MARYLAND ENTERS INTO $435 MILLION NATIONAL SETTLEMENT WITH SCHERING-PLOUGH
Action settles civil and criminal charges arising from company’s improper marketing practices for its products

Maryland Attorney General J. Joseph Curran Jr., announced today he has reached an agreement with pharmaceutical manufacturer Schering-Plough Corporation to settle a number of allegations concerning the marketing and distribution of several of its products. 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. The losses to the Medicaid programs in the 49 states and the District of Columbia that joined in the settlement exceeded $80 million. Under the terms of the settlement Schering will be required to pay the participating Medicaid programs a total of $203 million which represents repayment of the $80 million plus penalties.

Under the terms of Maryland’s settlement, the state will recover $1,619,202 for the Maryland Medicaid Program; $912,244 of that amount will be paid directly to Maryland, with the balance going to the federal government to reimburse its share of the Medicaid costs.

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.

The settlement was negotiated by the Attorney General Curran’s Medicaid Fraud Control Unit and by the National Association of Medicaid Fraud Control Units.