Drugmakers Bayer AG and GlaxoSmithKline have agreed to pay the largest Medicaid fraud settlements ever negotiated to resolve allegations of overcharging Medicaid, according to the office of U.S. Attorney Michael Sullivan in Boston.
Leverkusen, Germany-based Bayer will pay the federal government more than $250 million, and London-based Glaxo will pay almost $88 million, according to a release from Sullivan's office on Wednesday.
The release says the two companies were charged with failing to give Medicaid the lowest price of all, as required by law.
Specifically, the release says, both companies provided discounted prices to Oakland-based Kaiser Permanente. They engaged in "private labeling" for the HMO, affixing different labels to their drug products--an operation known as "lick and stick," the release says.
"These slightly altered labels allowed Bayer and GSK to avoid reporting to the federal government the new low prices given to Kaiser and avoid paying millions of dollars in additional drug rebates to the Medicaid program," the release says.
The investigation was originally triggered by a whistleblower lawsuit filed by George Couto, a former manager at Bayer who is now deceased, according to the release.
"The investigation is continuing," the release adds.