Multiple media sources just reported that Schering-Plough has settled civil and criminal charges. Representative coverage is by the Boston Globe, and AP via the Houton Chronicle. The essence, quoted from the AP, follows:
Schering-Plough Corp. on Tuesday agreed to pay $435 million and plead guilty to conspiracy to settle a federal investigation into marketing of its drugs for unapproved uses and overcharging Medicaid for certain drugs.Notet that this was the second biggest settlement by Schering-Plough in two years. According to the Globe, it was the third big settlement in five years. The total that the company will pay out from all will be "about $1.3 billion."
Kenilworth, N.J.-based Schering-Plough said it will pay $255 million to resolve civil aspects of the previously disclosed investigation. A subsidiary, Schering Sales Corp., will pay a criminal fine of $180 million and plead guilty to one count of conspiracy to make false statements to the government. The agreement is subject to court approval.
Schering-Plough said the settlement resolves an investigation by the U.S. Department of Justice and the U.S. Attorney's Office in Boston that began before a new management team took over at the company in April 2003.
'With this agreement, we are putting issues from the past behind us,' said Brent Saunders, senior vice president for compliance and business practices.
The agreement comes two years after Schering-Plough agreed to pay $346 million to settle charges that it paid a kickback to a big health insurer to protect the market for its allergy drug, Claritin.
U.S. Attorney Michael Sullivan, who announced Tuesday's settlement in a news conference in Boston, said health care corruption 'erodes public confidence, compromises the patient/physician relationship and adds costs to important government programs.'
Investigators found evidence that Schering-Plough marketed drugs for so-called 'off-label' uses.... One such drug was Temodar, which the Food & Drug Administration in 1999 approved to treat anaplastic astrocytoma, a type of brain tumor, in patients who hadn't responded to other drug regimens. Sullivan said Schering promoted the drug to treat several other types of brain cancers and cancer that spread to the brain from elsewhere, which the FDA had not approved.
Saunders said the company has agreed to plead guilty to making false statements in marketing Temodar, related to its sales people promoting the drug to doctors for uses other than the approved one.
Investigators said they also found evidence of unapproved promotion of Intron A for the treatment of cancer on the surface of the bladder.
Drug manufacturers are required to report their best price on drugs provided to commercial customers, including HMOs, to the Health Care Financing Administration and to pay rebates to the Medicaid program to make sure Medicaid obtains the benefit of that low price.
Prosecutors said that from April 1998 through 1999, Schering Sales reported a false best price to HCFA to avoid paying millions of dollars in additional rebates to Medicaid.
The investigation also found evidence of pricing manipulation involving K-Dur, used to treat stomach conditions.
It all is becoming so familiar, almost wearisome, yet the questions remain. Why do the mainly monetary penalties seem mainly to come out of the hides of stock-holders and consumers, rather than the people who actually made the decisions that lead to the offenses? And after all the indictments, prosecutions, settlements, and convictions involving large health care organizations, when will academics, policy makers and politicians, much less company CEOs and other organizational leaders admit we have a systematic problem here?