Attorney General's News Release

December 23, 2003

Nixon presents $1.1 million to state Medicaid program in settlement with GlaxoSmithKline on drug pricing

Jefferson City, Mo. — Attorney General Jay Nixon today presented a restitution check for $1,163,589 to Missouri's Medicaid program as part of a 49-state settlement with drug manufacturer GlaxoSmithKline. Nixon and the other state attorneys general reached the settlement with the company over rebates offered to Medicaid programs for the nasal spray Flonase and the anti-depressant Paxil.

The $87.6 million settlement was split between the states and the federal government, which jointly fund the Medicaid program. Nixon says Missouri received more than $2.7 million total, $1,544,515 of which was used to reimburse the federal government for its share of the state's Medicaid funding.

The settlement resolved the contention of the states, the federal Department of Justice and the federal Center for Medicaid and Medicare Services (CMS) that GlaxoSmithKline violated a federal Medicaid drug rebate statute requiring pharmaceutical manufacturers to accurately report “best price” information. “Best price” is the lowest price that a manufacturer offers its products for sale to commercial purchasers. CMS uses this information to calculate rebates payable by the manufacturers to the state Medicaid programs under the statute.

The government contended that GlaxoSmithKline sold Flonase and Paxil to HMOs at deeply discounted prices and then concealed that fact by re-labeling or re-packaging these drugs under the HMO's private label. The practice — referred to as “lick and stick” — enabled GlaxoSmithKline to avoid paying additional rebates to the Medicaid program over a period from 1997 to 2000.

As part of the agreement, the U.S. Department of Health and Human Services Inspector General will require GlaxoSmithKline to certify its “best price” methodology in the future to ensure the proper rebates are paid.

The Medicaid Fraud Control Unit of the Attorney General's Office, formed by Nixon in 1994, has authority under state law to investigate and prosecute, both civilly and criminally, allegations of fraud against Missouri's Medicaid program.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818