September 20, 2005 GlaxoSmithKline
GlaxoSmithKline has paid over $150 Million Dollars to settle claims initiated in a qui tam suit filed by a private company, which alleged that Glaxo set up a scheme to increases its sales of two drugs, Zofran and Kytril, through what is known as “marketing the spread.”
Marketing the spread is a scheme in which a drug manufacturer sets two prices for the same drug, which include the actual price and an inflated price. The inflated price, which is higher than the actual price, is provided directly or indirectly to the federal government for the purpose of having government health care programs reimburse health care providers who purchase the drug, at this higher price. At the same time, the health care providers are only paying the actual price, and they get to keep the difference known as “the spread.” The larger the spread, the more profit for the health care provider, and the greater the incentive for them to buy the manufacturer’s drugs. After Glaxo allegedly set up and maintained inflated prices for the drugs Zofran and Kytril, a private company, Ven-A-Care Inc., filed a qui tam lawsuit alleging that Glaxo’s pricing was fraudulent, and that it was marketing the spread for these drugs.
As part of the settlement, Ven-A-Care and its principals will receive $26 Million Dollars for having filed the qui tam case.
See U.S. Dept of Justice Press Release 9/20/05