GlaxoSmithKline settles fraud suit for $150 million US

Pharmaceutical giant GlaxoSmithKline PLC has agreed to pay $150 million US to settle fraud allegations over two anti-nausea drugs. It is the latest in a series of fraud settlements with major drug manufacturers that reap millions of dollars from U.S. federal programs.

The U.S. Justice Department opened an investigation concerning inflated prices for the anti-nausea drugs Zofran and Kytril. They are often prescribed to patients undergoing chemotherapy and radiation treatment.

Drug prices were inflated for Medicare and Medicaid programs. The programs reimburse doctors based on the reported cost of drugs. But the company charged health care providers less, knowing that the doctors would profit from the difference, the Justice Department said.

The government opened an investigation into the company after Ven-A-Care of the Florida Keys, Inc., filed a whistleblower lawsuit that first raised the allegations. The company and its principals will receive $26 million from the settlement, as allowed under the federal False Claims Act, the Justice Department said.

A statement on the GlaxoSmithKline site said that "numerous government reports and other evidence showed that the government was well aware that by using AWP (Average Wholesale Price) as its reimbursement benchmark, it was paying doctors more than the doctors paid for the medicines. For public policy reasons, the government maintained those reimbursement levels for many years."

The company admitted no wrongdoing in the settlement.

The settlement covers the time period of 1994 to 2002 for Zofran and 1994 to 2000 for Kytril. SmithKline Beecham divested Kytril in December 2000, just before its merger with Glaxo Wellcome.