| Drugmaker
Admits Claritin Kickback Scheme
July 30, 2004
Schering-Plough will pay the federal government
and 49 states $282 million to settle a
Medicaid fraud case involving its Claritin
allergy drug. The company will also plead
guilty to criminal charges of violating
the Anti-Kickback Statute and pay the
federal government a $52 million fine,
U.S. Attorney Patrick Meehan said.
Schering-Plough defrauded Medicaid, a
health insurance program for the poor
administered by the federal government
and the states, by failing to report the
correct "best" or lowest price
for its Claritin allergy drug, as required
by law.
The company granted secret discounts
on Claritin to two large HMOs, Pacificare
and CIGNA, but failed to include the data
in calculating the drug's "best"
or lowest price. As a result, the best
price reported to Medicaid was higher
than the true best price, resulting in
smaller rebates to the states and the
federal government.
Schering-Plough gave Pacificare and CIGNA
price breaks on Claritin after the HMOs
threatened to drop the allergy medicine
for a cheaper drug. The company hid the
discounts by providing them to the HMOs
in the form of "fees," interest
free loans, price breaks on other medications
and side agreements.
"Schering-Plough's Claritin con
has been exposed and stopped: this drug
company proved allergic to lawful, fair
business practices – boosting sales
of its allergy drug Claritin through a
scheme of concealed discounts," Connecticut
Attorney General Richard Blumenthal said.
"The company defrauded Connecticut,
other state and federal taxpayers of hundreds
of millions of dollars and now must pay.
The company resorted to a cynical subterfuge,
creating a complex scheme to deceive federal
and state officials. Phony fees, fake
agreements, false loans, all were intended
to further fatten the company's profits
at consumers' ultimate expense. This scheme
is enough to make anyone gag and choke."
The U. S. Department of Justice and the
National Association of Medicaid Fraud
Control Units, an anti-Medicaid fraud
coalition of state officials, also took
part in the investigation of the scam
and resulting settlement.
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