Merck to pay $671 mil in rebate scam
PHILADELPHIA -- Merck & Co. has agreed to pay $671 million to settle claims that it overcharged Medicaid programs for two big-selling drugs, Vioxx and Zocor, and to resolve allegations of improper marketing to doctors, U.S. prosecutors and company officials announced Thursday.
In a case in Philadelphia, Merck agreed to pay $399 million plus interest for improper calculation of Medicaid rebates and its marketing practices. In a Louisiana case, it agreed to pay $250 million plus interest for its rebate practices.
The interest payments would boost the total payout to $671 million.
Drug companies are required to report to the government the lowest price for its product to ensure that Medicaid programs get the benefit of the same discount. Merck, however, was hiding the steep discounts it gave to hospitals for the cholesterol drug Zocor and the painkiller Vioxx by reporting higher prices to the government, prosecutors said.
From 1997 to 2001, Merck also gave money and perks to doctors and other health care professionals to entice them to prescribe Merck drugs, a practice the government called excessive.
Merck said the settlements do not constitute an admission by Merck of any liability or wrongdoing. The drugmaker said it believes its pricing, sales and marketing policies and practices complied with all regulations and contracts in place at the time.
U.S. Attorney Patrick Meehan was joined at the news conference by officials with the Department Of Health and Human Services Office of the Inspector General and representatives from the state Attorneys General in Delaware, Illinois, Massachusetts and Nevada.
When Merck reported its fourth-quarter financial results on Jan. 30, they included a $671 million charge for the anticipated resolution of federal and state civil probes into past sales and marketing practices.
"The company has been working with federal and state authorities and has been making progress toward definitive agreements" to resolve the matters, the earnings report stated.