January 14, 2004
RECEIVES $2 MILLION FROM SETTLEMENTS WITH GLAXOSMITHKLINE AND BAYER
General J. Joseph Curran, Jr. announced today that the State of
Maryland has received $425,432.27 from GlaxoSmithKline Corporation
("GSK") and $1,586,763.51 from Bayer Corporation as its
share of the settlement of two nationwide actions against the two
pharmaceutical companies relating to violations of the federal Medicaid
drug rebate program.
"These settlements are the result of a commitment by law enforcement
to ensure the integrity of the Medicaid program and we are pleased
to receive this money for the State," Curran said.
The settlement against GSK resulted from an investigation undertaken
by the U.S. Attorney's Office for the District of Massachusetts.
The Bayer settlement resulted from an investigation of a complaint
filed in the U.S. District Court against Bayer in Massachusetts
in 2000 that was also investigated by the U.S. Attorney's Office
for the District of Massachusetts, as well as a criminal action
filed against Bayer in 2000 in the same court. On behalf of 49 states
and the District of Columbia, the National Association of Medicaid
Fraud Control Units assisted the Massachusetts U.S. Attorney's Office
in negotiating these settlements through a team led by the Directors
of the Medicaid Fraud Control Units in Maryland, Pennsylvania and
GSK and Bayer were alleged to have undertaken a scheme that would
allow them to inflate their reported lowest sale prices of certain
drugs to commercial users. These sale prices, called "best
prices" under the applicable federal law, are used to calculate
quarterly rebates to state Medicaid programs from pharmaceutical
companies like GSK and Bayer that have drugs covered by state Medicaid
plans and that have rebate agreements with the federal agency that
oversees Medicaid. Medicaid is a joint federal and state program
that provides healthcare benefits to eligible low-income Maryland
GSK and Bayer were alleged to have sold drugs to the health maintenance
organization Kaiser Permanente Medical Program at deeply discounted
prices and then to have taken actions to conceal these transactions.
The GSK drugs were Flonase, a prescription nasal spray, and Paxil,
an anti-depressant. Bayer was also alleged to have engaged in the
same scheme with another health maintenance organization, Pacificare/Health
Systems. The Bayer drugs were Cipro, an antibiotic, and Adalat CC,
an anti-hypertensive. Bayer also pleaded guilty to one federal criminal
charge in connection with its activities.
denying the allegations, GSK has agreed to pay a total of $87,600,922
in damages and penalties to the federal government and the states
to resolve the claims against it. The total state share is $38,269,148.
Bayer also denies the allegations on which civil liability is based,
in order to settle these claims it has agreed to pay a total of
$242,126, 580 in damages and penalties. The total state share is
and GSK have also both entered into corporate integrity agreements
with the Office of Inspector General of the U.S. Department of Health
and Human Services.
was formed in 2001 as a result of the merger of Glaxo Wellcome,
Inc. and SmithKline Beecham Corporation and has principal operations
in both Research Triangle Park, N.C., and Philadelphia, Pa. Bayer
Corporation is an Indiana corporation with its principal place of
business in Pittsburgh, Pa.