OLYMPIA – Attorney General Rob McKenna today announced that Washington’s Medicaid program will receive $660,500 as part of a national settlement with drug manufacturer GlaxoSmithKline. The settlement resolves allegations that the company improperly inflated the “average wholesale price” paid by government health plans for two prescription medications used to assist cancer patients undergoing chemotherapy.
Washington and attorneys general in 36 other states reached agreements with GlaxoSmithKline last week. Under those agreements and an earlier federal statement, GlaxoSmithKline will pay $138 million to the federal Medicare program and $23 million to state Medicaid programs.
The states alleged that GlaxoSmithKline manipulated reported benchmark prices that Medicare and Medicaid use to set reimbursement amounts.
“GlaxoSmithKline increased the reported prices for two of its products, Kytril and Zofran, which are given to chemotherapy patients to relieve nausea symptoms,” Attorney General Rob McKenna said. “The company created a ‘spread’ between the amount that consumers actually paid and what government health programs would reimburse them, then portrayed the difference as a discount to induce purchasers to buy its products.”
As part of the settlement, GlaxoSmithKline will be required to report to the Washington Medicaid program. The company must provide two certified and federally defined prices that are currently used in connection with the Medicaid rebate program and Medicare part B reimbursement. Such prices were not previously available to the state. Washington will use the data to evaluate the state’s costs and identify potential savings.
“This new pricing information will enable Washington’s Medicaid program to save significant expenditures on all GlaxoSmithKline drugs,” Senior Counsel David Waterbury said.
GlaxoSmithKline must also enter into a Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services and be monitored for compliance.
McKenna commended Waterbury for his work in reaching the settlement.
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David Waterbury, Senior Counsel, (253) 593-2154
Kristin Alexander, Public Information Officer, (206) 464-6432, firstname.lastname@example.org