Drugmaker to Pay $435 Million for Medicaid Fraud and Improper Drug Marketing

By Marianne Madden

Published on August 29, 2006

Of the settlement, $255 million is earmarked to resolve civil aspects of the investigation; a subsidiary, Schering Sales Corp., is to pay a criminal fine of $180 million and plead guilty to conspiracy to make false statements to the government.

Investigators found that Schering marketed drugs to treat conditions for which government regulators had not approved them. One drug in question was Temodar, a drug approved to treat a particular type of brain tumor (anaplastic astrocytoma) in patients who hadn’t responded to other treatments. US Attorney Michael Sullivan charged that Schering marketed Temodar to treat several other brain cancer types, including cancer that had spread to the brain from elsewhere in the body.

Schering also provided misleading information to the government about the price of Claritin RediTabs in order to secure a major HMO’s business. Investigators detailed that Schering gave the HMO free Claritin RediTabs in order to disguise a new lower price it was offering the HMO.

Drug manufacturers are required to report a drug’s best price to the Health Care Financing Administration and to provide rebates to Medicaid to ensure the program benefits from the low price. Prosecutors charged Schering with providing an inaccurate best price on Claritin RediTabs to the HCFA in order to avoid supplying millions of dollars in rebates to Medicaid.