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GSK reaches civil settlements for average wholesale price litigation

Pharma Compliance Alert, August 16, 2006

GlaxoSmithKline reached civil settlements last week to resolve class-action claims alleging that the company inflated average wholesale prices (AWP) for some of its drugs.

GSK says it has agreed to a nationwide settlement of $70 million to resolve claims filed on behalf of patients, health plans, and insurance companies. The company also reached civil settlements in AWP litigation with attorneys general of New York, California, Connecticut, Nevada, Montana, and Arizona, as well as potential AWP claims by 34 other states and the District of Columbia. Pennsylvania did not settle with GSK, but has filed a lawsuit, which is pending, according to the Philadelphia Inquirer.

The company settled without admitting wrongdoing. The company said that government health plans chose to use AWP as a reimbursement benchmark for many years, despite knowing that AWP exceeds the price actually paid by physicians, pharmacies, and others.

State attorneys general, on the other hand, are declaring victory. Connecticut Attorney General Richard Blumenthal said in a statement that the settlement provides restitution from a "brazen scheme to soak taxpayers and patients." New York Attorney General Eliot Spitzer's statement said the suit helped to stop a longstanding practice of "cheating" the Medicare system.

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