GlaxoSmithKline resolves price inflation claims

GlaxoSmithKline, the UK’s largest drug company, has announced that it will pay $70 million (36.9 million pounds) to settle claims of over-pricing.

The agreement aims to resolve class-action claims filed against the company from individuals, health plans and insurance companies. These centred around allegations that GlaxoSmithKline fraudulently increased the price of certain drugs purchased for US government health plans.

Drugs involved in the allegations include Zofran and Kytril for cancer treatments, with the alleged price-fixing costing consumers and the government millions of dollars.

GlaxoSmithKline also reached out of court settlements about the average wholesale price (AWP) of drugs in litigation suits filed by attorneys in several states of the US, including New York, California and Connecticut. Pharmalive reports that these settlements will be partially funded by money set aside in a previous settlement with the Department of Justice that took place in 2005.

Evidence given in the case suggested that the government uses AWP as a standard for its own pricing, despite the fact that AWP often exceeds prices paid by those in the medical industry.

However, GlaxoSmithKline decided to settle matters without admitting liability to any wrongdoings in the matter, in order to find a resolution to the case.

The news follows a previous agreement where GlaxoSmithKline resolved US government claims that it had raised the price of drugs used by federal healthcare programmes.

Quarterly results for GlaxoSmithKline showed that performances for pharmaceutical products were up, with sales rising by ten per cent to five billion pounds. Drugs for the treatment of asthma and diabetes did particularly well with profits up by 12 and 32 per cent respectively.

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