By GARDINER HARRIS New York Times June 3, 2004

In a novel claim testing the way that the $400 billion worldwide pharmaceutical industry is regulated, the New York State attorney general, Eliot Spitzer, sued the British-based drug giant GlaxoSmithKline yesterday, accusing the company of fraud in concealing negative information about its popular antidepressant medicine Paxil.

The civil lawsuit, filed in State Supreme Court in Manhattan, contends that GlaxoSmithKline engaged in persistent fraud by failing to tell doctors that some studies of Paxil showed that the drug did not work in adolescents and might even lead to suicidal thoughts. Far from warning doctors, the suit contends, the company encouraged them to prescribe the drug for youngsters.

"The point of the lawsuit is to ensure that there is complete information to doctors for making decisions in prescribing," Mr. Spitzer said in an interview. "The record with Paxil, we believe, is a powerful one that shows that GSK was making selective disclosures and was not giving doctors the entirety of the evidence."

GlaxoSmithKline officials issued a statement yesterday saying in part that the company "has acted responsibly in conducting clinical studies in pediatric patients and disseminating data from those studies."

On Wall Street yesterday, the American depository receipts of GlaxoSmithKline fell $1.38, or 3.2 percent, to $41.39.

Mr. Spitzer filed his suit at a time that the tendency of many drug companies to publicize only studies with positive results has come under increasing criticism.

As he has done in actions involving the financial services and mutual fund industries, Mr. Spitzer is entering regulatory terrain that has been largely the preserve of the federal government, in this case the Food and Drug Administration. This time, though, he maintains that his suit is not a criticism of federal drug regulators.

"This isn't Harvey Pitt and the S.E.C.," he said, referring to the former chief of the Securities and Exchange Commission, whom Mr. Spitzer criticized as less than vigorous in enforcing federal securities laws. Instead, Mr. Spitzer said that the F.D.A. had been hamstrung by court rulings that have used free-speech arguments to limit the agency's power to regulate what drug companies can say to doctors. Such rulings do not limit his powers, Mr. Spitzer said.

"You cannot invoke free-speech arguments as a defense to fraud," he added.

Similar suits against other drug companies are likely, Mr. Spitzer said. "This is an area that we're interested in," he said, "and I think there are other cases out there that are analogous."

A spokeswoman for the F.D.A. would not comment on the lawsuit but noted that the agency required companies to submit all data related to the safety of their drugs. Because so much drug company data submitted is considered proprietary, it is up to the F.D.A. to decide when to disclose possible public safety concerns.

That is what it did last year, when it warned doctors on the use of Paxil for adolescents and children. Earlier this year, it required antidepressant makers to strengthen suicide warnings on labels.

British drug regulators have banned the use of all but Prozac for the treatment of depression in adolescents and children. Prozac, made by Eli Lilly & Company, received a major American endorsement this week when the widely anticipated results of a study sponsored by the National Institute of Mental Health indicated that Prozac was superior to talk therapy alone or a placebo in treating depression among teenagers. The study did not address suicide risks.

Civil suits have been filed against Glaxo and some other makers of antidepressants by patients or surviving relatives, contending that the drugs caused violent or suicidal behavior. Some criminal defendants have contended that violent acts were a result of using the drugs.

Mr. Spitzer's lawsuit is part of a broad assault by prosecutors on the drug industry's marketing practices. Last month, for example, federal prosecutors in Boston announced a settlement with the world's largest drug maker, Pfizer; the company agreed to pay $430 million and to plead guilty to charges that its Warner-Lambert unit promoted the drug Neurontin to doctors for the treatment of conditions where no benefit had been proved.

TAP Pharmaceuticals agreed to pay $800 million for inappropriate marketing practices, and its former executives are facing federal criminal charges in Boston. Schering-Plough has acknowledged in regulatory filings that it is likely to be indicted for improper marketing practices. Other companies are being investigated.

At issue in most of these investigations, including Mr. Spitzer's Paxil suit, is the marketing of approved drugs for off-label uses  those not specifically approved by the F.D.A. While doctors are free to prescribe an approved drug for any use, the manufacturers are supposed to limit their marketing to those uses with F.D.A. clearance.

The new wrinkle in Mr. Spitzer's suit is his argument that a drug maker is committing fraud if it does not tell doctors about trials of a medication that raise safety concerns.

"I'm certainly not the person to determine whether Paxil is appropriate or not for any given patient," Mr. Spitzer acknowledged. "But what I can do is ensure the information to doctors is fair and complete so that those equipped to make this determination can do so."

Dr. Barry Perlman, president of the New York State Psychiatric Association, said in an interview that his organization supported a crackdown on the failure to disclose negative information on drugs.

"Whenever we don't have the complete picture," he said, "we can't prescribe ethically and appropriately, and that's an enormous obstacle to good care."

Richard Merrill, a University of Virginia law professor and a former general counsel at the F.D.A, compared Mr. Spitzer's suit to product-liability lawsuits by individuals. He said the suit was the first by a public official against the drug industry.

Pharmaceutical companies sponsor most clinical trials of drugs and, in many cases, they jealously guard the data that results. If a test suggests that a drug is effective in treating a certain condition, the company will push to get its results published in a prestigious journal. If the results reflect poorly on the drug, they often never appear in public.

Experts have long criticized the tendency in the industry to publish only positive clinical trials, arguing that this distorts medical practice and undermines the scientific process. Some have suggested that the results of all clinical trials should be published in a federal registry.

But some say that doctors are unlikely to consult such a registry and will continue to be influenced by trial results published in leading journals.

Mr. Spitzer's suit is the first to suggest a way of resolving such matters. If a company's marketing message is at odds with the results of its own, suppressed clinical trial, he argues, the company is liable for damages under consumer fraud laws.

In the case of Paxil, GlaxoSmithKline sponsored five trials of the drug in adolescents suffering from major depression. The company undertook the trials to qualify for a six-month extension of Paxil's patent granted under a federal law that encourages the testing of drugs in children. But it published only one of the trials, which showed mixed effect. The unpublished trials failed to show any benefit for the drug and suggested that it might increase the risk of suicide.

An internal memo cited in the suit said the company should have "effectively managed the dissemination of these data in order to minimize any potential negative commercial impact."

And, according to the suit, the company told its sales representatives that "Paxil demonstrates remarkable efficacy and safety in the treatment of adolescent depression." The suit contends that sales representatives passed this on to doctors.

The company's statement yesterday said the memo, written in 1998  before the merger of SmithKline Beecham and Glaxo Wellcome of Britain that created the current company  "is inconsistent with the facts and does not reflect the company position."

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by THERESA AGOVINO AP Business Writer June 2, 2004

NEW YORK -- GlaxoSmithKline PLC committed fraud by withholding negative information and misrepresenting data on prescribing its antidepressant Paxil to children, according to a lawsuit filed Wednesday by New York Attorney General Eliot Spitzer.

The lawsuit, filed in New York State Supreme Court, said Glaxo suppressed four studies that failed to demonstrate the drug was effective in treating children and adolescents and suggested a possible increase of suicidal thinking and acts.

It also said an internal 1999 Glaxo document showed that the company intended to "manage the dissemination of data in order to minimize any potential negative commercial impact."

Glaxo spokeswoman Mary Anne Rhyne said the company "has acted responsibly in conducting the studies in pediatric patients and disseminating results. All of our studies have been made available to the (U.S. Food and Drug Administration) and regulators worldwide."

Rhyne also said the studies referred to in the suit have been made public in medical meetings, journals and letters to doctors. She said the internal document referenced in the suit "is inaccurate and inconsistent with the facts, and doesn't express the overall company position."

The lawsuit touches on two pharmaceutical and medical controversies: whether antidepressants increase suicidal tendencies in children, and if drug companies should be required to disclose all studies they conduct on their medicines.

Paxil is not approved for use in children, but doctors can prescribe drugs as they see fit and routinely recommend antidepressants for children suffering from depression and other psychological disorders.

Only Prozac, which is made by Eli Lilly & Co., has been approved for use in children. According to Spitzer, Glaxo's revenues for Paxil prescriptions in children and adolescents totaled $55 million in 2002.

The lawsuit seeks the return of all profits obtained by Glaxo as a result of conduct alleged in the suit.

Glaxo's U.S. shares fell 94 cents, or 2.2 percent, to $41.83 in midday trading on the New York Stock Exchange.