Merck to pay $671 million to settle fraud cases

In one of the biggest U.S. healthcare fraud settlements ever, Merck & Co. will pay $671 million to settle claims it overcharged the government for four popular drugs and bribed doctors to prescribe its drugs, federal prosecutors said Thursday.

The alleged overcharges, dating back to the mid-1990s, involved Medicaid programs in the District of Columbia and every state but Arizona, as well as federal health-insurance programs at agencies including the Department of Defense and Veterans Administration.

In Philadelphia, prosecutors said Merck agreed to pay $399 million to end allegations of improper calculation of Medicaid rebates and bribery of doctors. In New Orleans, prosecutors said the drug maker agreed to pay $250 million for its rebate practices.

With interest, that totals $671 million.

Whitehouse Station, N.J.-based Merck said the settlements did not constitute an admission of any liability or wrongdoing. “What we have here is a disagreement [over] the rules of the Medicaid rebate program,” said Merck spokesman Ronald Rogers.

Drug companies must report to the government the lowest price for their medicines to ensure that Medicaid programs get the same discounts or rebates on drugs they buy. Prosecutors said Merck was hiding steep discounts -- up to 92% off the average price -- it gave hospitals that used a set amount of Merck products.

From 1997 to 2001, prosecutors said, Merck had about 15 programs used by its sales representatives to give doctors and other health professionals “illegal kickbacks,” disguised as fees for training or consultation, to induce them to prescribe Merck drugs.