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GlaxoSmithKline Pays $150 Million to Settle Price Fixing Charges

Sep 21, 2005 |

British Pharmaceutical giant GlaxoSmithKline (Glaxo) has agreed to pay over $150 million in settlement of federal (U.S.) charges that it fraudulently inflated prices for drugs bought by government health-care programs.

According to the U.S. Department of Justice, Glaxo allegedly violated the federal False Claims Act in the sale and marketing of Zofran and Kytril, two nausea drugs used by cancer patients who are undergoing treatment.

The Justice Department suspected Glaxo was engaged in a scheme to fix and maintain inflated prices for the two drugs knowing that federal healthcare programs based their reimbursement rates on those prices.

Federal officials stated that the Justice Department "will not tolerate fraudulent pricing practices designed to reap profits for drug companies and doctors at the expense of health care programs for the poor and the elderly."

Although GlaxoSmithKline issued a statement claiming it did nothing wrong, the company agreed to settle to avoid litigation. $26 million of the settlement will be paid to the whistle-blowers who prompted the investigation and another $10 million will go to state governments.

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