GlaxoSmithKline settles overcharging case for $70 million

RAW STORY
Published: Thursday August 10, 2006

A class action suit has been settled with GlaxoSmithKline for $70 million, the Prescription Access Litigation Project has announced in a statement obtained by RAW STORY.

The case was settled for patients on two GSK drugs, Kytril and Zofran. The drugs are commonly used to counter the side effects of cancer treatments. The settlement was in response to the claim that patients and health care providers were overcharged for the drugs.

The complete statement of the Massachusetts based organization follows:

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In a move that could mark the beginning of the end of unfair pricing for millions of consumers throughout the United States, the Prescription Access Litigation Project announced today that GlaxoSmithKline (NYSE:GSK) will pay $70 million in a nationwide class-action settlement to cancer patients and health plans who were overcharged for vital medications Kytril and Zofran. Kytril and Zofran are drugs commonly used to ease the side effects associated with cancer treatments.

The settlement is seen as a victory against the use of the Average Wholesale Price (AWP), a system by which drug companies set prices for almost all prescription drug sales in the U.S. There has been a growing consensus that the AWP is a fictitious price that has no direct relation to the actual average price charged for prescription drugs. It is calculated that the manipulation of AWP costs consumers hundreds of millions of dollars every year in unnecessary drug costs.

"Without a doubt, this case is the most important challenge to drug company greed going on in the United States today," said Renée Markus Hodin, associate director of the Prescription Access Litigation Project (PAL), the only national consumer coalition devoted to challenging high drug prices and making prescription drugs affordable for everyone.

"This settlement would not have happened but for the commitment of plaintiffs' lawyers, working together with Attorneys General from around the country, to tackle this illegal scheme on behalf of consumers nationwide," added Hodin. Steve Berman of Hagens Berman Sobol Shapiro served as lead counsel in the case. Attorneys General from New York, Connecticut, Arizona, Montana and Nevada were also actively involved in securing today's landmark settlement.

The settlement reached today will provide reimbursement to both patients and third-party payers, such as union benefit funds and health plans, who pay for drugs on behalf of their members.

The GlaxoSmithKline settlement is part of a larger AWP case currently before the U.S. District Court in Massachusetts. In a trial set for November 2006, Berman will be leading the plaintiffs' case against four other major drug manufacturer defendants.