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news.GlaxoSmithKline has paid over $150 million to the US government to resolve allegations that the company violated the False Claims Act through fraudulent drug pricing and marketing of two anti-nausea drugs, Zofran and Kytril, used primarily in conjunction with oncology and radiation treatment.
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The company indicated in a statement that it does not believe that it has done anything wrong, but that it decided to settle the case to avoid litigation.
It is alleged that the company sold its drugs to US healthcare providers at discount rates knowing that the US government would reimburse the healthcare providers for the full official price of the drugs.
The difference between the reimbursement rate of the federal health care programs and the actual price paid by healthcare providers for a drug is commonly known as the “spread.” The larger the spread on a drug, the larger the profit or return on investment for the provider.
GlaxoSmithKline allegedly used the spread to market, promote, and sell the drugs to existing and potential customers.
“We will not tolerate fraudulent pricing practices designed to reap profits for drug companies and doctors at the expense of healthcare programs for the poor and the elderly,” stated assistant attorney general Peter Keisler of the Justice Department’s civil division.
In response to the allegations GlaxoSmithKline said that “numerous government reports and other evidence showed that the government was well aware that…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. Notwithstanding this, GSK decided to settle the case, without admitting any wrongdoing, to put this historical matter behind it.”