GlaxoSmithKline and Civil Lawsuit settlement

[RandyW]

GlaxoSmithKline Reaches Civil Settlements on AWP Matters

Philadelphia & London (August 10, 2006) GlaxoSmithKline (NYSE:GSK) today announced it has reached civil settlements to resolve most of the litigation about the “Average Wholesale Price” (AWP) of certain GSK medicines. The company has agreed to a nationwide settlement of $70 million to resolve class-action claims filed on behalf of certain individuals, health plans and insurance companies. This settlement includes all claims filed against GSK in a consolidated Multidistrict Litigation (“MDL”) pending in federal court in Boston, Massachusetts. (In re Pharmaceutical Industry Average Wholesale Price Litigation, MDL No. 1456.)

In addition, the company has reached civil settlements in AWP litigation filed by the Attorneys General of New York, California, Connecticut, Nevada, Montanaand Arizona, as well as potential AWP claims by 34 other states and the District of Columbia. These settlements will be funded by a portion of $10.35 million (plus interest) set aside in a prior settlement with the Department of Justice announced in September 2005, a portion of the Bostonsettlement and an additional $1.62 million.

The total amount of the settlements announced today is covered by GSK’s existing legal reserve.

AWP is one of several benchmark or reference prices that has been used by many government and private insurers to set reimbursement rates for doctors and pharmacies that buy and dispense drugs. Plaintiffs contended that AWP was artificially inflated, which they say resulted in overpayments to doctors and pharmacies.

Testimony in the litigation showed, and a court-appointed independent expert in the MDL litigation affirmed, that government health plans chose to use AWP as a benchmark although it has been widely known for years that AWP exceeds the prices actually paid by physicians, pharmacies and others. For public policy reasons, these government health plans continued to use AWP as a benchmark for many years, and many still do. Medicare has moved away from AWP-based reimbursements in recent years, and other payors continue to weigh whether or not to retain AWP as a benchmark in their reimbursement systems.

Nevertheless, GSK has agreed to settle the cases, without admitting any wrongdoing, to put this historical matter behind it.

GlaxoSmithKline — one of the world’s leading research-based pharmaceutical and healthcare companies — is committed to improving the quality of human life by enabling people to do more, feel better and live longer.

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