Corp-Ethics.com - Report: Glaxo pays $70m to end price row

Company	GlaxoSmithKline [Company Info]
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Date	Issue	Title
10th Aug 2006	Other Issue	Glaxo pays $70m to end price row

Report

GlaxoSmithKline has agreed to pay out $70m (£36.9m) to settle numerous civil claims of price-fixing in the US.

Several states, health plans and numerous consumers had launched legal action against the group claiming it had inflated the price of some drugs.

The drug maker has admitted no wrongdoing, but said it had made the move to "put the matter behind it".

Glaxo, which earned $2.42bn in the second quarter, said it had already set aside the money for the settlement.

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

It also resolves a lawsuit filed in Boston by individuals, health care schemes and insurers.

The lawsuits stem from claims that Glaxo used illegal schemes to inflate the price of drugs - including cancer treatments Zofran and Kytril - costing consumers and government health plans hundreds of millions of dollars.

The cases centre on the difference between set rates - or average wholesale prices - that insurance companies and government health plans, such as Medicare and Medicaid, use to reimburse physicians and pharmacies for certain drugs and the amounts the drug companies actually charge.

However, Glaxo's spokeswoman said that the practice was common in the industry.

She added that testimony showed states and health plans chose to use the set price for the drugs although it was "widely known" that this exceeded the price paid by doctors and pharmacies.

New York Attorney General Eliot Spitzer said the agreement - which settles a case he launched in 2003 - would "provide significant restitution for consumers and the Medicaid program".

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