Bayer AG and GlaxoSmithKline agreed to pay a combined $344 million for allegedly violating a federal statute that requires drugmakers to give state Medicaid programs the best price offered to other customers. The settlements are part of an ongoing industry investigation being conducted by the U.S. attorney's office in Boston. Bayer, based in Germany, will pay about $252 million to settle a civil lawsuit alleging the company knowingly underpaid Medicaid rebates by more than $100 million for several years. Bayer also will pay $5.6 million in criminal after pleading guilty to charges that it didn't notify the Food and Drug Administration about private labeling of a drug. The estate of pharmacist George Couto, who filed the whistleblower lawsuit in 2000, will receive $34 million of the settlement. Two years ago, Bayer paid $14 million to settle civil whistleblower charges that it manipulated the average wholesale price of several drugs to increase Medicaid payments to physicians.
GlaxoSmithKline, Philadelphia, said it will pay $87.6 million to settle civil allegations that its predecessor companies, Glaxo Wellcome and SmithKline Beecham, repackaged products for a single customer in violation of the Medicaid Best Price Statute. Glaxo said it believes its interpretation of the law was reasonable, but it settled the case to avoid the expense of a trial. The repackaging arrangement was made before the companies' December 2000 merger and terminated prior to the deal, a spokesman said. The U.S. attorney's office in Boston has been investigating prescription-drug manufacturers' business and marketing practices since the late 1990s. It secured a record $884 million settlement with TAP Pharmaceuticals, Lake Forest, Ill., in 2001. -- by Mark Taylor