Glaxo Accused By US of Inflating Medicine Prices
Posted on: Friday, 26 August 2005, 18:00 CDT
DRUGS giant GlaxoSmithKline has been added to a list of companies accused by California of inflating medicine prices and costing the state's Medicaid system hundreds of millions of dollars.
California Attorney General Bill Lockyer has taken legal action against 37 companies and said that he has added Glaxo and US firm Amgen to the list originally complied two years ago.
Glaxo and companies including Abbott Laboratories and Wyeth are accused of hiding the true costs of their drugs so that payments from Medi-Cal, California's health insurance programme, would be artificially inflated.
"We're dragging these drug companies into the court of law because they're gouging the public on basic life necessities," Lockyer said. The Californian health insurance programme pays pharmacies and doctors based on prices supplied by the drug companies-The action was prompted by a whistleblower lawsuit filed by a small pharmacy, Ven-A-Care, alleging drugmakers reported "average wholesale prices" that were much higher than the actual cost.
The drug companies deny any wrongdoing. Glaxo said it always worked within the law and denied it had any power over wholesale pricing, which was dictated by the state.
A spokeswoman for Abbott also denied the charges, saying the company "has consistently complied with all laws and regulations'. She added: "We intend to vigorously defend against this lawsuit".
Bristol-Myers also said the accusations were baseless and it was "in full compliance with the law, guidelines and contracts". Amgen said it was only named because of its 2002 acquisition of Immunex and the lawsuit does not involve any drugs now sold by the firm. Californian authorities say each company could be liable for about $40 million (Pounds 22.3 million) under the action.
A dozen other states have filed similar lawsuits, and the cases have been consolidated at a federal court in Boston. A number of investigations have been launched into whether pharmaceutical companies have overcharged for their products.
Eli Lilly this month received a subpoena from the Florida Attorney General's office seeking documents on Medicaidrelated sales of its Zyprexa schizophrenia drug. Swiss biotech Serono took a $725 million charge in April related to a probe into US sales of its Aids drug Serostim.
But a Boston judge recently denied a request by a coalition of consumer groups, health plans and state Attorneys General for nationwide classaction status in a similar case.
Source: Evening Standard; London (UK)
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