UK drug giant GlaxoSmithKline says it will pay $150 million under a civil settlement with the US Department of Justice, the US Attorney’s Office for the District of Massachusetts, and the Office of the Inspector General of the US Department of Health and Human Services, to resolve claims that it over-charged the Government for its Zofran (ondansetron) and Kytril (granisetron HCl) drugs, which are used to treat chemotherapy-associated nausea.

The federal government contended that average wholesaler prices were artificially inflated from 1994-2002 for Zofran and 1994-2000 for Kytril, thereby increasing Medicare and Medicaid reimbursement rates for the products. But, according to GSK, numerous government reports illustrate that it was well aware that use of the AWP as its reimbursement benchmark ultimately resulted in paying doctors more than doctors paid for the medicines.

The majority of the settlement relates to Medicare payments for Zofran and Kytril, but a portion has been allocated to Medicaid and to reimburse states that participated in the settlement to reimburse their Medicaid programs for payments they made for these drugs, the group noted.

This is not the first time that the company has faced charges of fraud, its predecessor SmithKline Beecham Clinical Laboratories paid out $325 million relating to false claims and billing for its laboratory test kits in 1997. Furthermore, this marks the latest settlement in a growing stream of ‘whistleblower’ cases across the Industry, adding to the scrutiny of the conduct of companies within the sector.