Texas Attorney General Abbott Settles Medicaid Fraud Case With Glaxo-Smith Kline

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Glaxo-Smith Kline falsely priced Medicaid-covered drugs, repays Texas $1.4 million

November 16, 2007 -- AUSTIN – Texas Attorney General Greg Abbott today settled a fraudulent drug pricing case with pharmaceutical giant Glaxo-Smith Kline, its parent company, SmithKline Beecham Corp., and a subsidiary. Under the settlement, the defendants agreed to repay almost $1.4 million for charging the state inflated prices for three prescription drugs from 1994 to 2002.

“Although the law requires drug manufacturers to accurately report market prices, this defendant unlawfully charged the taxpayers inflated prices for its products,” Attorney General Abbott said. “With state health care expenditures on the rise, authorities must ensure that vendors are not overcharging the taxpayers. We will continue prosecuting waste, fraud and abuse in the Medicaid program.”

In order for pharmaceutical products to be eligible for Medicaid reimbursement, Texas law requires that manufacturers accurately report market prices to Medicaid’s Vendor Drug Program.

In this case, Glaxo-Smith Kline and its subsidiary, GlaxoWellcome Inc., formerly known as Burroughs Wellcome Inc., unlawfully overcharged the state for three prescription drugs. The defendants reported false, inflated prices for two prescription drugs that prevent vomiting, the anti-emetic drugs known as Kytril and Zofran, and an antibiotic, Amoxil. The Medicaid program reimbursed pharmacies and other Glaxo Smith-Kline customers for these drugs based on their inflated prices. Today’s settlement reflects Texas’s recovery of those dollars.

Federal and state damages for the three drugs total almost $2.8 million, of which 60 percent has already been remitted to the federal government. Texas will receive about $1.4 million for its share, including attorneys’ fees.

Today’s settlement reflects Attorney General Abbott’s continuing crackdown on waste, fraud and abuse in the Medicaid system. In 2005 alone, the Texas Medicaid program cost more than $17 billion. To save taxpayer dollars, Attorney General Abbott has dramatically expanded both the Civil Medicaid Fraud Section and the Medicaid Fraud Control Unit. Since Attorney General Abbott took office, the civil and criminal Medicaid fraud sections have recovered more than $190 million.

Source: Texas Attorney General