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Last Updated: Wednesday, 16 April, 2003, 20:21 GMT 21:21 UK
Drug giants in $350m fraud rap
Cipro
Cipro was among the drugs at the centre of the probe
Two European pharmaceutical firms have been ordered to pay record fines for allegedly defrauding the US health care system Medicaid.

Germany's Bayer, maker of Cipro, the popular antibiotic used during the US anthrax scare last year, has been fined $258m (163m).

While Anglo-American conglomerate, GlaxoSmithKline, has agreed to a civil court settlement of just under $90m.

The companies were accused of repackaging cheap drugs and selling them on at a higher price, an offence under federal law.

Ambiguous

The fines follow an investigation by the US Attorney's office in Massachusetts.

The cash will be divided between federal and state governments.

In a statement, GlaxoSmithKline said it thought the law was ambiguous, but it had already discontinued the offending sales policy.

It said it had agreed to a civil settlement to avoid the delay and expense of a trial.

Best price

Bayer said: "Throughout the investigation, Bayer co-operated fully with the government and we are now pleased to put this matter behind us."

The Medicaid programme, which is jointly funded by state and federal authorities, covers roughly 36 million poor children, adults and disabled people.

For a drug company to take part it must offer the government the "best price" on its pharmaceuticals.

But soaring prices have led to a series of probes into allegations of fraud.

Victimised

An official at the US Attorney's office Boston said the latest case was the biggest ever Medicaid fraud settlement.

Some in the pharmaceutical industry have complained they are being victimised by cash-strapped US states as an easy political target.

But Ira Loss, a health care expert at Washington Analysis, said the authorities must have been sure of their case on this occasion.

"They must have the goods on these guys because the way that statute was written provides a good amount of wiggle room" for drug companies to set prices, she said.




SEE ALSO:
Bayer wins second Baycol case
04 Apr 03  |  Business
Aids foundation sues Glaxo
01 Jul 02  |  Business


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