U.S prosecutors and Merck & Co. (NYSE:MRK) officials announced that a settlement has been reached over claims that the pharmaceutical company overcharged Medicaid and had improperly marketed medications to doctors.
Merck agreed to settle a Philadelphia case concerning improper Medicaid rebate calculations and marketing practices for $399 million plus interest. The company also settled a Louisiana case that involved improper rebate practices for $250 million plus interest. Add in the interest charges and the total settlement for both cases cost Merck $671 million.
Both cases revolved around accusations that Merck was giving deep discounts to hospitals yet reporting significantly higher prices the government to whom pharmaceutical companies are required to sell their products at the lowest price offered to others. This practice ensures that Medicaid programs get equal discounting and thus get the best price possible.
The government also believed that between the years 1997-2001 Merck gave an excessive amount of perks to doctors and other health care professionals to entice them into prescribing the company's drugs.
The cases involved the drugs Zocor, Mevacor, Pepcid and Vioxx.
Merck stated that the settlements do not constitute and admission of guilty or liability.
"What we have here is a disagreement (over) the rules of the Medicaid rebate program," said Merck spokesman Ronald Rogers. "These civil settlements were the best and most appropriate way to resolve these lengthy investigations and bring these matters to closure."
[Source: YahooNews]
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