Whistleblower's Long Journey - WSJ.com #BigPharma

By PETER LOFTUS

In 2002, drug maker GlaxoSmithKline PLC sent one of its quality-assurance managers, Cheryl Eckard, to Puerto Rico to help clean up a mess at one of its biggest manufacturing plants. U.S. authorities had just cited the plant for several violations, including making a contaminated ointment used to treat skin infections on children.

Ms. Eckard's journey from North Carolina to the Caribbean set off a chain of events culminating in this week's announcement that she would collect at least $96 million for her role in helping the government secure a criminal guilty plea and a $750 million payment from Glaxo to settle an investigation of manufacturing deficiencies.

Ms. Eckard's bounty is believed to be the largest award given to a single whistleblower in U.S. history.

Other drug companies, such as Pfizer Inc. and Eli Lilly & Co., have collectively paid billions of dollars to settle probes. Lawyers say the publicity surrounding each new settlement triggers a wave of would-be whistleblowers looking to get in on the action, leading to more substantive cases with bigger awards. Strengthened whistleblower protections also have contributed to the surge.

"The breadth of cases has expanded to include different areas we've never seen before," said Joseph E.B. White, a Philadelphia attorney who represents whistleblowers.

Mr. White sees the focus of health-care-fraud cases expanding to allegations of manufacturing problems and the submission of false clinical-trial data to secure regulatory approval for new drugs. He also says manufacturers of medical equipment and devices are increasingly in the sights of would-be whistleblowers and government investigators. Ms. Eckard, 51 years old, wasn't available for an interview, according to her attorneys. They said she is originally from North Carolina but declined to say where she lives now, citing her privacy. She currently works as a consultant to the pharmaceutical industry on quality-assurance projects.

"This is not something I ever wanted to do, but I felt I had no choice because of the safety concerns," Ms. Eckard said in a statement Tuesday in Boston.

Glaxo said in a statement that it regretted the way it operated the Puerto Rico plant, which has since been closed, and it's committed to continuously improving manufacturing quality. The company denied Ms. Eckard's allegations, and said her lawsuit will be dismissed as part of the settlement and payout to her. In its planned guilty plea, Glaxo agreed to admit that it sold adulterated products with the intent to defraud or mislead. A court date hasn't yet been set for Glaxo to formally enter the plea and receive sentencing.

Ms. Eckard worked at Glaxo from 1992 to 2003 and was a manager of global quality assurance at the company's Research Triangle Park, N.C., site at the time she was asked to visit the plant in Cidra, Puerto Rico.

What Ms. Eckard found when she arrived in Cidra in 2002, according to court documents, were even more problems than those cited by the U.S. Food and Drug Administration.

The plant had received complaints that drugs of different types and strengths were being mixed up in the same bottle, and plant managers had made no attempt to issue a recall or correct the cause of the mix-ups, according to a lawsuit Ms. Eckard later filed in federal court in Boston.

She learned of one consumer complaint that a boy was given double the dose of the antidepressant Paxil due to such mix-ups, according to her lawyer Neil Getnick.

Ms. Eckard made some strong recommendations to her superiors: Stop shipping all products from the plant, suspend manufacturing for two weeks to allow time to resolve the problems, and notify the FDA about the product mix-ups.

But according to her lawsuit, Ms. Eckard's recommendations were ignored because her supervisors were too busy preparing for an FDA inspection in October 2002 they hoped would clear the way for approval to market two new products, including the diabetes drug Avandamet, which was eventually approved. A Glaxo spokeswoman said two of Ms. Eckard's superiors cited in her lawsuit, who are still with the company, weren't available to comment. Others weren't reachable for comment.

Ms. Eckard continued to make trips to Cidra into 2003. She eventually told her boss that "she would not participate in a cover-up of the quality assurance and compliance problems at Cidra," according to her lawsuit.

Steven Eckard, Cheryl's ex-husband, said, "I can tell you as a quality-assurance auditor she was very good at her job. She was a company person. She was not a malcontent. She was a person who really worked hard for the company up until things went sour."

Mr. Eckard separated from Ms. Eckard in 2000, and two later divorced.

By mid-2003, Ms. Eckard was terminated in what the company called a "redundancy" related to the merger of Glaxo Wellcome and SmithKline Beecham PLC a couple of years before.

After she left the company, she continued to try to persuade its compliance department that more needed to be done at Cidra. But she says the company took no action. Finally, in August 2003, she called the FDA's San Juan office and spent more than two hours detailing her concerns.

It was soon after that the FDA began an investigation and executed search warrants at the plant to seize documents and other potential evidence. The following year, Ms. Eckard filed a federal lawsuit against Glaxo.

Ms. Eckard's lawsuit was filed under the U.S. False Claims Act. The law, which dates back to the Civil War, prohibits people or businesses from defrauding the government, and provides incentives for people who suspect wrongdoing to come forward. Lawsuits are typically filed confidentially in federal court to protect the identity of the plaintiff. The Justice Department then determines whether the case has enough merit for it to take over.

If the Justice Department is successful in recovering money—usually through a settlement—the whistleblower is generally entitled to receive from 15% to 25% of the award.

A study published in the New England Journal of Medicine earlier this year found payouts to whistleblowers have ranged from $100,000 to $42 million per person, with a median recovery of about $3 million. Attorneys' fees however, can eat into that, ranging from 30% to 50%, according to Mr. White. Ms. Eckard's lawyers declined to say what their cut was.

Several whistleblowers split about $100 million of Eli Lilly's $1.4 billion settlement in 2009 to resolve a probe of off-label promotion of antipsychotic Zyprexa. One of them, a former Lilly sales rep named James Wetta, went on to work for AstraZeneca PLC and tipped off federal authorities about alleged off-label promotion of the antipsychotic Seroquel, resulting in Astra's $520 million settlement in April.

Mr. Wetta stood to get at least $45 million of that settlement, though he was to share an undisclosed portion with another whistleblower in that case. His attorney, Michael Mustokoff, declined to specify the exact amounts he received.

Mr. Mustokoff said Mr. Wetta has declined to be interviewed, saying most whistleblowers "want to live anonymously and they want to enjoy their good fortune."

—James Oberman and Jon Kamp contributed to this article.

Write to Peter Loftus at peter.loftus@dowjones.com

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