Schering-Plough settles federal probe
of unit for 345 million dollars
NEW YORK : Pharmaceutical giant Schering-Plough said it would pay a total of
US$345.5 million to settle a federal probe of its managed-care programs for government health care programs.
The company said its Schering Sales Corp. unit was to plead guilty to a single criminal charge regarding a payment to a managed-care customer, resulting from a probe conducted by the US prosecutors.
The agreement settles a five-year probe by federal prosecutors into the pharmaceutical firm's marketing practices for its Claritin allergy medication. Schering gave Cigna Corp. more than $10 million in kickbacks in order to keep its business after the health insurer said it would switch its patients to a lower-priced drug. At the same time, Schering continued to charge Medicaid a relatively high price for Claritin--violating the federal anti-kickback act, which requires drugmakers to offer Medicaid the lowest price on products. The settlement includes a criminal fine of $52.5 million and civil damages of $293 million.
The investigation was prompted by a whistle-blower lawsuit filed by three people who worked at a Schering-Plough subsidiary.
Schering-Plough will be credited with 53.6 million dollars previously paid in additional Medicaid program rebates against the damages, leaving it with net payments of 291.9 million.
Schering-Plough increased its litigation reserves by 350 million dollars in the third quarter of 2003.
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