Medicaid fraud - GSK breaks ranks and pays up.

Poor GSK. Europe's biggest drugmaker has broken ranks with its Big Pharma colleagues and agreed to pay more than $70 million to settle claims by state attorneys general and consumers that the company overcharged government health programs for its medicines.

The settlement covers claims by New York, California, Nevada, Connecticut, Montana and Arizona, as well as potential claims in 34 other states and the District of Columbia.

The agreement also resolves a lawsuit filed in Boston by health-care programs, individuals and insurers, said the company, which has operations in Parsippany.

The case stems from the government practice of using average wholesale prices, as reported by Glaxo and other drugmakers, to set reimbursement rates for medicines used by health programs, such as Medicare.

The states said the companies used the formula to artificially inflate drug prices, costing their programs hundreds of millions of dollars.

Eliot Spitzer, New York's attorney general, filed suit in February 2003 against Glaxo and rivals Pharmacia Corp. and Aventis, accusing them of giving a discount to doctors. The physicians then claimed reimbursements at higher prices from government programs, such as Medicare and Medicaid, and pocketed the difference, Spitzer said.

"Our lawsuit helped stop a longstanding practice that inflated the cost of drugs for people suffering from cancer and cheated the Medicaid system" Spitzer said. "Today's settlement provides significant restitution for consumers and the Medicaid program."

Glaxo's settlement leaves Johnson & Johnson, Bristol-Myers Squibb Co., Pfizer and 15 other pharmaceutical companies facing a trial over the class-action lawsuit.

Connecticut Attorney General Richard Blumenthal called it a “brazen scheme.” “The fraud is especially shameful because the company sought to increase sales my manipulating prices instead of competing honestly,” he said.

Source