Pennsylvania Attorney General Jerry Pappert said on Monday that his Medicaid Fraud Control Section has secured $6,175,000 for the Pennsylvania Medicaid Program as its share of a national settlement with Schering-Plough Corporation.
The settlement is part of a national $290 million settlement following a guilty plea by Schering Sales Corporation, a subsidiary of Schering-Plough, to criminal charges that it fraudulently marketed and priced its blockbuster allergy drug, Claritin.
“Prescription drug pricing fraud hurts all of us by driving up the costs of health care and medication,” Pappert said. “We must remain vigilant in ensuring that drug companies follow our Medicaid laws and stop companies that defraud consumers and state programs.”
Schering’s marketing of Claritin violated the federal Medicaid Drug Rebate Statute, which requires drug manufacturers to report accurate “best price” information to the government, Pappert said. Officials use the information to calculate the rebates drug manufacturers pay to the states to ensure the state Medicaid programs purchase the drug at the manufacturers’ lowest price for the product. The “best price” is the lowest price that a manufacturer offers its products for sale to commercial purchasers.
In the Schering case, Pappert said, two large health maintenance organizations (HMOs) threatened to drop Claritin from their formularies due to its high price. In the late 1990s Claritin was Schering’s best-selling drug, though it was substantially more expensive than its closest competitor, Allegra. When the HMOs threatened to drop Claritin, Schering devised various incentives to indirectly lower the price of Claritin, Pappert said. However, Schering failed to report the discounts to the Medicaid programs.
“Schering devised an illegal kickback scheme to keep its high-priced drug, Claritin, on the list of drugs offered by these HMOs while continuing to charge the state Medicaid programs the same high costs,” Pappert said. “This forced poor people, those on Medicaid, to pay more for this drug than people with private insurance.”
As a result of this scheme, Pappert said, the Medicaid programs and certain public health systems paid much more for Claritin from 1998-2002 than customers of the two HMOs. To resolve the claims, Schering-Plough agreed to pay the states the $290 million settlement.
For the scheme, Pappert said, Schering Sales pleaded guilty to criminal charges brought by U.S. Attorney Patrick L. Meehan of Eastern District of Pennsylvania. In addition, the company agreed to pay a $52.5 million fine for violating the Anti-Kickback Act.
(via PR Newswire)
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