Glaxo Case Pushes U.S. Health Settlements to $6.6 Billion

By:  Alex Wayne

GlaxoSmithKline Plc (GSK)Johnson & Johnson (JNJ) and other drugmakers have paid $6.6 billion this year to settle claims of defrauding U.S. health programs, more than double the amount of 2011, advocacy group Public Citizen said.

Fines and penalties rose from $2.5 billion in 2011, aided by a record $3 billion settlement by Glaxo in July, Washington- based Public Citizen said in a report today. Common frauds include overcharging government programs such as Medicare and pushing doctors to prescribe drugs for unapproved uses.

Health-fraud settlements have risen since President Barack Obama took office, with federal and state governments resolving 143 cases since the start of 2009, about 50 percent more than the previous 18 years, according to data in the report. Despite the increased pursuit, the penalties represent a fraction of drug companies' profits and need to be raised, said Sammy Almashat, a researcher at Public Citizen who wrote the report.

"Investors have come to expect" companies to build potential fines into their businesses, Almashat said in a telephone interview. "The consensus seems to be that this is a business model, and unless the federal government moves first to increase these penalties, that's likely to remain the case."

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