Action settles civil and criminal charges arising from company’s improper marketing practices for its products

The National Association of Medicaid Fraud Control Units (NAMFCU) announced on August 29, 2006, that it has reached an agreement with pharmaceutical manufacturer Schering-Plough Corporation to settle a number of allegations concerning the marketing and distribution of certain of its products. 49 states and the District of Columbia participated in this settlement. As a result, the company will pay the state and federal government nearly $255 million in damages and penalties for Medicaid and federal health care programs.  Additionally, in connection with this settlement, a Schering division will plead guilty in federal court in Boston to criminal charges related to this conduct, agreeing to pay total criminal fines of $180 million.

The conduct at issue with Schering, a Pennsylvania-headquartered manufacturer of a wide variety of pharmaceutical products, fell into three categories: Schering’s exclusion of certain price discounts from the formula used to calculate Medicaid Program rebates and resulting underpayment of those rebates for the allergy drug Claritin Redi-Tabs and the potassium supplement K- Dur;  the improper “off-label” marketing of brain cancer medication Temodar; and the company’s payment of illegal remuneration to physicians to induce them to prescribe hepatitis drugs PEG-Intron and Rebetron, and bladder cancer medication Intron-A.  Resulting losses to state Medicaid Programs were in excess of $80 million which, under the terms of the national settlement, Schering will be required to repay along with penalties, resulting in a total Medicaid recovery of $203 million.

The civil settlements with Schering further require the company to enter into a Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services, in order to monitor the company’s operations and ensure compliance with the law in the future.