In a move that signals federal prosecutors are pursuing yet another type of fraud in the pharmaceutical industry, GlaxoSmithKline has agreed to pay a whopping $750 million fine to settle charges over numerous production problems - contaminated meds, mislabeled packaging and incorrect dosages - at a facility in Cidra, Puerto Rico (you can read the gritty details here).

The fine includes a $150 million criminal penalty and the remaining $600 million will be used to settle civil charges, as well cover the cost of the government investigation and reward Cheryl Eckard, a former global quality assurance manager who filed a whistleblower lawsuit, with a payout of at least $96 million. To be specific, a subsidiary that ran the plant pleaded guilty to a felony (read terms here). No individual Glaxo execs or managers were held accountable, but we should also note that a spokeswoman for the US Attorney in Boston, which pursued this case, says the investigation is ongoing.

The settlement was actually disclosed back in July, when Glaxo took a $2.4 billion charge to cover the cost of the deal, as well as resolve numerous product-liability lawsuits involving its Paxil depression pill and Avandia diabetes med (read the settlement here and the plea here).

The whistleblower lawsuit (which you can read here) recounts problems that resulted in a consent decree signed by Glaxo and the FDA back in 2005 over manufacturing problems at the plant, which has since been closed as part of long-running cutbacks (back story). This was reached after Eckard was fired in 2003.

At the time, FDA inspections found Paxil CR tablets that could split apart, causing patients to receive only a portion of a tablet and, therefore, no active ingredient. Conversely, patients might receive a part of a tablet containig an active ingredient but not offering the controlled-release effect. And some Avandamet tablets, which are used to treat diabetes, did not have an accurate dose of the active ingredient (see background here).

By way of her lawyers, Eckard offered this statement: “It’s been a very challenging eight years for me and my family. This is not something I ever wanted to do but I felt I had no choice because of the safety concerns. I don’t take any great joy in knowing that it took a whistleblower suit to get the company to come around but I’m grateful to the many employees who told the government the truth in this case. I’m obviously happy with this resolution. I hope it leads to improved safety standards in the industry as whole. Drugmakers are continuing to take their factories to countries that are remote from FDA scruitnty. I hope this case will be a wake up call that no matter how far away the factory is removed, the company takes responsibility for meeting federal safety standards.”

“This case is a game-changer because it signals that the U.S. Department of Justice is going to join cases that deal with manufacturing violations. We know there are other big cases out there that fit this model, and we have just seen a new front open up in the war on fraud,” says Patrick Burns of Taxpayers Against Fraud, a non-profit that supports whistleblower lawsuits. “This relator did not bring a single case to the U.S. Department of Justice - she brought a whole new way of thinking and whole new pattern of criminal conduct.”