Boston, MA... Delaware corporation
SCHERING-PLOUGH CORPORATION,
together with its subsidiary, SCHERING SALES
CORPORATION have agreed to pay a total
of $435,000,000 to resolve criminal charges and
civil liabilities in connection with illegal
sales
and marketing programs for its drugs Temodar for
use in the treatment of brain tumors and
metastases, and Intron A for use in treatment of
superficial bladder cancer and hepatitis C. The
resolution also pertains to Medicaid fraud
involving Schering’s drugs Claritin RediTabs, a
nonsedating
antihistamine, and K-Dur, used in treating
stomach conditions.
United States
Attorney for the District of Massachusetts
Michael J. Sullivan, Department
of Health and Human Services Regional Inspector
General Joseph Moraski, United States Food
and Drug Administration Special Agent in Charge
Mark Dragonetti, Department of Defense
Criminal Investigative Service Special Agent in
Charge Edward Bradley, and Department of
Veteran’s Affairs Special Agent in Charge
Jeffrey Hughes announced today that SCHERING
SALES CORPORATION will pay a $180,000,000
criminal fine and, together with
SCHERING-PLOUGH CORPORATION, another
$255,000,000 to settle civil liabilities.
Today’s global resolution ensures that the
federal Medicaid program and each of the State
Medicaid agencies which paid for prescriptions
of Claritin RediTabs and K-Dur will obtain the
benefit of the best price offered by Schering to
commercial purchasers of those drugs, and will
ensure that Schering pays appropriate damages
for improperly promoting its drugs for uses not
approved by the FDA and from offering or paying
kickbacks to physicians to prescribe those
drugs.
"The Justice
Department is committed to rooting out and
prosecuting health care fraud,"
said Deputy Attorney General Paul J. McNulty.
"It is vital to public health and safety that
pharmaceutical companies are deterred from
improperly marketing their drugs to doctors and
patients to treat illnesses that these drugs are
not approved to treat. This settlement sends a
clear
message to the pharmaceutical industry that the
Justice Department will not tolerate these
deceptive and illegal marketing practices."
2 “The American
people, as both taxpayers and consumers, expect
our health care system
to be free from fraud and corruption,” stated
U.S. Attorney Michael J. Sullivan. “The
pharmaceutical industry has an obligation to
ensure that all rules, regulations and laws are
complied with. To do less erodes public
confidence, compromises the patient physician
relationship and adds costs to important
government programs. We will not tolerate
attempts to
profit at the expense of the ill and needy in
our society.”
To resolve the
criminal charges, SCHERING SALES CORPORATION has
agreed to
plead guilty to a one count criminal conspiracy
to make false statements to both the Food and
Drug Administration regarding its improper drug
promotional activity and to the Health Care
Financing Administration regarding its best
price for certain drugs, and to pay a
$180,000,000
criminal fine. As a result of its criminal
conviction, SCHERING SALES will be excluded
permanently from participation in all federal
health care programs.
SCHERING PLOUGH
CORPORATION also agreed to settle its civil
False Claims
Act liabilities and liabilities under the Food
Drug and Cosmetic Act for a total of
$255,025,000.
Specifically, SCHERING will pay $159,502,000,
plus interest, to the United States in civil
damages for losses suffered by the Medicare
program, the federal portion of the Medicaid
program, the Veteran’s Administration, the
Department of Defense and the Federal Employees
Health Benefits program as a result of
SCHERING’s improper drug promotion and marketing
misconduct, and Medicaid rebate fraud. SCHERING
will also pay a total of $91,602,000, plus
interest, to settle its civil liabilities to the
fifty states and the District of Columbia for
losses the
state Medicaid programs suffered. In addition,
SCHERING will refund $3,921,090 to the
Public Health Service (PHS) programs that also
were entitled to a lower price on certain drugs.
The first object
of the conspiracy to which SCHERING SALES will
plead guilty
charges that it conspired with others to give
free Claritin Redi-Tabs to a major health
maintenance organization to disguise a new lower
price being offered to the HMO to obtain its
business. Drug manufacturers are required to
report their best price on drugs provided to
certain
commercial customers, including HMOs, to the
Health Care Financing Administration
(“HCFA”), and to pay quarterly rebates to the
Medicaid program, the nation’s taxpayer funded
health insurance program for the poor and
disabled, to be sure the Medicaid program
obtains the
benefit of that low price. From April 1998
through 1999, SCHERING SALES reported a false
best price to HCFA, which failed to include the
new low price of Claritin Redi-Tabs provided to
the HMO, to avoid paying millions of dollars in
additional rebates to the Medicaid program.
“Investigation of
prescription drug fraud is a priority of the
Office of Inspector General
(OIG) and resolution of this case stems from
OIG's strong relationship with our
law-enforcement
partners," said Daniel R. Levinson, Inspector
General of the U.S. Department of Health and
Human Services. "In addition to enforcement, OIG
strongly supports implementation of
compliance measures by pharmaceutical companies
that are designed to address all risk areas of
their business - whether they be pricing,
marketing or promotional practices. The expanded
Corporate Integrity Agreement with
Schering-Plough incorporates additional ways for
OIG and
the Company to monitor these issues and minimize
the risk of off-label promotion."
3 "The Centers
for Medicare & Medicaid Services is committed to
protect the Medicare
program for beneficiaries and taxpayers, and
with the implementation of the prescription drug
benefit, it is even more important for the
Government to fully investigate health care
fraud
relating to prescription drugs," said CMS
Administrator Mark B. McClellan, M.D., Ph.D. "At
the same time, drug manufacturers have a duty to
implement strong compliance measures that
will address all risk areas of their business
including pricing, marketing or promotions. "
The second object
of the conspiracy to which SCHERING SALES will
plead guilty
charges that it conspired with others to make
false statements to the FDA in response to the
FDA’s inquiry regarding certain illegal
promotional activities by the Company’s sales
representatives at a national medical conference
for oncologists. Those false statements were
designed to reassure the FDA that the
promotional activities were isolated and not
directed by
home office, when in fact, the activities were
widespread and part of the national marketing
plan.
In addition, the Company sought to falsely lull
the FDA into believing that it had taken
appropriate steps to reinforce the message with
its sales representatives that such promotional
activities were prohibited, when in fact, the
Company knew and expected that those activities
would continue.
“The FDA takes
seriously its responsibilities to protect
consumers from products that are
promoted for unapproved uses,” says Margaret
Glavin, the FDA's Associate Commissioner for
regulatory affairs. "Pharmaceutical
manufacturers who mislead FDA place consumers at
risk."
The civil
settlement resolves allegations that
SCHERING-PLOUGH CORPORATION
and SCHERING SALES knowingly caused the
submission of false and/or fraudulent claims for
SCHERING’S drugs that were not eligible for
reimbursement. These included the
government’s claims that (1) SCHERING
misreported its best price to HCFA on Claritin
ReidTabs to evade Medicaid rebate liability, (2)
SCHERING misreported its best price on
private-labeled K-Dur to HCFA to evade Medicaid
rebate liability, (3) SCHERING overcharged
the PHS entities because of its misreporting of
best price to HCFA, (4) SCHERING induced
physicians to start patients on Intron A for
Hepatitis C by paying them remuneration through
three marketing programs, (5) SCHERING induced
physicians to use Temodar for certain
patients with brain tumors and brain metastases
and to use Intron A for certain patients with
superficial bladder cancer through improper
preceptorships, sham advisory boards, lavish
entertainment, and improper placement of
clinical trials; and (6) SCHERING knowingly
promoted off label uses of Temodar for certain
brain tumors and brain metastases and Intron A
for superficial bladder cancer despite not
having FDA approval.
SCHERING-PLOUGH
CORPORATION will be subject to an amendment to
its
existing Corporate Integrity Agreement. That
amendment requires Schering to continue
extensive work that the Company has undertaken
in the last two years to monitor and correct the
shortcomings in Schering’s drug sales, marketing
and pricing activities. After the activities
were
uncovered by the government, SCHERING-PLOUGH
cooperated with the investigation and
actively worked on compliance issues through a
significantly expanded compliance department.
4 The investigation was conducted by the Food
and Drug Administration’s Regional Office
of Criminal Investigations in both Boston and
Miami; the Department of Health and Human
Services’ Office of Inspector General, Office of
Investigations; the Defense Criminal
Investigative Service of the Department of
Defense; and the United States Office of
Veteran’s
Affairs’ Office of the Inspector General.
Assistance in the
investigation was also provided by Patrick
Lupinetti, Director of the
New York State Attorney General’s Special
Projects and Medicaid Fraud Control Unit and
David Waterbury, Director of the Washington
State Attorney’s General’s Medicaid Fraud
Control Unit, who coordinated the National
Medicaid Fraud Units. The criminal investigation
and resolution were handled by Assistant U.S.
Attorneys Susan Winkler, Chief of Sullivan’s
Health Care Fraud Unit, and Jeremy Sternberg.
The civil investigation and settlement were
handled by Assistant U.S. Attorneys Susan
Winkler, Jennifer Boal, Chief of Sullivan’s
Civil
Division, Gregg Shapiro, and Department of
Justice Trial Attorney Andy Mao of the Fraud
Section of the Civil Division. The Amendment to
the Corporate Integrity Agreement was
negotiated by Senior Counsel Mary Riordan in the
Office of General Counsel in the Department
of Health and Human Services, Office of
Inspector General.
Press Contact: Christina DiIorio-Sterling, (617)
748-3356
HMA's
Pamphlet