ALBANY, N.Y., August 15 – GlaxoSmithKline (GSK), a leading pharmaceutical company, has settled a suit alleging illegal pricing schemes for cancer patients and yielding millions for government health plans and consumers.

Under the settlement that was reached by New York State in conjunction with a settlement by the U.S. Department of Justice and the National Association of Medicaid Fraud Control Units, GSK will provide over $1 million in restitution to New Yorks Medicaid program. This represents New Yorks share of an agreement involving over 40 states for two drugs used in connection with cancer treatment. In addition, GSK will pay $940,000 to Medicaid for claims relating to payments for an antibiotic.

Under a separate settlement of a private class action suit in federal court in Boston, GSK will establish a national restitution fund of approximately $40 million, to which Medicare consumers in New York and across the nation, and the New York Elderly Pharmaceutical Insurance Coverage (EPIC), may make claims.

New York Attorney General Eliot Spitzer sued GSK and two other pharmaceutical manufacturers in 2003. The companies were alleged to have made false statements that inflated the average wholesale price of a class of drugs known as anti-emetics, which help people deal with side effects of chemotherapy, and other drugs.

According to the Attorney General, the practice had two main consequences: it caused government health plans and consumers nationwide to overpay for certain drugs because they reimbursed the pharmacies and doctors at an inflated price; and Medicare beneficiaries overpaid because as coinsurance, they paid a percentage of the inflated amount.

Under the settlement, GSK will pay the New York Medicaid program a total of $1.53 million in restitution for inflating the prices of Kytril and Zofran, injectable anti-nausea drugs used in connection with chemotherapy, and Amoxil, an antibiotic. Under federal law, the federal Medicaid program will receive an additional $470,000 from New Yorks settlement of GSKs inflating prices of Amoxil.

Also:

GSK will establish a nationwide fund of approximately $13.5 million to which Medicare beneficiaries in New York State who paid inflated coinsurance amounts may make claims;

GSK will establish a nationwide fund of approximately $27 million to which EPIC, which provides drug coverage for seniors with Medicare, may make claims;

GSK will pay New York $640,000 to cover costs of the state's investigation;

GSK will report to the New York Medicaid program two federally defined prices, one of which is used to set current Medicare Part B reimbursement.