More Drug Pricing Fraud Allegations

From the Philadelphia Inquirer, a story that GlaxoSmithKline has settled for $150.8 million US Department of Justice charges that the company fraudulantly overbilled Medicare and Medicaid. The alleged scheme involved inflating average wholesale prices for Zofran and Kytril used to set reimbursement rates. The settlement is unrelated to another lawsuit brought by consumer groups, health plans, insurers, and state attorneys general that contends GlaxoSmithKline inflated prices for other drugs which is pending in US District Court in Boston. The Inquirer noted that GlaxoSmithKline settled another suit in April 2003 which had alleged violations of the federal Medicaid rebate law.
Lest anyone think that this is an issue exclusive to the US, last week the London Times reported that the UK government has charged executives of six UK based generic drug companies of conspiring to defraud the UK National Health Service (NHS). Allegations involve price-fixing for some widely used drugs, such as penicillin based antibiotics and warfarin. The defendants worked for Kent Pharmaceuticals, Norton Healthcare, the Goldshield Group, Generics UK, Ranbaxy Laboratories UK Unit and Regent-GM Laboratories Ltd. Two firms, Generics UK and Ranbaxy, have already settled.
This is just the latest of many stories about bad behavior by leadership of pharmaceutical companies. (This is not to say that we haven’t also seen many stories about bad behavior by leadership of biotechnology and device companies, managed care organizations and insurers, and hospitals, academic medical centers, and medical schools.) Nonetheless, stories like this should be contrasted with the the laissez faire attitude some physicians’ assocations (see posts here and here) and medical schools and academic health centers (see post here) have about taking pharmaceutical companies’ money. Bernard Carroll’s proposal that physicians’ associations should apply ethical standards when deciding which drug companies’ money they should accept deserves serious consideration.