Healthy Skepticism Library item: 1053

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Publication type: news

Glaxo and Bayer Settle U.S. Medicaid Fraud Charges
REUTERS 2003 Apr 16

Full text:

CHICAGO (Reuters) – GlaxoSmithKline Plc and Bayer AG Wednesday reached the
biggest-ever Medicaid fraud settlement with U.S. prosecutors on charges the
drug makers inflated prescription drug prices, company and government
sources said.
The U.S. Attorney’s Office in Boston said it plans to announce the deal at a
briefing later Wednesday
Bayer, based in Germany, agreed to pay $257 million to settle allegations it
cheated Medicaid, the U.S. health plan for the poor, for drugs such as
Cipro, the popular antibiotic used during the U.S. anthrax scare last year,
according to a plaintiff’s lawyer.
Glaxo agreed to settle for $87.6 million with the U.S. Attorney’s office “to
avoid delay and expense of a trial,” it said in a statement.
Soaring drug prices and strapped state budgets are leading U.S. attorneys
and states to crack down on abuse of the Medicaid system by various market
players.
For a drug maker to take part in the joint state-federal Medicaid program,
which covers roughly 36 million needy children, adults and disabled people,
it must offer the government the “best price” on its pharmaceuticals.
“They must have the goods on these guys because the way that statute was
written provides a good amount of wiggle room” for drug companies to set
prices, said Ira Loss, a health care expert at Washington Analysis.
Britain-based Glaxo did not admit wrongdoing and said the disagreement
stemmed from “an ambiguous aspect” of the Medicaid pricing law.
Bayer and Glaxo officials were not immediately available for comment.
California, New York, Florida, Illinois, Texas and Pennsylvania will also
recover damages are part of the settlement, according to a lawyer for a
plaintiff suing Bayer.
An official at the U.S. Attorney’s Office in Boston confirmed the Medicaid
settlement is the largest ever, though would not verify the amounts.