Company Agrees to Settlement Over Drug Price Inflation
GlaxoSmithKline on Thursday said it has agreed to a $70 million settlement with New York Attorney General Eliot Spitzer (D), other state attorneys general, health insurance plans and consumers over allegations that the company artificially inflated average wholesale prices of prescription drugs, the Bloomberg/Philadelphia Inquirer reports. The settlement pertains to injectable antinausea drugs Kytril and Zofran, which are given to cancer patients undergoing chemotherapy, as well as to the antibiotic Amoxil (Freifeld, Bloomberg/Philadelphia Inquirer, 8/11).
Government health plans and private insurers use AWPs to set reimbursement rates for doctors and pharmacies (Reuters/New York Times, 8/11).
In a separate settlement in September 2005, GSK agreed to pay $150.8 million to settle fraud allegations regarding inflated AWPs for the two antinausea drugs. The Department of Justice claimed that GSK purposely overcharged government health care programs for Zofran and Kytril and then charged health care providers less than the reimbursement rate, making it more profitable for those providers to sell GSK drugs.
The lawsuit was related to sales of Zofran between 1994 and 2002 and sales of Kytril between 1994 and 2000. GSK admitted no wrongdoing as part of that settlement (American Health Line, 9/21/05).
In the new settlement, GSK has agreed to settle claims with Arizona, California, Connecticut, Montana, Nevada and New York. Thirty-four other states and the District of Columbia also will be eligible to receive part of the settlement, GSK said. The company said it will pay the settlement with funds from its legal reserves (Reuters/New York Times, 8/11).
Spitzer filed the suit in 2003, claiming that GSK committed consumer fraud and commercial bribery and made false statements to government health plans. Spitzer said that similar cases against Sanofi-Aventis and Pharmacia -- which has been acquired by Pfizer -- still are pending.
Spitzer said, "Our lawsuit helped stop a long-standing practice that inflated the cost of drugs for people suffering from cancer and cheated the Medicaid system," adding, "Today's settlement provides significant restitution for consumers and the Medicaid program" (Bloomberg/Philadelphia Inquirer, 8/11).
GSK said it "has agreed to settle the cases, without admitting wrongdoing, to put this historical matter behind it" (AP/Long Island Newsday, 8/11).