Schering-Plough Probe Widens

From Reuters

Schering-Plough Corp. on Friday said that it expected a criminal indictment in a government probe of its sales and marketing practices that has widened to include accusations of obstructing justice by destroying documents related to the investigation.

The company said it received a letter from the U.S. attorney’s office in Boston stating that it was the target of a federal grand jury investigation for allegedly selling unapproved drugs and for remunerating doctors and insurers to influence them to use Schering-Plough products.

The U.S. attorney’s office declined to comment.

A criminal indictment could dash the hopes of a quick rebound for the Kenilworth, N.J.-based drug maker.


Struggling to overcome manufacturing problems, plummeting sales and the departure of Chief Executive Richard Kogan, Schering-Plough last month named Fred Hassan as CEO with the belief that he could breathe new life into the company, as he had done with Pharmacia Corp.

The company had previously said the U.S. attorney’s office was investigating its sales, marketing and clinical trial practices. The Wednesday letter reveals a wider and apparently more serious criminal probe.

The investigation also includes allegations of submitting false pricing information to the government. The company said it believed that the allegation of selling unapproved drugs meant promoting its products for uses other than those approved by U.S. regulators.

Major drug companies including Pfizer Inc., Eli Lilly & Co. and Bristol-Myers Squibb Co. also face government probes of sales and marketing practices.

But the allegation of obstruction of justice by Schering-Plough is new and appears to be more serious than what others in the industry are facing.

Schering-Plough said that it would continue to cooperate with the U.S. attorney’s office and that it would be able to submit evidence and legal arguments in response to the allegations.

The company’s shares fell 45 cents, or 2.4%, to $18.45 on the New York Stock Exchange.