Glaxo reaches $70 million settlement over price-fixing claims

17-08-2006

Pharmaceutical giant GlaxoSmithKline announced yesterday that it had agreed to pay $70 million (£36.9 million) to settle a number of civil lawsuits filed in the US which accused the company of pricefixing.

The settlement covers claims made by several states, consumers and healthcare programmes that Glaxo fraudulently inflated the price of some drugs purchased by government health plans.

The suits filed against the company claim that Glaxo inflated the average wholesale price (AWP) of its medicines, which insurance companies and government healthcare programmes such as Medicare and Medicaid use to reimburse doctors and pharmacies for drugs.

It is claimed that the alleged pricefixing, which involved drugs including Glaxo's cancer treatments Zofran and Kytril, cost consumers and government healthcare plans millions of dollars.

Confirming details of the settlement yesterday, Glaxo said that the deal would cover claims made by the states of New York, California, Connecticut, Nevada, Arizona and Montana, as well as potential claims in 34 other states and the District of Columbia.

The London-based company said the agreement also resolved a lawsuit filed in Boston by individuals, healthcare programmes and insurers. Glaxo, which earned $2.42 billion in the second quarter, said that it had already set aside the money for the settlement.

But in a statement the pharmaceutical firm said US government health programmes had chosen to use the average wholesale price of drugs as a basis for reimbursing doctors, even though it had been "widely known for years that AWP exceeds the prices actually paid by physicians, pharmacies and others".

Glaxo said that it had agreed to settle the cases, "without admitting any wrongdoing" to put the "historical matter behind it".

The legal agreement follows a separate $150 million settlement Glaxo reached last September to resolve US government claims that it inflated the price of drugs purchased by federal healthcare programmes.


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