Companies pay $344m fraud settlement
pharmafile | October 28, 2003 | News story | |Â Â Â
GlaxoSmithKline and Bayer have agreed to pay $344 million to settle charges of defrauding the US Government healthcare system.
The payout is one of the biggest in relation to alleged fraud against the health insurance programme for the poor, and centres on Bayer's antibiotic Cipro and hypertension drug Adalat, and GSK's antidepressant Paxil and allergy treatment Flonase.
Powerful private insurance companies Health Management Organisations regularly negotiate large discounts on prescription prices with the industry, which companies are obliged by law to match for the Medicaid system.
But Bayer and GSK have now admitted they did not pass on these discounts to Medicaid, instead creating separate labels for the HMO, a practice know as ick and stick.
Announcing the settlements, US Attorney General Michael J Sullivan said: "We are experiencing a time of skyrocketing prices for prescription drugs, where state and federal budgets are stretched to the breaking point. The effect of leading corporations seeking to avoid paying millions of needed dollars to our nation health care programmes can be devastating".
He concluded: "Such conduct by pharmaceutical companies is intolerable and we in law enforcement will remain focused on protecting our nation Medicaid programme".
The cases are the latest in a series of investigations into the conduct of pharmaceutical companies and HMOs, which many US consumers blame for the crisis in which the country's healthcare system finds itself.
A recent survey by respected healthcare charity the Kaiser Family Foundation found 32 states plan to cut back their Medicare programmes because of cost pressures, but pharmaceutical companies says the current system is to blame, and needs to be reformed urgently.
GSK has agreed to pay a civil fine of $87.6 million, but maintains it was interpreting an "ambiguous aspect" law in reasonable and good faith, but has agreed to comply with a Government corporate integrity monitor.
Bayer has pleaded guilty to charges of fraudulent pricing and will pay $5.6 million in criminal damages. It will pay a further $257 million to settle criminal and civil charges relating to Cipro and Adalat.
