Erika Kelton devoted almost a decade to a whistleblower action against GlaxoSmithKline PLC, but it finally paid off — to the tune of $3 billion. Kelton, a partner at Phillips & Cohen in Washington, was lead attorney for the firm in an off-label marketing case involving a number of prescription drugs, including asthma drug Advair. It was the largest health care fraud settlement to date, according to the U.S. Department of Justice.
Advair received U.S. Food and Drug Administration approval to treat serious forms of asthma, but Glaxo allegedly marketed it to patients suffering from milder forms of asthma, for which it has not been approved.
When Kelton and the firm took the case in 2003, claims involving off-label marketing were scarce and settlements were virtually nonexistent. Kelton acknowledged that the case was “somewhat risky,” but after recognizing the value of its two whistleblower clients’ information, the firm poured resources into it, renting an apartment in Boston, where the case was being litigated, and filling it with attorneys, paralegals and office equipment.
According to Kelton, her clients’ high-ranking positions within Glaxo pointed to the company’s upper echelons. “They would have made strong witnesses, if the case had gone to trial, and they had a large volume of damning evidence,” she said.
The firm spent a day presenting its case to the Justice Department, after which the agency agreed to take up the matter. On July 2, the department announced that it had reached a settlement with the drug manufacturer, and credited support from the firm. Glaxo pleaded guilty to two counts of introducing misbranded drugs into interstate commerce and one count of failing to report safety data to the FDA.
Of the $3 billion recovery, $686 million involved Advair. “It is thrilling and extraordinary to be involved in such an historic settlement,” Kelton said.
Phillips & Cohen handles exclusively whistleblower cases under the False Claims Act, tax violations, securities fraud and other forms of corporate skullduggery. The firm helped to secure a $37 million settlement in April, involving ATK Launch Systems Inc., which allegedly sold faulty military equipment with the potential to seriously injure or kill military personnel.
Phillips & Cohen partners Eric Havian and Claire Sylvia handled that case; their co-counsel included Lieff Cabraser Heimann & Bernstein partners Robert Nelson and Nimish Desai.