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GSK pays $70m to settle drug pricing row

Allegations that British firm artificially inflated prices of cancer drugs

GlaxoSmithKline (GSK) has agreed to pay $70m in a national settlement of civil lawsuits over allegations that the British company artificially inflated average wholesale prices of prescription drugs, including blockbuster cancer treatment Zofran.

The lawsuits, brought about by several states, health insurance plans and consumers, alleged that GSK used illegal schemes to inflate the price of two injectable anti-nausea drugs, Kytril and Zofran, which are both given to cancer patients undergoing chemotherapy, as well as the antibiotic Amoxil.

The states involved are New York, Connecticut, Nevada, Arizona, Montana and California. GSK said 34 other states and the District of Columbia would also be eligible to receive funds from the settlement.

A GSK spokeswoman said the company was admitting no wrongdoing and had settled the cases to ìput this historical matter behind itî.

ìSimilar claims have also been made against many other pharmaceutical companiesî which have not yet reached settlements, she said, adding that the cost of the settlement was covered by GSK's legal reserves.

New York attorney general, Eliot Spitzer, who filed the suit in 2003 said it had ìhelped stop a long-standing practice that inflated the cost of drugs for people suffering from cancer and cheated the Medicaid systemî.

ìToday's settlement provides significant restitution for consumers and the Medicaid programme,î he added.

Last September, GSK reached a $150m settlement to resolve government charges that it fraudulently inflated the price of drugs purchased by US federal healthcare programmes.

The US Department of Justice claimed that GSK overcharged government healthcare programmes for Zofran and Kytril and then charged healthcare providers less than the reimbursement rate, making it more profitable for those providers to sell the GSK drugs.

30th September 2008

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