Bayer to pay $14 million in probe of drug prices

NEW YORK - A U.S. unit of German pharmaceutical giant Bayer AG has tentatively agreed to pay the federal government $14 million to resolve allegations that it lied about the wholesale prices of certain drugs, including those to treat AIDS, The Wall Street Journal reported Monday.

The settlement requires the company to give regulators more accurate price information and to cooperate in the ongoing investigation, the Journal said.

Bayer said that it believed its actions were lawful but that it decided to resolve the charges to avoid further expense and disruption of its business. The settlement was reached Friday.

The case against Bayer focused primarily on drugs used to treat hemophilia and AIDS, such as Kogenate, Koate and Thrombate.

The investigation began in the mid-1990s after a lawsuit was filed by the Key West, Fla., pharmacy Ven-A-Care, which administers intravenous drugs to patients in their homes. The suit alleged the drug makers were reporting high wholesale prices to make their drugs more attractive to doctors receiving Medicaid reimbursements.

Investigators say that for certain drugs, the greater the disparity between actual and reported prices, the more profit per dose for doctors administering the medications. Doctors buy the drugs at deep discounts.

Prosecutors said they uncovered documents in which Bayer executives discussed raising their prices to keep pace with competitors' reported increases and keep their drugs attractive to doctors and other providers.

Bayer didn't receive Medicaid payments, but the prosecutors argued that the company had caused false claims to be submitted by reporting inaccurate prices.

The Bayer settlement still must be approved by several states.

More than 20 drug companies are under investigation, including Abbott Laboratories, Bristol-Myers Squibb Co., Glaxo Wellcome PLC's U.S. unit and SmithKline Beecham PLC. The companies have denied wrongdoing.

Prosecutors, who are seeking similar agreements with the other major drug makers, say the federal government pays $1 billion or more in inflated drug claims every year.

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