September 05, 2006
Schering-Plough settles off-label marketing, price fraud charges
Schering-Plough agreed to pay $435 million to settle charges that it lied to the government about drug prices and improperly marketed cancer drugs for uses not approved by the FDA.
The settlement is the latest in a string of penalties for Schering-Plough, which has paid about $1.3 billion in civil and criminal fines since 2002. The corporation will pay $255 million to settle civil charges, and its Schering Sales unit will pay a $180 million criminal fine and plead guilty to one count of conspiracy to make false statements to the government. The case was brought by the US attorney in Boston.
The government accused the company of illegal sales and marketing programs for several cancer drugs, including allegations the firm induced physicians to use Temodar for brain tumors and brain metastases and Intron A for superficial bladder cancer, all unapproved uses.
Marketing tactics included paying doctors to serve as a “preceptor,” who would take a Schering-Plough sales representative around with them during their workdays; placing doctors on medical advisory boards that existed primarily to pay the doctors stipends; providing “lavish” entertainment; and an illegal kickback scheme, in which Schering-Plough would pay doctors $500 for each patient started on Intron A for Hepatitis C.
Prosecutors also said Schering-Plough misreported its best price on two drugs, Claritin Redi-Tabs and K-Dur, to evade giving Medicaid the same low price it had negotiated with some health plans.
Schering Sales agreed to plead guilty to one count criminal conspiracy to make false statements regarding improper promotional activity on the two cancer drugs and regarding hiding its best price for Claritin and K-Dur. The unit will be excluded permanently from participation in all federal healthcare programs, although its marketing functions have been assigned to other units which can continue doing business with Medicare and Medicaid. Except for the plea, Schering-Plough neither admitted nor denied wrongdoing.
The agreement, subject to court approval, resolves an ongoing investigation, which began prior to the arrival of Schering-Plough CEO Fred Hassan and his new management team.
“With this agreement, we are putting issues from the past behind us,” Brent Saunders, Schering-Plough SVP, global compliance and business practices, said in a statement.
Two years ago, Schering-Plough pleaded guilty and paid $345.5 million to settle charges that it defrauded Medicare by overcharging for Claritin.