GlaxoSmithKline reaches US settlements over wholesale drug pricing

GlaxoSmithKline agreed to a nationwide settlement of $70 million to resolve class-action litigation filed by individuals, health plans and insurance companies in the US over the average wholesale price (AWP) for certain of the company's drugs. Additionally, Glaxo stated that it reached settlements in other civil litigation over AWP claims filed by several US attorneys general, as well as potential claims by 34 other states.

The company said in a statement that government healthcare programmes chose to use AWP to set reimbursement rates for drugs, "although it has been widely known for years that AWP exceeds the prices actually paid by physicians, pharmacies and others." Nonetheless, the company said it "has agreed to settle the cases, without admitting any wrongdoing, to put this historical matter behind it." Glaxo also indicated that an existing legal reserve will cover the total expense of the settlements it has reached.

Miller Tabak analyst Les Funtleyder remarked that "AWP laws are very complicated, and it's easy to run afoul by them," Bloomberg reports. He noted: "If the attorney general could show [the alleged overpricing] was deliberate, I think the fines would be higher." As it is, Funtleyder noted that the payment is "non-material" to Glaxo.

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