[e-drug] Glaxo agrees to pay $150m in drug-price fraud case

["E-drug" <e-drug@healthnet.org>]

E-DRUG: Glaxo agrees to pay $150m in drug-price fraud case
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 http://www.boston.com/business/healthcare/articles/2005/09/21/glaxo_agrees_to_pay_150m_in_drug_price_fraud_case/?rss_id=Boston+Globe+--+Business+News

Glaxo agrees to pay $150m in drug-price fraud case
By Associated Press  |  September 21, 2005

WASHINGTON -- GlaxoSmithKline PLC will pay $150 million to settle claims
it overcharged the government for two antinausea drugs, and prosecutors
say they're looking into 150 cases of drug price fraud.

Scrutiny of the pharmaceutical industry has increased along with the
portion of healthcare costs attributable to prescription drugs. That
attention is likely to grow as the government readies a drug insurance
program for older Americans under Medicare that is expected to increase
sharply its spending on medicines.

The Glaxo settlement is the latest in a series of whistle-blower claims
that have resulted in $2.4 billion in payments from drug companies in
recent years.

Glaxo engaged in a scheme to inflate the price of Zofran and Kytril for
the Medicare and Medicaid programs, which reimburse healthcare providers
based on the manufacturers' prices, the government said. The drugs,
typically administered in doctors' offices or hospitals, are used mainly
to counter nausea brought on by chemotherapy and radiation.

The company charged healthcare providers less for the drugs, knowing they
would get to keep the difference and would be more likely to prescribe
them again, the Justice Department said.

Glaxo admitted no wrongdoing as part of the settlement. ''We believe that
our price reporting was lawful and was done in good faith, but we've
agreed to this settlement to avoid the delay, expense, and uncertainty of
litigation," said Mary Anne Rhyne, a company spokeswoman.

The case resulted from a whistle-blower lawsuit filed by Ven-A-Care of the
Florida Keys Inc., a small home-infusion company that has won several
suits that made similar allegations against other drug makers.

Senator Charles Grassley, an Iowa Republican, Congress' leading advocate
for whistle-blower protection, said the ''importance of whistle-blowers
will only increase as the new Medicare prescription drug benefit takes
effect. Bad actors in the industry should know that these good guys are on
the case."