutors said GlaxoSmithKline illegally promoted the drug Paxil for treating depression in children from April 1998 to August 2003, even though the FDA never approved it for anyone under age 18.

WELLBUTRIN: The corporation also promoted the drug Wellbutrin from January 1999 to December 2003 for weight loss, the treatment of sexual dysfunction, substance addictions and attention deficit hyperactivity disorder, although it was only approved for treatment of major depressive disorder.

AVANDIA: Between 2001 and 2007 GSK failed to report to the FDA on safety data from two studies of the cardiovascular safety of the diabetes drug Avandia. Since 2007, the FDA has added warnings to the Avandia label to alert doctors about potential increased risk of congestive heart failure and heart attack.

It is illegal to promote uses for a drug that have not been approved by the FDA — a practice known as off-label marketing.

They say that between 2001 and 2007 GSK failed to report on two studies of the cardiovascular safety of Avandia, a diabetes drug.

It is illegal to promote uses for a drug that have not been approved by the FDA - a practice known as off-label marketing.

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Of the penalties, $1 billion covers criminal fines and forfeitures and $2 billion is for civil settlements with the federal and state governments.

Deputy U.S. Attorney General James Cole said at a news conference in Washington that the settlement 'is unprecedented in both size and scope'.

As part of the settlement, GlaxoSmithKline agreed to monitored by government officials for five years to attempt to ensure the company's compliance.

GSK said in a statement it would pay the fines through existing cash resources. The company announced a $3 billion charge in November related to legal claims.

Chief Executive Andrew Witty said GSK's U.S. unit has 'fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct.

'Today brings to resolution difficult, long-standing matters. Whilst these originate in a different era for the company, they can not and will not be ignored.

'On behalf of GSK, I want to express our regret and reiterate that we have [learned] from the mistakes that were made.'

Carmin M. Ortiz, a U.S. attorney in Massachusetts, told USA Today: 'GSK's sales force bribed physicians to prescribe GSK products using every imaginable form of high-priced entertainment, from Hawaiian vacations to paying doctors millions of dollars to go on speaking tours to a European pheasant hunt to tickets to Madonna concerts, and this is just to name a few.'

Andrew Witty: CEO of GlaxoSmithKline, said the U.S. unit has 'fundamentally changed our procedures for compliance, marketing and selling. When necessary, we have removed employees who have engaged in misconduct'

As part of the settlement, GlaxoSmithKline agreed to new restrictions by the U.S. government to prevent the use of kickbacks or other prohibited practices.

The inspector general of the U.S. Department of Health and Human Services will oversee the 'Corporate Integrity Agreement' for five years.

The company will not be able to compensate its salesmen based on sales goals for territories.

It was also required to change its executive compensation program to allow the company to 'claw back' certain pay for those engaged in misconduct.

Prosecutors have not brought criminal charges against any individuals in connection with the GSK case, although the settlement expressly leaves open that possibility. Cole declined to comment on the possibility of future charges.

In a statement, GlaxoSmithKline said it disagreed with some statements the Justice Department made in court papers.

For example, the company said its settlement with the government does 'not constitute an admission of any liability or wrongdoing in the selling and marketing of Lamictal, Zofran, Imitrex, Lotronex, Flovent, Valtrex, Avandia or Advair products.

'The government also made allegations about Paxil, Wellbutrin that the company did not admit.

'The civil settlement agreement contains many allegations that are either inaccurate or incomplete, that selectively tell only parts of the story, and that draw unwarranted conclusions from disputed facts.'

GSK's shares were positive on the New York Stock Exchange on Monday, up 1.6 percent to $46.29 at 1400 EDT.

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